I retired from personal blogging in July 2008 but you can find me over at blog.xero.com
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The New Zealand Institute released for discussion this morning their next report on Broadband in New Zealand.
ASSESSING NEW ZEALAND’S CURRENT ROADBAND PATH: THE NEED FOR CHANGE (pdf)
NZI has consulted widely in this report and I’ve certainly appreciated having a lot of time with Paul and David. I really appreciate that NZI are taking such a lead in working through the issues in this difficult area.
This paper is part of a modified program of work NZI are doing to surface the issues and unemotionally do the background research required to put forward credible solutions. This particular paper is very important because it asserts that the program of work the Government is doing will not get us to where we need to be.
It’s all building up for the next exciting chapter which will put focus on some suggested solutions. Of course I have an opinion on that.
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To me, the issues are not about what, how, where, when, but fundamentally about who and why - ie. who has the need, who will provide the solution, who will pay for it, and why? I could wax lyrical on the many permutations of who and why, but people only seem to want to talk about the what, when, where, and how. That still seems to be missing from your diagram.
Who and why, that is!
Ummm, you seem to be operating on old summer time, not new extended summer time. Or else I’m an hour ahead of you (of course, I always thought I was).
This is the top-down approach and it might work.
But, for the bottom-up approach of building little bits at a time and connecting them, is it more or less likely that adequate infrastructure could be created by communities in the same timeframe?
i.e. by the time you get the framework in place and raise funding and plan the infrastructure project, how much local fibre/wireless could have been rolled out?
The choice as I see it is to continue the debate or to cut to the chase and just go ahead and build stuff. People already know how to engineer modest amounts of bandwidth (10M - 1G) on local scales. The intercity problem is readily solvable. You need $100M for an overseas cable. If we had more people out there building stuff, the aggregated demand 2 years down the track will solve the national and international problems on its own.
Fed up with reports and jaw-jaw. More people up poles. More people digging holes.
Jim the whole point of funding separation is solving the problem of who pays for it.
If it is debt funded and returns the appropriate rate of return then investors will be attracted. The beauty of the plan is it costs nothing, it is just creating the investment conditions to invest in infrastructure as debt instead of retail telco as equity. Hence funding separation.
Rod, It seems to me the problem is going to be getting that rate of return, wouldn’t it be better for the Government to provide say a 3b loan fund for investment in Broadband Infrastructure.
I agree the development should be made by Private companies & maybe I’m wrong, but I don’t see investor/s in NZ with the sort of money Verizon pumped into their Fibre setup and after the SubPrime crisis global investment is going to be harder to come by.
Nothing really new there, but nice to see it put clearly.
LLU was a big distraction. Now people are realising it.
We should require a minister of telecommunications who knows something about modern networking, at least has the equivelent of CCNA knowledge.
Jim, I really want to say it’s not even worth the why at this point, given how cheap it is (if you don’t get it by now, you never will get it).
People should remember that the $4-5 billion doesn’t dissapear, the infrastructure makes a return from subscription fees. And there is the less tangible return of economic benefit.
I’d have to pull out all my old study material on this, but I remember the model I proposed the Government would subsidise 25% of the CAPEX for a roll out, the rest would come from debt funding. With this, it appeared a 10% ROI could be expected, which would cover the debt. Certainly if the Government made available low cost loans for that, it’d be cheap as chips. Perhaps if they provided 25% at no cost to local councils, the councils are expected to come up with the rest (using their own access to low cost finance).
Also, look at how much effort gets put into justifying a new road? Often these are practically useless, and building the roads is more of a political will than any kind of business logic. So given how comparitivly cheap FTTH is compared to road spending, why do we expect it has to be subject to such higher standards? In Wellington for example, they want to build a $1 billion dollar motorway to serve the residents of Kapiti (this likely will get killed it appears now), the Govt is putting up half the cash, and the region is expected to pay the rest (through rates or petrol taxes or whatever). This is acceptable to people for some reason, despite the completely dubious economic benefit of the road when compared to cheaper options. Yet for just $400 million you could roll out FTTH to most of the regions homes. And this largely pays for itself directly in a plain black and white accountable way, and on top of that has economic benefits to the region.
Same in Auckland, a $2 billion new tunnel is on the books (with a $3 billion second crossing, and numerous other recent projects totalling in the billions). A roll out there of FTTH would probably be about $1.2 billion.
So the money is available. It is cheap. It has a better business case than most Govt spending.
NZ just needs stop talking about it and choose to get on with it.
/end-rant.