Market ‘Won’t Deliver’ on Broadband

THE unbundling of Telecom and other industry reforms pushed through by the Government will fail to deliver the investment in broadband that is required for New Zealand to keep pace with its peers, according to a report by consultancy Network Strategies that was commissioned by InternetNZ.

Network Strategies says that in the absence of further public investment in broadband, services will not get much better outside the main centres. “We expect that rural and remote users will not see much improvement beyond the expensive satellite services that are available today.”

A study commissioned by Cisco and carried out by Oxford University ranked New Zealand 35th out of 45 countries for the quality of its broadband services, taking into account download and upload speeds and network latency.

InternetNZ has set a target that three-quarters of households should be able to connect to the Internet at speeds of 100 megabits per second for an “affordable price”, and that businesses should get 1 gigabit per second connections.

Telecom has guaranteed 80 per cent of New Zealanders will be able to connect to the Internet at speeds of at least 10Mbps by December 2011.

“Market leaders in the OECD have seen huge growth, stimulated by the availability of high bandwidth services at a relatively low price,” Network Strategies says. “As an example, residents of the Swedish city Vasteras can currently obtain symmetric 100Mbps services for NZ$49 a month, which compared with the DSL services Telecom plans to deliver in four years’ time, still represents an enormous gap.”

Network Strategies says a 30Mbps connection would be sufficient to simultaneously deliver one channel of high-definition video and two standard-definition channels to a home along with a 10Mbps Internet connection and a voice service. But it forecasts falling computer storage costs will mean people will want to download full- length high-definition movies with the same frequency that they now download digital music, creating demand for far faster connections.

It concedes it is possible New Zealand could “make do” with a lower level of broadband service that “did not materially affect economically-important applications”, but says there is a distinct possibility that would mean applications developed for faster networks overseas might not be viable here.

Network Strategies says the National Party may have underestimated the cost of its proposed fibre network and Labour’s alternative Broadband Investment Fund has no coverage targets, leading it to conclude that “the financial proposals of the two major political parties would not realise InternetNZ’s target within 10 years”.

Mark Ratcliffe, chief executive of Telecom network arm Chorus, says 100Mbps is something “we all want. I think there is no doubt that is where we will end up. How it gets paid for is yet to be worked out.”

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