Commission probes speed barriers for broadband

Photo / Thinkstock

The Commerce Commission is investigating issues that could stall the uptake of services on the Government's ultra-fast broadband network.

The study, prompted by international experiences of fibre deployment, hopes to discover if any of the barriers to uptake witnessed overseas could apply in New Zealand.

Over the next 10 years, fibre cables will be rolled out across 75 per cent of New Zealand, which the Government claims will offer internet speeds of 100 megabits per second.

This is more than 20 times faster than the average download or browsing speeds users now experience.

The competition watchdog yesterday released a draft on the study's structure and will finalise its scope and terms of reference later this month.

The final report is due out in December.

Under proposed law before a select committee, the commission would be unable to regulate price or competition issues on the billion-dollar fibre network until the end of 2019.

A commission spokesperson said yesterday that the study was not about forming regulation and its findings would be used only to inform the telco industry.

Telecommunications researcher Paul Budde said price was the factor dictating fibre uptake globally.

"Even in countries like Japan and Korea, which are seen as leaders in fibre to the home, they are reaching a limit of people who want to use it because the price is high.

"We also saw this in the United States, when [prices are high] you limit penetration to 10 or 15 per cent," Budde said.

"Nothing else but price is the key element in that."

Ensuring a wide range of industries use fibre services, is a way to drive prices down, he said.

"If you only build a fibre network for [home and business] internet you will never make it stand up in an economic way. If healthcare and education providers, if they all start using it, you start sharing the cost of the infrastructure and the price of pure internet access goes down."

As well as looking into factors that could inhibit uptake, the study will also determine whether network neutrality was an issue in New Zealand and whether there would be competition among services requiring UFB's high bandwidth (such as iSky and other internet television).

Network neutrality is a principle which proposes certain content should not be privileged so it travels faster on an internet network and that all data sent or received is treated equally.

InternetNZ chief executive Vikram Kumar said although the country did not experience the same neutrality problems as Europe or the US, it could be an issue here depending on the commission's definition of the term.

"There are so many issues that could come under it - some which New Zealand has and some which it does not."