KEY POINTS:
The Government is considering using an investment vehicle to help fund high-speed broadband networks.
Communications Minister David Cunliffe yesterday said there was merit in exploring alternative investment models for rolling out fibre broadband networks to streetside cabinets.
"The Government is interested in alternative ideas for meeting the country's investment requirements and may be prepared to support such ideas through to fruition," said Cunliffe to an audience at the Digital Future Summit.
He welcomed Telecom's planned investment in a high-speed broadband network but said it was not sufficient for improving broadband performance.
"While this proposal represents a significant improvement on the status quo, we assess that by the time of completion it will be at the low end of performance internationally with the FTTN (fibre to the node) proposal resulting in relatively long copper loop lengths compared to the upper quartile of the OECD," said Cunliffe.
Instead he proposes a target of broadband at speeds of 20 megabits per second in towns with a population of more than 10,000 - approximately 76 per cent of phone lines - and 90 per cent of New Zealanders with broadband speeds of at least 10Mbps by 2012.
Telecom's plan would see 50 per cent getting speeds of up to 20Mbps and 80 per cent of New Zealanders with broadband speeds of 10Mbps.
Cunliffe would not comment on the possibility of the Government itself investing in the development of broadband networks, as has been promised by the incoming Labor Government in Australia, saying such matters were for the budget round and he was not authorised to speculate on how money would be allocated.
"In the short to medium term we think we could probably get, with a bit of cooperation and imagination from around the industry, speeds of up to double what Telecom's offering in urban centres," said Cunliffe.
Telecom chief executive Paul Reynolds said a lot could be done without government funding.
However, he said return on investment and scale would always be issues in New Zealand.
Reynolds said it would be crazy to have too many competing infrastructures.
"What we need to do is get to a situation where the industry works together better and shares infrastructure," he said.
"I don't want to have all of the costs of towers, fibre and everything else ... if I could share it with my colleagues round this table and I know some of them feel similarly. I think we need to get our act together to deal with the scale issue by working better together."
Cunliffe fired a shot at Telecom's record for investment in rural phone networks, highlighting a shortfall of $3 million between what it received in subsidies from rivals to provide phone services to rural customers and what it spends annually on the network.
Cunliffe raised the idea of contestable funding to subsidise a second fibre cable to Australia in order to increase competition on international internet links and push down prices.
* Telecom chief executive Paul Reynolds said he was surprised and dismayed at the reaction the company had had regarding its plans to run fibre to streetside cabinets.
Last week when Telecom announced plans to run more fibre into the network, companies hoping to take advantage of local loop unbundling expressed concern their investment would not be commercially viable.
They said investment in unbundling would only make sense in urban exchanges with a large number of broadband customers.
"Accusations of us hiding information and 'gaming' the situation are unfair," said Reynolds yesterday.
"We are doing our utmost to re-shape ourselves for the new era by being honest, open and transparent. Clearly though we need to keep doing this to build the trust."
He said Telecom had been clear about the trade-off between unbundling and running fibre to streetside cabinets and was offering wholesale access to broadband from cabinets as well as the opportunity for rivals to install equipment in the cabinets.
TECH TALK
* The two-day Digital Future Summit in Auckland is bringing together business, community and government leaders to discuss how technology can benefit New Zealand.
* One of the goals of the summit is to canvas ideas for an update of the Government's digital strategy, originally written in 2005.
