Chris Barton: Broadband - visionary, or business as usual?

Vector's advertising campaign pushed for an alternative approach to rewiring New Zealand for broadband. Photo / Sarah Ivey

Three questions worth pondering:

* Is the government about to break its election promise and give us ultra slow, instead of ultra fast, broadband?

* In the face of the Telecom lobby, is communications minister Steven Joyce like a spineless jellyfish?

* If you were being paid $5 million-plus a year to run a monopoly utility company, what would you be thinking while watching the movie Inside Job?

In answer to the first two, it certainly looks that way. After stringing us along for more than two years with the promise of $1.5 billion investment in ultra fast broadband, the government seems poised to do a u-turn and give the bulk of this taxpayers' money to Telecom. We all know what that means - more waiting on hold.

Adding insult to injury, the government also seems determined to forever consign farmers to the slow lane by giving its $300 million Rural Broadband Initiative money to a cosy Telecom-Vodafone duopoly. This is not just anti-competitive and surely in breach of our Commerce Act, but also arrantly stupid when it's quite clear that farmers should be on fibre, not some castrated wireless and Telecom compromise.

I want to be wrong about both these fears. On the face of it National's ultra fast broadband scheme seemed inspired - an opportunity to rewire New Zealand, bypass the Telecom monopoly and wrest back a public utility for the public, instead of lining shareholders' pockets. But all the signs point to business as usual and consumers once again getting overcharged and underserviced.

We shouldn't be surprised. Ever since deregulation of the telecommunications sector and the transformation of a publicly-owned New Zealand asset into our largest listed company, we've been at the mercy of foreign owners determined to under invest in the network and reap unsustainable monopoly profits.

Successive governments have tried for 20 years to bring this monster of their own creation under control, but all have capitulated under its share market might. Telecom rules OK.

It's even more extraordinary that this government is about to repeat the same mistake and consign our electricity companies to the same fate. All New Zealanders could benefit from cheap electricity and cheap ultra fast broadband provided by properly run government owned public utilities.

That is, enterprises prepared to operate under a steady- as-she-goes modest return on investment, rather than providing never ending dividends demanded by greedy shareholders. New Zealand business, built on such bedrock - free to waste bandwidth, not to mention electricity in creative endeavour - might actually deliver real productivity and wealth. If there us any way to leapfrog Australia, this is it.

The shame of the situation is how underwhelming the ultra fast broadband scheme has become - entry level fibre in urban areas at $40 per month wholesale delivering 30Mbps down and 10Mbps up.

In rural areas it's a dismal 5Mbps for 80 per cent of households with the remainder receiving 1Mbps. Pathetic. Investment in a future of ultra fast broadband should start at 100Mbps and be contemplating 1Gbps and beyond. If there is anywhere that "think big" is good, it's in bandwidth.

The sad irony is that if ever there was a communications minister with the backbone to get the job done it was Steven Joyce - a man with the smarts and business acumen to see past Telecom. Sadly, like so many communication ministers before him he seems to have lost his bottle.

But we shouldn't be surprised. Crown Fibre Holdings, which is deciding this outcome, is stacked with former telco men, many of them ex-Telecom and clearly unable to see beyond telco blinkers. What they will never understand is that in the rewiring of New Zealand in fibre, telcos are not required.

All we need are the new wires, best done by lines companies, who know about such things, leaving the optic electronics contracted to those who do such stuff internationally - Alcatel, Lucent, Cisco, Ericsson, Huawei and so on.

Which brings me to my imponderable third question about what New Zealand's most highly paid man, Telecom's Paul Reynolds, would be thinking watching Inside Job.

I raise it not because I happened to be sitting next to him when I watched Charles Ferguson's documentary last week, but because the story is about how the American financial system went out-of-control making massive private gains at public loss. It was hard not see parallels here.

This was a financial system - the epitome of the free world and the free market - that for decades was stable and safe. But then the "industry turned its back on society, corrupted our political system, and plunged the world economy into crisis."

Some dialogue on how it all began:

Narrator: "But in 2000, Iceland's government began a broad policy of deregulation that would have disastrous consequences; first for the environment, and then for the economy...

"At the same time, the government privatised Iceland's three largest banks. The result was one of the purest experiments in financial deregulation ever conducted."

Gylfi Zoega (economics professor): "Finance took over. Um, and uh, more or less wrecked the place."

Narrator: "The government regulators who should have been protecting the citizens of Iceland had done nothing."

It's a script that could just as easily be applied to the Rogernomics of New Zealand from 1984 onwards and the deregulation that among other things gave us Telecom. We know business left to its own devices - especially when it has monopoly control - doesn't deliver decent public utility.

What's hard to fathom is why this government is determined to keep following the already failed laissez faire path.

chris.barton@nzherald.co.nz