KEY POINTS:
The poor state of phone and internet services in rural areas is back on the agenda and Communications Minister David Cunliffe has sent a strong hint that the Government is considering building a network to plug coverage gaps.
"I want to say that I am hearing loud and clear from farmers and rural New Zealand a great deal of disquiet about the state of the network," Cunliffe told a conference in Auckland this week.
"Quite clearly, there has been a history of under-investment in rural telecommunications, and we want to see that turned around."
What exactly the Government has in mind for farmers is far from clear. The last publicly funded foray into rural broadband was in the form of the flawed Project Probe, which was designed to connect rural schools and communities but did little for competition as Telecom picked up the lion's share of the money.
Cunliffe's timing, a few years after Probe, is impeccable. By the time any plan for a new Government-funded rural broadband project has worked its way through the Cabinet and into the planning stage, we'll be in the run-up to an election.
Given the recent politicisation of the broadband issue since the Government moved in to open up Telecom's copper-line monopoly, rural broadband is likely to be one of Labour's key election pledges.
The same situation has just played out across the Tasman where Prime Minister John Howard and his Government, facing an election later this year, have just committed more than $1 billion to allow Opel - a private partnership of telecoms operator Optus and rural services provider Elders, to build a wireless broadband network covering hundreds of thousands of homes and businesses in rural Australia.
In doing so, Howard took the steam out of a rival proposal from opposition leader Kevin Rudd, to spend close to $5 billion building a more ambitious national fibre optic network.
Cunliffe will no doubt study the structure of the Opel project very closely. It will use WiMAX wireless technology to form the basis of its rural network, allowing users equipped with aerials and routers to pick up high-speed internet connections and use internet-based (VoIP) phone services.
WiMAX is a clever technology that's nevertheless unproven in wide scale deployments and is generally backed by alternative telecoms operators seeking to gain inroads against mobile phone players who are delivering mobile broadband services via their networks of cell towers. For that reason, the Australian project has raised eyebrows in the telecoms industry.
However, New Zealand has a small stable of wireless operators, namely CallPlus and Woosh Wireless, who are betting the future on WiMAX.
CallPlus has secured access to US$450 million ($588 million) in funding from a Japanese merchant bank to build a WiMAX network and Woosh, a past recipient of Probe funding, is hoping WiMAX will rescue it from the bad technology decisions it has made in the past.
An auction of radio spectrum suitable for delivering WiMAX services will be held in December and the outcome will determine who is left with enough spectrum to serve the rural sector and the country in general.
If Cunliffe is smart, he will ditch the grant mentality that accompanied Project Probe and follow the Australian model, matching an investment from a credible private consortium for a rural broadband service spanning all regions.
There's scope there for co-operation between the WiMAX players and internet providers who are spotting increasing potential in the rural sector.
But Cunliffe needs to learn from the problems that have dogged State-owned network operator Kordia's own rural broadband service, Extend.
The sales pitch should be easier this time around.
The question is whether the Government is willing to think on a more ambitious scale and deliver the funding that would allow the private sector to service rural New Zealand properly.
