ISPs at risk of being 'left out in the cold'

Chief executive of Pacific Fibre, Mark Rushworth. Photo / Dean Purcell

Content owners and internet service providers need to forge a new relationship if the ultra-fast broadband scheme is going to be profitable, said a panel discussing the future of internet in New Zealand.

Executives from TelstraClear, Orcon, Pacific Fibre and the Telecommunications Carriers Forum at this week's Tel.Con11 summit, agreed that if the status quo continues, content owners rather than telcos would reap the rewards of fast internet.

Retail providers expect video to be the majority of traffic being sent and received across the Government's ultra-fast broadband network.

A good deal of this video will be movies and television programmes.

The problem for internet providers is how to make money on this content when its overseas owners tightly control how and where it can be distributed.

Chief executive of Pacific Fibre, Mark Rushworth, said a solution was desperately needed.

"You go back five years and you had people asking who are you with, Telecom or Vodafone? [Now] telcos are almost becoming irrelevant to the point where you've got a bunch of content players, the Apples the Googles, the Facebooks and the guys we haven't even thought of yet, and you've got telcos ending up becoming dumb pipes. It's a really challenging space."

TelstraClear's head of customer experience, John Stone, said retail providers needed the ability to offer high-definition video content that internet users could access easily.

As it stands, he said, movie studios exercise "great influence over who can do what".

"If [telcos] are limited in how they access content or when they can access it, they can't create a bundle or a package that would provide the incentive for someone to move to fibre [internet]," he said.

There needed to be a wholesale market in New Zealand, where retailers could purchase content to package for end-users, he said.

Telecommunications Carriers Forum chief executive David Stone said agreements were needed around the caching of content, which would mean it could be stored locally rather than being drawn from overseas servers.

It is an issue because of New Zealand's limited internet links with other countries and the cost of bringing in offshore traffic.

Stone cited Crown Fibre Holdings director Murray Milner, who claimed New Zealand risked becoming a "digital backwater" if it did not start caching more material.

"There's a real need to create a vast amount of caching here because the sheer volume of content would overwhelm [the country's international cable]. But yet that aspect of the debate really hasn't taken off," Stone said.

While Orcon's chief executive Scott Bartlett agreed caching was vital, he said he saw a huge need for more locally produced content.

"[In France] there are 50 content providers, with all different types of content. There's a real vibrant community there of industry using the internet to deliver content that people want, a richness and diversity of it. Why don't we have that here?" he asked.