NZ 'losing race' on broadband

By ADAM GIFFORD

Telecommunications analyst Paul Budde says New Zealand is missing a $2 billion growth opportunity through its failure to fully embrace broadband.

An International Telecommunications Union (ITU) study of 178 economies which found New Zealand dropped from 12th to 21st in access to information and communications technology is clear evidence that New Zealand's strategies are not working, Budde said.

"The Government's heart is in the right place but it does not have the strategies to move forward."

But Information Technology Minister David Cunliffe said NZ was pushed back in the rankings by Asian tiger economies, and the report was not a cause for panic.

The ITU's digital access index this year measured affordability and education, as well as the traditional focus on telecommunication infrastructure such as mobile phones and fixed telephone lines.

Budde said New Zealand business was more conservative than the sector's European and Asian counterparts.

"New Zealand business people seem to stick to old models rather than look to new opportunities.

"That is reflected in the way 60 per cent of managers in the US and Europe have broadband at home, compared with only 10 per cent in New Zealand.

"Another factor is that Telecom is not showing any leadership in making sure people take up broadband. That is one of the key reasons New Zealand has dropped in the rankings since 1998.

"While the rest of the world has moved on, New Zealand has been stuck.

"The infrastructure build out is far too slow because there is no competition and it will take years for the Telecommunications Commissioner to create a competitive environment.

"I don't think we have that time - if you want to close the gap you must run faster, or the gap will get bigger."

Budde said affordability, high speed and unlimited access attracted broadband customers.

"[Telecom's] Jetstream may be affordable but the service is substandard and a fraction of what people get in other parts of the world."

Most of the $30 million or so the Government intended to spend on Project Probe, to get broadband to the regions, would be wasted - either because it would go to Telecom or because it would be uneconomical, Budde said.

"There is nothing wrong with bringing infrastructure to the regions, but you can't expect it to be profitable.

"It will need ongoing Government subsidies to keep going or it will go down the drain very quickly, so the money is totally wasted."

Budde said that rather than supporting companies such as Telecom, the Government should promote grassroots efforts to bring broadband to communities.

An action plan needed to be national, rather than just regional or provincial, because metropolitan areas also had broadband access problems.

Budde said countries which adopted broadband early were starting to reap the benefits.

"You see this incredible spin-off once you get this digital economy going - businesses create new revenue from extra services on broadband, and healthcare and education are more efficient."

In New Zealand, that could lead to an increase of 2 to 3 per cent in GDP, worth around $2 billion a year, Budde said.

Cunliffe said that although he had read reports indicating positive effects on GDP from broadband, "it is speculative and requires further testing".

A September ITU report had ranked New Zealand as having the 10th-cheapest broadband pricing.

"The Government has been very active in the broadband space with Probe, which is rolling out in the regions and aggregating demand," Cunliffe said.

"We are also working on next-generation internet, and also the local loop unbundling review is going on.

"The Government is aware this sector is changing fast. We are doing a strategy review of our ICT policies which is due to report to Cabinet in March."

Cunliffe said he would go to Geneva next month for the UN summit on the information society, and visit Korea on the way back to see how that country had jumped to number 4 in the ITU rankings.