Backers wanted for net phone system

By SIMON COLLINS

An Auckland venture capitalist is seeking energy trust and Government support for an audacious plan to provide high-speed internet-capable phone connections to provincial areas.

David Hayde of Carlyle Venture Capital, who says he has backing from an American venture capital company, wants to start in Whangarei and Nelson.

His plan involves:

Installing fibre-optic or wireless phone links to replace Telecom's copper wires in all areas where the existing lines are too slow for high-speed internet access.

Negotiating with phone companies to use parts of their networks wherever they are adequate for high-speed internet traffic.

Negotiating with regional energy trusts and the Government to share the capital costs.

He has applied to Industry NZ under the Government's new Regional Partnerships Programme for a contribution to an initial $1 million feasibility study and pilot scheme.

Ultimately, the plan would cost hundreds of millions of dollars. Telecom says upgrading rural phone services to the internet speed now available in the main centres would cost more than $500 million.

Mr Hayde said it was not economic to provide these services outside the main centres, but they could pay their own way in the future if the Government and energy trusts provided grants or accepted less than commercial returns.

He said the American venture capital company had proposed putting in $500,000 for the feasibility study, provided the Government and the lines companies also invested some money.

"So it's a three-way thing. No one of those three things will go ahead without the others."

The Regional Partnerships Programme has a budget of $5.6 million this year, $11.25 million next year and $16.9 million a year from 2002-03.

The country's 30 energy trusts have total investments worth $1.5 billion, including a mix of operating line companies and cash obtained from the sale of power retailing companies.

But both have other calls on their money. Mr Hayde's proposal is one of 137 applications totalling $109 million for regional development grants, and many energy trusts are committed to using their cash to benefit electricity consumers.

Mr Hayde, a partner with accountants KPMG until two months ago, said he quit to set up Carlyle Venture Capital so that he could become more "hands-on" with projects such as the regional telephone service.

"There are three or four people who had the idea for a wee while."

He declined to name the US venture capital company which is backing him, but said it "has done something similar in another part of the world."