Glacial speed of advance chilling

By CHRIS BARTON

It goes without saying in the information age that speed is of the essence. But it has to be said in New Zealand, because the essence of both the Government and the Telecom monopoly, when it comes to information age advancement, is slowness. Glacial slowness.

Let's face facts. New Zealand isn't "world-class in embracing e-commerce for competitive advantage". That was the bold goal of the Government e-commerce strategy announced in November 2000. We haven't caught the "knowledge wave" as promoted by the Government a year later in a much-hyped talkfest. Neither are we "growing an innovative New Zealand" as outlined in Government policy last year.

And despite a $30 million budget allocation to help provide broadband access to all schools and promote broadband competition, we haven't got anywhere near an environment where broadband internet access is enjoyed by all. The Telecom monopoly can reach 83 per cent of its customers with its fast Jetstream service, yet uptake among residential users is only around 2 per cent - about 20,000 users.

The latter statistic is the most chilling. While there are many measures to gauge whether or not we have become world class in embracing e-commerce, caught the knowledge wave or begun to grow an innovative New Zealand, the uptake of broadband is key. For it is here that the future information age lies. With really fast always-on internet - not the paltry speeds of Jetstream today - vistas of opportunity open. At 10Mbps (megabits per second) - more than 10 times the speed most residential users and small business have now - video conferencing becomes a reality. So does streaming video and video on demand. But that's still not enough. To really participate in a broadband world - to move huge amounts of data around in the blink of an eye - you have to be working at 100Mbps, and thinking about upgrading to 1Gbps (gigabits).

There are pockets of this type of activity happening - through the fibre pathways laid down by electricity lines company Vector and Wellington's Citylink consortium. But they're the exceptions. When it comes to reaching homes and many businesses outside the main cities, the high-speed pathways are simply not there.

To understand why, we need to know why our Government and the Telecom monopoly prefer slowness to speed. Why, despite the rhetoric to the contrary, they both prefer to delay.

For Telecom, the answer is straightforward - it doesn't have to. With an almost total monopoly on the lines to our homes, it can implement whatever it chooses.

At present it is choosing to gradually move internet users from very slow dial-up access to always-on internet that ranges in speed from 128Kbps (kilobits), double the speed of dial-up, up to 2Mbps.

For home users, prices start at $65 per month (compared with $15 to $28 a month for dial-up). That's on top of your existing monthly line rental ($38 per month) and you pay extra if you go over a certain level of data downloads per month. As evidenced by the slow uptake, most home users aren't buying. But that doesn't particularly matter to Telecom, because it has more than 400,000 dial-up customers and the move to broadband at a snail's pace is just fine - especially with no competition.

Parts of Wellington and Christchurch - where TelstraClear has run cable - do enjoy competition. Users can get a package comprising cable television, phone and fast internet substantially less than in other parts of New Zealand.

But Telecom has been able to thwart the effects of this competition by reducing line rentals in those locations. In most civilised parts of the world, such an action would be deemed anti-competitive - leveraging monopoly power to provide discounts to a few while the rest pay through the nose.

Which brings us to slow government. This Government took its entire first term to pass the Telecommunications Act, which reformed more than a decade of really bad monopoly-supporting legislation. The act has been in place for just over a year and so far nothing significant in terms of broadband has happened.

Why? Because the wheels of government do grind painfully slowly. Why? I have two possible answers. As a country we're still in shock from the rapid change brought about by the preceding Rogernomics era and we prefer things to change gradually. Or, that the Government doesn't really see ubiquitous fast internet as a way of economic transformation. If it did, we would see some serious "hundreds of millions" infrastructure investment, rather than the insignificant "tens of millions" allocation over three years.

But there is a glimmer of hope in a call to the newly-appointed telecommunications commissioner, Douglas Webb, to set some realistic prices for wholesaling. He's been investigating the matter since July. If he does give a favourable ruling, TelstraClear should be able to start offering some competing broadband and phone packages to the entire country. Don't hold your breath. There's an enormous amount of red tape and legendary Telecom delaying tactics to be worked through.

But broadband competition is on the horizon, thanks to new developments in wireless technology. Walker Wireless and Vodafone teamed up last year to trial wireless broadband to homes and businesses in central Auckland. The companies are now converting trialists to paying users and plan to deploy in Southland and a wider coverage area in Auckland this year. They're offering a 128Kbps service similar to Telecom's Jetstream starter for $58 month - $7 less than Telecom.

It's encouraging that broadband competition and competing infrastructure are beginning to emerge. But the slowness of its arrival and the slowness of the pipes make the country a broadband laggard. To catch a wave you first have to get on your surfboard, paddle out beyond the break, and wait for the big one. NZ broadband surfers aren't yet off the beach.

Herald Special Report - February 18, 2003:
Knowledge Wave 2003 - the leadership forum

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