Chris Barton: Handout supports monopoly

The Government said last week that it would give a Telecom-BCL consortium a handout - possibly up to $6 million - to provide broadband to schools in Wellington, Taranaki and Waikato.

But a veil of secrecy shrouds the latest tenders for the Government's Probe project. No information is available on what schools and other users will pay for their broadband.

We know nothing about who the competing tenders were, nor how much extra the Telecom monopoly will invest in regional infrastructure over and above what it is already doing to supply its Jetstream service nationwide.

And while subsidies are available, no one is saying how much they will be. But a $6 million handout is a reasonable guess - based on the assumption that the Government has allocated about $30 million for the project.

Southland, the first of the 15 regions awarded a Probe contract, also provides an indication. It received $2 million from the Government to assist a Walker Wireless-Vodafone consortium to supply broadband to the entire community, not just schools.

At least the secrecy about Probe is consistent. When the project was announced last year, the Government insisted on saying it had allocated "tens of millions" of dollars rather than a fixed amount that would normally be assigned to any policy initiative.

Why? Because Probe is not a Government policy to provide broadband to all New Zealanders, but a mishmash of hidden agendas, political grandstanding and tokenism.

Probe - the provincial broadband extension project - was born out of IT Minister Paul Swain's office in 2001. To give him credit, he was probably the only minister at the time who saw the potential economic benefit of broadband communications to the regions.

But like all politicians, he suffers from Telecomphobia - fear of upsetting our largest listed company.

Swain had the fear so bad that he made sure the key broadband enabler of local loop unbundling - opening Telecom's monopoly on lines to our homes to competition - has been delayed for two years.

Perhaps to make up for his blunder, he became a broadband advocate. But all Swain was really doing was cadging a ride on the sterling work of Venture Southland and the Far North Development Trust, who had both done considerable research on the subject.

Those two regions, along with Wairarapa, were well-advanced with plans to bring broadband to their areas without any help from the Government - and were receiving plenty of local support.

Which is why the Government hijacked the idea. But with no budget to allocate to the scheme and zero interest from the Treasury in the concept, Swain was stymied - until he cleverly sold the notion to Education Minister Trevor Mallard, who had a little cash in the contingency fund.

In the process, the project mutated from being a plan to provide affordable broadband to all New Zealanders, to providing broadband to all schools.

The Government hoped that by making sure schools had broadband access - an admirable social goal - the surrounding area would also. So the broadband-for-all idea was not entirely lost.

Which is why Economic Development Minister Jim Anderton belatedly got in on the act.

As a compromise, and because most politicians have no idea what broadband is, it sounded like a reasonable plan. It also meant the Government looked like it was doing something to advance the "knowledge wave" infrastructure, rather than just banging on about a meaningless concept.

But when the request for proposals (RFP) was released last December, a key requirement was missing. Instead of asking for proposals to supply broadband to everyone in the region at the same price, the focus was now firmly on supplying schools first and the rest of the community second.

Estimates for the Telecom-BCL proposals for coverage "of households in non-urban areas" for the Waikato, Taranaki and Wellington are 91.5 per cent, 95 and 83.5 per cent respectively. Put another way, 9.5, 15 and 16.5 per cent respectively of rural homes in those regions will not receive broadband.

Schools that are outside the proposed new coverage areas will be considered for a subsidised satellite service (Region 15).

The RFP also largely ignores the other key aim of Probe: "To encourage competition in broadband telecommunications outside the metropolitan centres."

Had that been clearly incorporated into the RFP, the Telecom monopoly would not have bothered to apply for Probe funding. State-owned BCL would have linked with other internet and telco providers to bring the market force of competition to each region.

Suggest such an idea to the Telecomphobic ministers involved in Probe and all you hear is an incredulous splutter.

Which is why the Government is now preparing a multimillion-dollar handout to prop up a monopoly - a decision guaranteed to lessen competition in Wellington, Taranaki and Waikato.

Contrast that with Southland, the Far North and Wairarapa, which have insisted on a whole-of-community requirement and selected Vodafone-Walker Wireless.

Those regions will not only get broadband for everyone, but also the benefit of competition as both Telecom and BCL improve facilities to face down a threat to their dominance.

As they now say in those places: "Buy one network and get another one free."

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Ministry of Education Probe Overview

Probe Proposal