Peter Griffin: Broadband a tough sale in hard times

It was a sight to behold. As I walked through the gates of Fieldays at Mystery Creek last week, two dozen John Deere tractors formed a gleaming wall of green steel. It was the second reminder of how big and rich an industry farming is.

The first was the carpark. The surrounding fields teemed with thousands of visitor vehicles. It felt like I was making my way into a sold-out U2 concert.

With "e-farming" banners jumping out from all sides, I rubbed shoulders with surprisingly well-dressed farmers, listened in on their mobile phone calls and watched as they drooled over an automated milking setup that can milk the entire herd with the push of a few buttons.

I found out that farmers are fast adopters of new technology, but that they're tight-fisted. They will open their cheque books only if they can can spot a return.

The "e" focus of Fieldays this year comes during an interesting period. Farmers, relatively speaking, are facing hard times. Last year, Fonterra paid a creamy $5.30 a kilogram of milk solids.

Slumping commodity prices and the strength of the Kiwi dollar have slimmed down the payout to $3.60 a kilogram. The difference is at least hundreds of millions of dollars. As with any sector battening down the hatches - and the IT and telecoms sector is a prime example - capital spending is usually the first area of the balance sheet to take a cut.

So where does that leave companies such as Telecom, Broadcast Communications, Airspan, Walker Wireless, Vodafone and TelstraClear, who are all in some capacity eyeing up the business opportunities in rural New Zealand?

It leaves them with a harder story to sell to farmers. But it also gives them a platform to deliver the message of broadband creating productivity gains.

As TelstraClear points out in its latest submissions to the Commerce Commission pitching the benefits of unbundling Telecom's last mile copper network, online applications are making farmers more productive.

The telco points to an OECD report from last December which notes that "the New Zealand dairy industry is reported to have identified productivity gains in the order of US$140 million through the use of applications and tools made available to farmers over the internet".

We're talking about things like electronic pasture rotation plans, instant access to milk yield information and on-tap info from Fencepost.com

All those gains on offer while most farmers are chugging away on dial-up.

Farmers will buy wireless antennas and sign up to monthly gigabyte download limits only if they think it will buy them even greater productivity gains.

If they buy into Telecom's story, they will have to be prepared to pay a bit more than city dwellers.

It's costing more to reach the farmers, by the pure nature of the terrain that has to be covered and the absence of economies of scale in the backblocks, so maybe some premium, perhaps 30 per cent, is reasonable. But it has yet to be seen whether farmers will pay the premium in sufficient numbers to make the idea of a "FonterraNet" deal with Telecom work.

The satellite broadband option that will cover the most inaccessible rural areas is ludicrously expensive, which will make a community/farmer element of Project Probe's "region 15" difficult to nail down. Rocom has an offer on the market with set-up costs of $9000. Optus is flogging a similarly priced service. Even with several farmers sharing one connection, that's still expensive.

The present reality is that Telecom has an obligation to provide 14.4Kbps internet access to 90 per cent of the country and 9.6Kbps to 95 per cent of the country, as part of the legislated Kiwi Share agreement. In some areas it is arguable whether Telecom is meeting its obligations. Line quality in many spots is patchy.

The problem is that it is hard to tell whether this is Telecom's scratchy network or electric fences and farm machinery causing electronic interference with the signals carried over the copper lines. Even the blast of a mobile phone can knock out a dial-up internet connection if it is close enough to the incoming line.

So the network providers have a big job to do in educating the farmers on the worth in moving off dial-up and paying the premium.

Hence Telecom's reinvention of the technology shed that sat out the America's Cup at the Viaduct Harbour and attempted to convince hundreds of thousands of visitors, with some success, that Telecom is in fact an innovative company.

The shed no longer took the shape of a giant huhu grub, but the foot traffic through it at Fieldays was constant.

"Are Jetstream and broadband the same thing?", asked one farmer clutching a FonterraNet "expression of interest" form. The message is sort of getting through.

And the Government is weighing in with its own rural push. Communications Minister Paul Swain won the prize for cheesiest gimmick when he opened Fieldays with the click of a huge computer mouse. That started a video presentation on "New Zealand's biggest computer screen", watched by a mob of Swanndri-clad farmers.

In reality it may not be cold, hard economics that decide the rate of broadband take-up among farmers, but family issues.

Despite the number of bachelor farmers floating around, most farmers are family men. Families run farms.

The kids are teaching their farmer parents how to access the internet to correspond with the dairy company or access information.

Older farmers are learning through the likes of Senior Net. Kids who travel an hour to and from school each day are needing to be able to access learning materials online outside of school. It is the worry that their kids will slip behind that compels farmers to listen to the broadband story.

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