KEY POINTS:
Rod Drury's idea for a Government-owned broadband network, open to any players on a cost plus 10 per cent basis, is one worth serious consideration.
It's scary that a tech-savvy entrepreneur feels the need to try to find the answer to a serious problem facing the nation, but that's where the Government's flawed regulation of the telecommunications industry and Telecom's under investment in its networks has led us.
The problem of poor broadband isn't one that can be chipped away at over the space of five years or a decade. We haven't got that long.
The digital economy was built in that time period and we've largely been sidelined from it as a result of our bad infrastructure.
That needs to change, fast.
The Government only recently woke up to the importance of having a reliable, national, high-speed broadband network with the formation of its digital strategy and the move last year to dismantle Telecom's monopoly.
It has shown with its rescue of Air New Zealand, its continued ownership of TVNZ and Kordia, the broadcasting operation, that it feels the need to ensure provision of some services
The Drury plan, "NewZealand.net", is as important as having a strong national airline or state broadcaster, given the growth of the digital economy. [Read his report]
But how realistic is his idea? Can the Government be persuaded to spend potentially hundreds of millions of dollars to lay fibre optic cables? I think it can.
The case for such a network stimulating GDP growth and our ability to become more active in the global digital economy is there.
The level of discontent with the services being provided by Telecom and the internet providers who wholesale its services is at an all-time high.
At the price structure Drury is proposing, there's likely to be no shortage of customers. With central and local government in the loop, the Resource Management Act and public consent issues that have prevented commercial fibre networks being built in the past, are likely to evaporate.
In fact, it seems there may have already been some preliminary discussion in government circles about the feasibility of setting up what I recently heard described as the "Kiwibank of telecommunications".
The obvious starting point in such a venture is Kordia (formerly Broadcast Communications), a state-owned enterprise with an independent board of directors.
Kordia has extensive radio microwave and fibre optic cable networks, capable of shifting large amounts of data around the country at high speed.
Its network of transmission towers delivers terrestrial TV and radio throughout the country and, in recent years, the company has made a big push into delivering wireless broadband services.
Drury's assertion that the formation of a state-owned wholesale fibre network wouldn't hurt Telecom is realistic.
We only need look at Project Probe, the Government-funded initiative of a few years ago to get broadband to schools in rural areas, to see that Telecom is more than willing to piggyback on Government efforts to improve broadband access.
In the case of Probe, the state-owned enterprise, Kordia, became a network provider offering wireless services to retail partners such as Telecom and Iconz to push high-speed services out to rural schools and communities using its radio transmission towers. Probe was a well-meaning but flawed project, hampered by Telecom's dominance of the successful tenders and the high cost of the equipment needed to access the network.
What Drury is proposing is something that will prove to be more expensive than Probe, which the Government subsidised to the tune of more than $20 million, but offer a level playing field for internet providers to tap lucrative markets in urban areas.
The idea of the Government owning offshore infrastructure is more problematic - investing in undersea fibre networks is expensive and many companies, some partially backed with Government investment, have been burned playing in the international bandwidth market.
But what about unbundling? Isn't it meant to provide the services we need using Telecom's existing network? In theory yes - and there's an argument for focusing, in the short term, on improving that network, rather than investing heavily in fibre.
"The existing copper would give a perfectly good performance if it was used properly," says ihug's regulatory manager, David Diprose.
He claims that copper line-based ADSL and its successor, ADSL2, which Telecom is rolling out from next month, is good enough technology to deliver the broadband services we so badly need.
The problem now, he says, is that Telecom radically limits the per-connection "back-haul" capacity in its network, limiting how quickly your data can be carried around its network.
"That's why New Zealand broadband is so pathetic," he says. "Almost every Aucklander should be able to get acceptable performance on copper.
"Most of them are within 3km of the exchange."
With unbundling, internet providers will be able to form their own back-haul arrangements with other infrastructure operators, such as Vector or Citylink.
That may improve the situation. In the meantime, NewZealand.net should be viewed not as a last resort, but a possibility worth considering.
