KEY POINTS:
The question from a colleague seemed simple enough. Is anyone supplying fibre to the home?
It's a good question. Fibre optic cable coming out of the wall means real high-speed anytime access to the internet, not having to rely on the wonders of ADSL alchemy to sweat the last dollar out of the state's historic investment in copper wiring (now owned by Telecom).
More than 21 per cent of homes in Hong Kong have fibre, 19 per cent in South Korea and 16 per cent in Japan.
It's meant an explosion of gaming in those countries, with IPTV and video on demand also moving out of the theory zone.
In Sweden, 27 per cent of homes are fibred up, and the Netherlands and France are enthusiastic adopters.
I turned for an answer to Citylink, which has one of the four fibre optic networks in Auckland's CBD.
"I've been in the fibre business for 25 years and fibre to the home has always been five years away. Now I think it's further away," says founder Neil de Witt.
Citylink's customers are corporates who want fat pipes to the internet or completely private networks of fibre joining multiple sites in Wellington or Auckland.
While fibre to the home is happening in new residential developments, no one has been able to come up with a business case for retro-fitting brownfields or existing residential areas. Most of the costs are not in the fibre or connectors but in digging holes to hide it underground, he says.
"It should be as pervasive as reticulated water or sewage or electricity, but where is the return on investment? The most expensive house to connect is the one at the far end and, unless you get a contribution from every house on the way, how can it be done?"
It's still early days, he says.
Other observers aren't willing to cut the industry as much slack.
The New Zealand Institute says national economic benefits from broadband could total from $2.7 billion to $4.4 billion a year, but it will take fibre to capture many of those benefits.
A discussion document it posted last month says Telecom is the only company likely to make significant investments in fibre but it has weak incentives to invest.
It says the country has a strategic choice between the status quo, waiting and waiting and waiting on Telecom or creating a new regulatory and funding model to spur the roll-out of fibre infrastructure.
Telecom has started to move - incrementally. It is rolling out fibre to cabinets, shortening the distance signals must run on copper.
It is also putting fibre to the home in new subdivisions, rather than stopping it in a cabinet in the street and running copper the last leg.
Tim Pegler, the head of Telecom's broadband wholesale division, says the cost of the components has come down in the past year and, since fibre cabinets don't need the power and air conditioning of conventional cabinets, the cost comes in at about the same price as copper.
The first subdivision with fibre to the home laid on is Kensington Park in Orewa, where the first houses should be completed this month.
Pegler says another 15 subdivisions around the country have signed on, amounting to about 5000 homes.
Pricing still hasn't been decided with retailer WorldXchange, because the Commerce Commission hasn't determined how much Telecom can charge for backhaul. WorldXchange chief executive Cecil Alexander says the plan is to keep the prices and speeds similar to existing packages. The company is the exclusive service provider on the Telecom-linked subdivisions until September, when the market will be opened to others.
"I'll be surprised if we get 1000 households signed up by then," Alexander says.
If telcos can't do it, how about lines companies?
Vector has been building fibre networks connecting its electricity substations around the city.
Simon Mackenzie, chief executive, says it does not intend entering the fibre retail business and is waiting for partners with profitable models to drive uptake. It has found one such partner in North Shore City, which got $4.5 million of the Government's Broadband Challenge money to put 1 gigabit fibre links into all council buildings and the city's 42 schools.
Mackenzie says the company is now ready to talk about its CBD fibre and build on the momentum of the North Shore deployment.
Roger Matthews, North Shore's economic development manager, says while fibre to the home is where everyone wants to go, no one is sitting on the budgets required to deliver it.
"While we have crap service in North Shore, we have crap demand - people are using computers for emails and searching the web. Not a lot else."
Most New Zealanders will buy the cheapest package on offer, even if their usage would justify a higher spend.
Matthews believes the council could affect the market, without spending a lot. "It struck me that if we could connect the schools and give them an unreasonably fast level of broadband, if anyone could work out how to soak up a gigabit, it would be secondary school kids - and they would get used to that as a standard service level."
While a web design business or television production studio in Parnell or Ponsonby can't get a fat pipe by the end of the year a farmer in Nelson can.
That's because lines company Network Tasman is putting a fibre loop around the top of the South Island.
Resident Chris O'Connell, the deputy chair of TUANZ, the Telecommunications Users Association, says proper fibre means open access to services like where you get your telephone service from.
"This is the end game and Telecom wants to delay it as long as possible so it can sweat its assets," O'Connell says.
"We will have islands of people doing it and, as people see what a huge difference it makes, Telecom will find there is demand."
TUANZ has released a manifesto for the 2008 election to push political parties to halt what it sees as a serious decline in New Zealand's competitiveness due to its failure to keep up with technology change.
* www.tuanz.org.nz
* www.nzinstitute.org
