Shortchanged by anything less than broadband

By ROBIN McNEILL

A friend tells a childhood story in which she proudly announced achieving 95 per cent in a school maths exam. Her father's praise came in the form of the technically accurate, if disheartening, observation: "There's still room for improvement".

So it is with broadband telecommunications. Broadband service vendors enthusiastically proffer solutions that will service 85 per cent, 90 and even 95 per cent of the wider community. But a service offering anything less than 100 per cent coverage is just not good enough.

Why is this so? Largely because of the tension between network providers - the telcos - and network users, encapsulated in the question, "Who is the most important customer?".

For telcos, the answer is obvious - the first customers signing on to their networks are supremely important.

The first customers are those who first start paying off the network investment. Accordingly, telcos usually serve the valuable, easy-to-reach customers first.

The hardest, most expensive-to-serve customers are connected last.

Those who are too hard - or rather, too expensive - to service don't get connected. In an unregulated market, no one can blame telcos for that.

Things are different for customers and wannabe customers. Demand for services delivered over telecommunications networks differs from most other networks.

Let me explain. Telecommunications is intrinsically a two-way process. If the electricity lines company has to extend its network down the road to provide you with service, only you are going to benefit.

But should a telco extend its cable down the road to provide you with telephone service, you're not the only one to benefit, for billions of other inhabitants of this planet can now contact you.

All else being equal, for existing telecommunications network users the most important customer on the network is the last customer who has been connected. Each new customer on the network provides new opportunities to make and receive calls.

Customer calling opportunities provide a very good measure of a network size, capacity and utility as far as users are concerned.

Calling opportunities are determined by the combination of customers who can initiate calls and customers who can receive calls.

If 10 per cent of the population are connected to a network, just 1 per cent - 10 per cent times 10 per cent - of all potential call set-ups within the population can be established.

With 80 per cent of the population connected, still only 64 per cent of all possible call set-ups can be established.

Even when 95 per cent of the population are connected, this allows for only 90 per cent of the potential call set-ups. This leaves a lot of room for improvement.

How, then, can we ease the tension between the drivers for telco investment and the needs of users? The standard, if unimaginative, approach is to directly subsidise broadband network expansion. Project Probe (the Government's plan to bring broadband to schools and the regions) will likely do this, as do those communities underwriting Telecom New Zealand broadband projects.

But such subsidisation requires extraordinary care in its implementation. Poor targeting merely finances network investment that would have been undertaken anyway and accordingly serves only to bolster telco profits.

A more sustainable, long-term approach is required.

Last year Venture Southland commissioned a survey of 1000 Otago and Southland farmers. Three-quarters of them were unhappy with their telecommunications service and a third of them could not even establish a viable internet connection.

The data suggests that Telecom is not providing the 14.4kbps data-capable lines they are obliged to provide to 90 per cent of the population, or at least not in rural Southland.

The heavy hand of the Government, in whatever guise, could force Telecom to upgrade its network and thus give the farmers 14.4kbps capability. But frankly, who wants just 14.4kbps?

There is a neat solution to this dilemma. First, calculate how much it would cost Telecom to bring its network up to the 14.4kbps. The company could then undertake the work immediately.

Much better still, the Government could waive the 14.4kbps Universal Service Obligation on Telecom for consideration of the value of this upgrade work.

The freed-up money could then be set aside as a contestable regional fund to instead help committed network providers - including Telecom - introduce broadband in rural areas.

By tagging the money for remote network deployment, or at least to provide service to the remotest 10 to 15 per cent of the population, we should be confident that 100 per cent broadband coverage is achievable. That would be a credit pass to be proud of.

* Robin McNeill is principal of the telecommunications engineering and consulting firm McNeill & Associates, and can be contacted at r.mcneill@ieee.org

Broadband Communications in Southland