Waikato eyes joint venture

By ADAM GIFFORD

South Waikato District Council is considering a joint venture with start-up company Rural Networks to bring wireless broadband to the 25,000 people in Tokoroa, Putaruru and nearby areas by Christmas.

Council economic development manager Noel Ferguson said the company wanted the council to underwrite its investment, with repayments from subscriber fees.

"We are looking at about $65 a month for voice with guaranteed quality of service, all the phone services you expect like voicemail and call forwarding, and internet access at 10 times current dial-up access speeds and all-you-can-eat-data."

Rural Networks believes it can build a network infrastructure for the region based on the 802.11 wireless standard for $1.6 million, which includes 16 Macro wireless masts and two local exchanges.

User devices, which offer up to five phone lines, a keyboard and LCD screen for email, a firewall and a PC connection, are expected to cost each residential subscriber $1000.

Rural Networks is seeking a $2 million loan from the council to pay for the infrastructure and some user devices, and underwriting for up to $7 million in further loans from other sources for additional user devices and initial operating costs.

It said gross revenues should reach about $5.5 million a year, enough to repay the loans by 2007, and the joint venture should be paying $2 million a year in dividends from 2008. The company will use TelstraClear for internet backhaul and access to the telephone network.

"The only thing holding it up is getting a test site here so people can see it in action," Ferguson said.

He said the proposal was consistent with the council's role as an infrastructure provider.

"The difference between a community-owned network and spending the money with Telecom every month amounts to a net saving over the next 10 years, conservatively, of the thick end of $35 million."

Coverage would include Tokoroa, Putaruru, Tirau, Atiamuri and possibly Mangakino and Okoroire.

"We could roll that network straight down the Waikato River. It gets a bit hairy as you get into the rough hills towards Te Kuiti, but along the river valley it's fine."

Rural Networks managing director Roger Herbert said the company was formed by people with telephone company and wireless experience.

It aimed to work with regional and district councils or provincial businesses to bring high-speed data and reliable voice to the regions.

"We believe wireless is the cheapest option - it is easier to roll out and has the most long-term benefits."

Herbert said Rural Networks was talking to other potential customers, including electricity lines companies keen to make better use of their fibre networks in rural regions.

"A lot of customers in rural areas are a long way from the fibre, so wireless is a cheap way to get the connection."

The 802.11 standard uses unlicensed spectrum in the 2.4 or 5.8 MHz bands, so it is not subject to the licence costs affecting other radio-based systems.

It is also compatible with Ethernet standards used by computer networks, so end users do not need expensive switches.

Telecom's broadband product, the Jetstream ADSL (Asynchronous Digital Subscriber Line) service using existing copper lines, is not available farther than about 6km from an exchange.

Rural Networks