Pitch for Govt to take the lead in fibre optic network

Hot on the heels of forcing Telecom to open its fixed-line network to rivals and split into three operating companies, the Government is being lobbied to take the lead in developing a multi billion dollar national fibre optic network.

Ernie Newman, chief executive of the Telecommunications Users Association, said the unbundling of Telecom's local loop and the separation of its network from retail and wholesale sales units meant the building blocks were in place for New Zealand's telecoms market to catch up with international norms.

However, this would take some time.

New Zealand ranks 21st out of the 30 Organisation for Economic Cooperation and Development countries for broadband, or high-speed internet, use.

In a recent report, the New Zealand Institute think tank estimated improved broadband could generate national economic benefits of between $2.7 billion and $4.4 billion annually.

It said the national focus should shift from encouraging broadband penetration to increasing network speed, which meant investing in a fibre network.

Aside from being much faster, fibre removes bandwidth restrictions enabling the development of services like internet television.

Benefits from a fibre network the Institute identified include reduced travel costs and increased sales productivity, development of digital media and the film industry, income from storing and manipulating data, healthcare savings and education benefits.

Mr Newman said given Telecom's copper network was dated, there was an opportunity to take a "bold" national decision and build a fibre network.

Given the multi-billion dollar cost, it was unlikely the private sector would build it alone.

Furthermore, Mr Newman said, the Government needed to send a clear signal because it had allowed expectation to build that it might invest in telecoms infrastructure in some form.

"While that expectation is there, the private sector's rational response is to close its wallet," Mr Newman said.

"Why would you spend money on investing in new technology if there's a chance the Government will come to the party in 12 months time and help you, or that the Government could end up competing against you?"

David Skilling, chief executive of the New Zealand Institute, said the Government should take a role in developing a fibre network.

One option was investment as there was a national economic case, rather than a commercial business case for a Telecom or Vector, for many of the economic benefits the Institute had identified.

However, the Government role could alternatively be a regulatory one or come through public-private partnerships.

In June the Australian Government awarded $A958 million ($NZ1.12 billion) to a joint venture between telco Optus and rural services firm Elders to rollout broadband to rural Australia.

This came after the opposition Labor Party promised an $A4.7 billion broadband rollout if it won this year's election.

Chris Harrington, press secretary for Communications Minister David Cunliffe, said the issue of the level of additional government intervention required in the telecoms sector was under regular consideration.

However, it was difficult to draw any firm conclusions at the moment.

Compared to New Zealand's existing residential broadband speeds of no more than two to three megabits per second, speeds of 25 to 50 megabits per second were becoming commonplace overseas, Mr Skilling said.

- © Fairfax NZ News