Connection

Goal

New Zealand will be in the top quarter of the OECD for broadband uptake by 2010.

Targets

• To implement the Advanced Network by 2006.
• To promote and support open access fibre networks in 15 cities and towns by 2009.
• To achieve upper-quartile OECD broadband performance by 2010 through policies promoting competition and economic development.
• To create the conditions for all major public institutions (hospitals, libraries, and councils) to have access to a fast (1 Gbps) connection by 2010.

Challenge

We must respond to two challenges of connection:

• New Zealand has high Internet usage, but low broadband uptake
• New Zealand’s small market inhibits investment and limits competition.

Being connected by broadband matters. Affordable, high-speed Internet access drives productivity and economic growth. It is a prerequisite for a 21st century economy – and for all the other goals in this Strategy.  

Respondents to the draft Digital Strategy told us that the high price and low speed of broadband were inhibiting growth in New Zealand. Broadband facilitates e-business and improves communication. It can increase business efficiencies. With affordable high-speed access, businesses will be able to connect with their customers and suppliers and get the information they need. Communities outside our major towns and cities will be able to get connected, unleashing their potential. Farms need broadband, just like factories.

Broadband is therefore a critical part of our infrastructure. Moderate-speed broadband with broad coverage is not enough. Our businesses and researchers need higher-speed and more affordable broadband to compete and connect globally.

The government is committed to implementing the Advanced Network linking our universities and research organisations, so that researchers can collaborate more effectively with each other and with colleagues around the world. Regions and local government can play a part in partnering with or encouraging others to build open-fibre networks that link businesses, hospitals, libraries, schools, and so on.²⁰

In other OECD countries, broadband is on offer from a range of suppliers at a reasonable price. New Zealand is a small market, with limited competition in some areas. A high-quality, high-speed infrastructure depends on having an open, competitive framework. The government’s goal is to enhance competition between providers to promote investment, drive innovation, and improve the quality of service offered to consumers.

Recognising that broadband uptake is beginning to increase, we intend to create an environment where prices will continue to fall and broadband speed to rise, so that New Zealanders will obtain the full benefit of broadband. There must be a balance struck between the interests of consumers (getting good service at a reasonable price) and the interests of companies that seek a return on their investment in infrastructure.

Digital technology and the convergence of broadcasting and communications have opened up exciting new ways to deliver content, such as digital TV, with new challenges and opportunities in broadcasting as much as telecommunications. Opportunities also arise from the convergence of telecommunications and IT. Wireless solutions also offer a way of increasing competition between different kinds of technology; this is important in a small market so that innovative, low-cost services can be developed.

As a large network user and significant purchaser, the government can also help drive demand. The government will also raise people’s awareness of the benefits of broadband and set clear targets for broadband speed and coverage, benchmarked against the OECD.

Feedback on the draft Strategy supported the need for medium-term targets, but called for intermediate targets to be developed. They have now been included.

Achieving fast broadband will require the government to monitor and benchmark performance, promote partnerships where appropriate, and hold industry to account where necessary. Active monitoring and benchmarking against OECD peers will ensure that we achieve our upper quartile OECD target.

Link to OtagoNet Case Study

Broadband targets

Already, some important steps have been taken to deliver these targets. Through competition and the PROBE initiative, we aim to have at least 95% of each region able to access broadband by the end of 2005. Satellite coverage will bring broadband access to almost every household and business in the country – making our broadband coverage excellent by world standards.

What broadband means in practice

A broadband connection will enable most web pages to load in less than five seconds. You can speedily send or receive a batch of digital photos, browse electronic magazines, and file government returns online. Farmers can keep an eye on stock all around the farm, and monitor the farm remotely.²⁴

A fast²⁵ broadband connection makes it quick to send video files. You can watch movies, send your own family video to friends and family, and use video telephony for personal calls and business meetings.²⁶

Once hospitals are provided with fibre connections, you could have a scan done at Invercargill Hospital and sent at once to the specialist in Dunedin to look at it in real time - just as if the specialist were present.

Actions

The Broadband Challenge

The concept

The government is making $24 million available over four years to enable affordable broadband based on competitive open-access principles.

Rolling out fast broadband

In other countries, providing open-access fibre has sped up the roll-out of fast broadband. This is often achieved by partnerships between local and central government and public institutions such as universities, hospitals, or government.

In a small market like New Zealand, more targeted action is needed when market incentives do not work fast enough. In many towns and cities in New Zealand, local connections can still act as a constraint on high-speed connectivity.

The Broadband Challenge provides for fast broadband roll-out by supporting partnerships with achievable business plans and if necessary by facilitating partnerships between businesses, and local and central government. The Broadband Challenge will promote:

• high-speed capacity for regional centres and their businesses. (These can be termed urban networks or ‘MUSH networks’, as they cover the municipality, universities, schools, and hospitals amongst other users)
• innovative ways of making broadband available to smaller communities that are currently unable to access such a service (see communities section).

The process

The government is providing seed funding, but local government and regions will be central to the process, harnessing the input from their businesses and wider communities. Criteria for successful partnerships are likely to include:

• partnership engagement
• financial commitment (including the degree of leverage of other funds to complement and maximise the benefit from the government seed funding)
• clear demonstration of the needs and benefits (how they relate to the region’s or community’s needs and whether they are part of a longer-term sustainable plan)
• ability to implement and deliver, demonstrating that the technology is fit for purpose and that such networks adhere to open-access principles.

More details, including the process for 2005-06, will be available on the website.

Case Study – OtagoNet

²⁰ ‘Regions’ includes Economic Development Agencies and EDANZ (www.edanz.org.nz).

²¹ Small and Medium sized enterprises

²³ It is not possible to set a target for take-up, as not all businesses require fast broadband connectivity.

²⁴ Most broadband connections will be provided using ADSL technology over copper cables. In some areas fixed, satellite, or wireless technologies will be used.

²⁵ By current standards a ‘fast’ connection implies a speed faster than 5 Mbps.

²⁶ Many of these connections will be provided either by ADSL 2+ technology or later in the decade by VDSL2 technology. Availability will be governed by the development of international standards and the increased use of fibre in the network.

²⁷ Figure withheld due to commercial negotiations.

²⁸ Working with TUANZ (http://www.tuanz.org.nz) and others.

²⁹ See http://www.med.govt.nz/pbt/telecom.html.

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