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Rural broadband: information superhighway or country dead end road?

Rural broadband: information superhighway or country dead end road?

The fact it is even called rural broadband smacks of a “watered down” version of what the urban dwellers will receive. Is it true? Does it matter?

When Federated Farmers President Don Nicolson starts being bullish and demands that the “rural broadband envelope must be pushed”, what is he actually saying?

Is he not telling us that, yet again, the country cousins are going to be the losers when he makes the point that “broadband is to this century what electricity was to the last”, but that urban New Zealand will get one version and 1.1 million rural dwellers another?

Is what is being spent on rural broadband enough to plug us into greater productivity, capability and economic contribution? Or is the most important sector of our economy getting the scraps from the townies’ table?

When the Government’s Rural Broadband Initiative (RBI) starts delivering internet services to the countryside, they’ll be a twentieth of the speed being enjoyed in towns and cities.

The $285 million RBI calls for provision of 5Mbit/s services to 80 per cent of rural households, with the remainder receiving at least 1Mbit/s.

That’s in stark contrast to the $1.5 billion Ultra-Fast Broadband (UFB) plan for urban New Zealand that will mean internet download speeds of at least 100Mbit/s, and uploads of at least 50Mbit/s, rates of up to 50 times faster than today’s typical broadband services.

There will be another key difference. Urban centres will be getting their services over optical fibre, with its near-limitless capacity. Most farms, however, will rely on lower-capacity fixed wireless delivery.

Nonetheless, says Richie Smith, chief executive of rural communications specialist Farmside, it will be a big step up for many backblocks New Zealanders.

“The only access a lot of the rural community have to higher-speed broadband is via satellite,” Smith says, “so the rollout of the RBI infrastructure is a positive step in the right direction.”

Federated Farmers, however, questions whether the Government is being ambitious enough.

“Are we going forward or treading water?” was the response of federation president Don Nicolson, to the announcement that RBI contract negotiations were under way with joint bidders Telecom and Vodafone.

“The outcome of this RBI process will have an impact for at least a quarter of a century,” Nicolson said. “It is that critical, and demands we get the best collective possible outcome for rural New Zealand.”

Nicolson backed Communications and Information Technology Minister Steven Joyce’s intention to retender if the contract fine print couldn’t satisfactorily be agreed. On April 20, however, Joyce announced agreement had been reached with Telecom and Vodafone, after two months of talking.

“Not only have we secured an agreement that exceeds the Government’s RBI objectives, but we will have 252,000 customers in rural New Zealand getting access to high-speed broadband that compares well to urban levels of service and prices," the minister said.

“I am confident that we have secured the best deal for creating a step change in broadband services for rural New Zealand.”

Other observers of the RBI process were less confident of the wisdom of awarding the contract to the joint bidders, given the pair’s dominance of the mobile phone market.

To mitigate that, the Telecommunications Users Association (TUANZ) and analyst firm IDC stressed that the RBI contract must guarantee other service providers access to the Telecom-Vodafone network.

TUANZ chief executive Paul Brislen said handing over $285 million so Telecom and Vodafone could increase their network capacity would inevitably also increase their market strength.

“The trick is to build in enough safeguards that that added strength does not destroy competition,” he said.

IDC senior analyst Rosie Spragg said the Government had been pragmatic in choosing to negotiate with Telecom and Vodafone, clearly having gone for maximum “bang for buck”.

“The key challenge now is for the Government to ensure wholesale pricing and open access terms and conditions that encourage the development of a competitive rural retail market,” said Spragg.

Affordability for the rural community was also critical, “to attain the economic and social benefits that the RBI is seeking to achieve”.

Federated Farmers indicated the level of pricing it thought reasonable: monthly wholesale prices of around $35 and retail at around $60, for speeds of at least 10Mbit/s.

The technology pitched by Telecom and Vodafone should ultimately be capable of 10Mbit/s and faster. Their scheme is for Telecom’s network arm, Chorus, to lay more than 3000km of new optical fibre to 719 rural schools and 154 new cell sites, from which fixed wireless services will be available.

Homes passed by the fibre would have the opportunity of high-speed connections at urban prices.

In the short term, Vodafone will pump up its 3G network speed from the present 7.1Mbit/s to 28.8Mbit/s, so rural cell sites shared by five subscribers would meet the Government’s 5Mbit/s service requirement. In four or five years, an upgrade to 4G would deliver 100Mbit/s, fast enough for 3D TV transmission.

Not good enough, said unsuccessful bidder Kordia. With partner Woosh Wireless and FX Networks, it could offer 4G services from day one.

They may yet get the opportunity. Joyce urged all the failed RBI bidders “to start working with Telecom and Vodafone to look at ways to further improve solutions for rural New Zealand”.

Farmside is eager to get on with it.

“We’ll be one of the first in the queue to be accessing the new network,” Smith says. “Farmers and rural people are running sophisticated businesses. Their needs for data and communications are growing all the time.

“Their families, like every family, have increasing needs for data and accessibility. So the RBI is a wonderful initiative.”

This story originally appeared in Primary magazine. Click here to subscribe.