Rural Broadband demands a step change to deliver future proofing

Following recent media speculation on the outcome of the $300 million Rural Broadband Initiative (RBI), Federated Farmers is challenging the initiative to ensure it delivers radically improved broadband for over one million New Zealanders.

“The Government should be thinking about a step change to future proof rural communities as it considers the outcome of its $300 million RBI,” says Conor English, Federated Farmers Chief Executive Officer.

“Federated Farmers is very ambitious, not just for rural New Zealand, but for all New Zealand. That’s why we are so passionate about the RBI and lobbied successfully to lift the investment level from $48 million to $300 million.

“While this still doesn’t match the level of investment going into the Urban Broadband Initiative, it is critical Government gets it right. They have an opportunity to set our rural communities up for the next quarter century with world beating broadband.

“We’re not just talking about download speeds because the upload speeds are also vital. Upload speeds means rural New Zealand can seize every digital opportunity.

“Federated Farmers bottom line is pretty simple. That is to get the greatest number of the one million Kiwis deemed ‘rural’ onto the fastest broadband as quickly as possible, as efficiently as possible and as cheap as possible.

“We need the infrastructure to deliver the step change this public investment deserves. We also need real competitive tension between the urban and rural initiatives to drive innovation and new services at the lowest cost.

“Take 4G Long Term Evolution (LTE) wireless being rolled out in Australia, India and China. We don’t want to put up with rural broadband speeds, which the cities had six years previously.

“Rural New Zealanders shouldn’t be second class citizens in their own country.

“Ultrafast rural broadband means more productivity and social connectedness because rural people are people too. We want to export protein and fibre from the country and not our people.

“Ultrafast rural broadband is a way for regional New Zealand to attract investment and people from the cities with the added attraction of lifestyle.

“Instead of overcrowding the cities, ultrafast rural broadband could take pressure off the environment and infrastructure in places like Auckland.

“Don’t forget that the one million Kiwis deemed ‘rural’ produce over 66 percent of our exports and provide the heart of our multi-billion dollar tourism industry too. Broadband is the next big enabler of productivity, which will assist New Zealand jump to the next economic level.

“New Zealand needs every export dollar it can get so the Government needs to back rural New Zealand with a genuine step change that will future proof them,” Mr English concluded.

FEDERATED FARMERS SUMMARY POSITION ON THE RBI

Broadband Speed:
Our view is that the Rural Broadband Initiative (RBI) targets do not future proof the rural community and are generally too low. We are seeking a step change that will leapfrog our rural community forward, otherwise we will spend decades playing catch-up.

Coverage:
Obviously we want 100 percent of rural people to get broadband. However, we do appreciate the topographical challenges and economic trade offs that sometimes have to be made. While fibre gives the best performance, the solution will come in a portfolio of technologies. It is important New Zealand gains the advantage of emerging technologies such as Long Term Evolution (LTE).

Wholesale cost:
This needs to reflect the benefit of the $300 million input and be around $30 month.

Retail cost:
This needs to be around $60 with an excellent service to encourage uptake.

Datacaps:
Federated Farmers does not like data caps. Caps should only be used where there is a proven technical requirement to manage performance.

Facilitating real competition:
Competition encourages innovation and value for money. In our view, it is in the best interests of end users to have genuine retail competition with services stemming from the RBI. The successful infrastructure bidder could provide a ‘NetCo’ service (a non-profit entity that builds and maintains a fibre network), with operators then retailing services to consumers.

There should be a true open access solution all the way to the end customer. Consumers should have full portability between retailers – the ability to swap their retail provider from Vodafone to Woosh for example. This will ensure the maximum amount of competitive tension. End user consumer behaviour will drive services and innovation that may come from a current provider, or a new one.

In its current state, the RBI risks creating a monopoly that will stifle economic development and innovation for the next quarter of a century. Federated Farmers had a similar concern regarding mobile termination rates and has worked to have them regulated. Whatever the outcome, it is vital that the regulatory framework ensures genuine competition.

Levy money:
The outcome of the RBI must not be influenced by what commercial organisations pay as the new levy to fund rural broadband. It must be determined on the greatest benefit to rural people and communities.

Infrastructure:
It could be a concern if Government ended up simply funding any incumbents expansion of their existing network. Therefore, existing towers should be made available on a similar basis to any new towers. The successful RBI bidder should provide a true open access solution all the way to the end customer to allow local, regional and national service providers to participate.

Rollout timeframes:
On current RBI timeframes by 2017/2018 some in the rural community may still be awaiting broadband speeds many in urban New Zealand have enjoyed for a decade. We do appreciate funding and logistical constraints but the rollout should be sooner rather than later.