I’ve been sceptical about many of the frequent calls for “someone” to build a state-owned high speed broadband network throughout New Zealand. My argument, basically, is that if it was a viable proposition, someone would build it, and empirically, since no-one has, the economics don’t stack up. However, things have moved on since Rod Drury’s initial attempts to get fast broadband onto the national agenda. He’s got together with various smart people who understand something about networks and economics, and their proposals are now starting to take on an air of feasibility. At a function last week, Rod outlined some new perspectives (my comments are in italics):

• The business case for the public good of broadband has been made (public good: yes; business case: hmmm).
• There is not a corresponding business case for a business entity to build the network we desire. (at last some realism).
• International links are as important for economic transformation
• There is substantial economic risk to NZ due to lack of international diversity.
• New Zealand needs a strong and vibrant Telecom (the dominant player) + competition.
• Telecom is probably best qualified to run a NZ network. (agreed).
• The Internet is a user pays model.
• Consumers happy to pay up to an amount - but want service close to technical limits.
• There is demand for safe, long term investments.
• CAPEX to solve the problem spent each year as OPEX. (not sure of the validity of the distinction - it’s all cash; also sounds like part of possible solution rather than a fact, but never mind ).
• We want the market to deliver a solution, not government funding. (yes!!)

Rod’s revised goal: an open access, user pays network, linking major NZ towns and cities to the world. (This is an important and valuable restriction: not going everywhere, just the major centres, means the plan might be affordable)

Rod’s revised solution:

• Separate infrastructure from retail telecommunications services.
• Cost plus model to allow for uneconomic network build.
• Infrastructure funded on bond style basis.
• Includes new cable from NZ to major international POP (jargon for another big network entry point).
• Terminates at each local authority (major local government centre) with Peering Point.
• User pays, fair interconnect accounting part of platform.
• City wide network is local government issue (i.e. any high speed local fibre would be a local commercial or community-funded issue, another important clarification which means CBDs would be fast-fibred, but not every suburban street unless local communities decide somehow to fund it).
• Network company tenders for contract for NZ.net management
• Strong governance structure.
• Seeks open access relationships with other countries.
• ‘Don’t blink’ strategy (probably needs cross-party support)

There’s still a lot more refinement to do, but this is a marked improvement on earlier ‘pie in the sky’ proposals. However, putting aside the technical points, there are still some questions: what will it cost to build and operate, and will users pay the true costs, especially while it’s being built?

Most importantly, will Telecom and the Government want to do it this way? As we start to define the proposed restricted network and business case more clearly, and assuming that the network separation already underway works, why wouldn’t Telecom just build, own and operate the new network as normal, albeit under an appropriate regulatory environment?

Disclosure: I have financial interests in Telecom, but it’s not significant enough to influence my thinking.