The deal to bring broadband to the boondocks

by peter.griffin / 20 April, 2011
Hundreds of millions of dollars will be poured into getting high speed broadband to rural areas. But can the services offered live up to the promise?
After a couple months of negotiations, the Government has sealed its deal with Telecom and Vodafone to push high-speed internet services into most parts of rural New Zealand where people live.

But the controversial $285 million deal, which beat out a rival plan from OpenGate, a joint venture of Woosh Wireless, state-owned network operator Kordia and fibre network provider FX Networks, has its detractors, who believe delivering broadband services from mobile phone towers is a flawed model that won't deliver the promise of bridging the digital divide between urban and rural areas and will just entrench a Vodafone-Telecom duopoly on broadband services.

The main points of the deal allow for:

- 86 percent of rural houses and businesses access to peak speeds of at least 5Mbps
- 154 new cell phone towers and 380 existing cell towers upgraded to enable fixed wireless broadband, as well as improved mobile coverage.
- Telecom to extend its fibre network by 3,100 kms
- Additional 6,200 sq km of mobile coverage
- 700 rural schools connected to fibre networks, 48 schools digital microwave radio connections
- Wholesale prices comparable to urban pricing
- Telecom and Vodafone competitors able to access infrastructure on non-discriminatory basis
- Telecom extending urban-like fixed-line broadband speeds to 57 percent of rural customers
- Upgrade path to 4G

Vodafone chief executive Russell Stanners, speaking at the press conference at the Beehive this morning, said the mobile provider would be investing around $100 million of its own money in the venture, while Mark Ratcliffe who runs Chorus, the arm of Telecom that will lay the fibre, said the investment on its part was in the "tens of millions".

So, a good injection of funds into getting decent internet connectivity to the rural sector, but a couple of tech journalists at the press conference noticed a seemingly small but important variation in the plan to get broadband to rural areas.

Today's press release from Joyce's office promises that 86 per cent of rural houses and businesses will have access to broadband "peak speeds of at least 5Mbps [megabits per second]".

However, a document I have from the Ministry of Economic Development published in February explains that people "will receive a minimum of 5Mbps and many will get more".

Now, the difference between a minimum connection speed and a minimum peak speed can be great. The peak speed is what you can expect to connect at in the best case scenario and is dependent on network contention, quality of wireless signal and the architecture of the network. A minimum speed is what you can expect to get at a bare minimum.

The minimum peak speed clarification here suggests people will be connecting via the new service at a speed much lower than 5Mbps, which is what network engineers have been suggesting anyway. On a good day, users can expect their connection to deliver at least 5Mbps. How much of a difference that means, will only be revealed when the network is in place - by which stage 5Mbps is going to look decidely slow anyway.

Still, there is a provision for the network to be upgraded to "4G" advanced wireless boradband services, which are already rolling out overseas and delivering up to 100Mbps transfer speeds. But the ability of Vodafone and Telecom to roll out 4G services will depend on them securing access to additional radio spectrum to supply them. Spectrum will become available in the next few years when the Government shuts down analog TV signals. But Vodafone and Telecom, along with any other players will have to bid for the spectrum on the open market - so no guarantees there.

The deal has been overshadowed somewhat today by the revelation that a key advisor on the Government's broadband plan at the Ministry of Economic Development, Bruce Parkes, is one of the former executives considered responsible for Telecom's $12 million fine for anti-competitive behaviour.

Parkes was on the management team at Telecom between 2001 and 2004 when the Commerce Commission says the anti-competitive behaviour took place. Joyce's political rivals were quick to exploit that today.

Wrote Labour's communications spokesperson Claire Curran in a press release:

“In the light of the anti-competitive breach found against Telecom in yesterday’s court decision and in the knowledge that Bruce Parkes, who has been named as being at the centre of this case, and who is now the government’s chief adviser on broadband, all broadband decisions should come to a halt.”

Fat chance of that.

Listen to audio from this morning's press conference which the Listener attended:

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