Modern communications technology changes peoples' lives. It makes our work far more efficient and our personal lives more fulfilling. Society is still at the beginning of discovering the infinite number of new ways it offers us to do things.
If you live somewhere like Denmark, Korea or Iceland - countries which are near the top of the OECD per capita in broadband connectivity - this is good news. At the other extreme – Hungary, Mexico, Poland or New Zealand – it's a real concern. We are at the wrong end of a modern digital divide.
The government is on the case. The local loop – jargon for the copper lines that connect your home to the nearest Telecom exchange – is being unbundled. This means that phone companies other than Telecom will be able to go inside Telecom's exchange with their own box of electronic gear wired back to their own network, connect it to the end of the Telecom wire that runs to your home, and offer you their service as an alternative to Telecom. Bingo - competition, just like other industries!
Yet unbundling is a metropolitan solution. For sound engineering and economic reasons it works best in areas where the population is dense and hence the length of the local loop is short. Local loops in the more outlying areas where the population density is lower, are way too long to carry broadband, unbundled or otherwise.
That's why the government is investigating rural phone services. Announced in May 2006, the review will be wide ranging. The Minister has said it is absolutely essential, given the importance of the rural economy to New Zealand, that our farmers have access to the same high-speed, high-capacity broadband we want for urban business and residential users. That's a high goalpost.
Rural solutions could be delivered over a wide range of technologies. Already many farmers have connected successfully to the IPSTAR satellite broadband service. Its dearer then city solutions but given the wide range of ways farm businesses can use broadband to economic and social advantage, and the subsidies offered by rural supply companies, the business case stacks up. In the dairy sector in particular, strongly encouraged by Fonterra, "e-farming" is well on the way.
Wireless solutions may be right in some areas. For as long as there are telecommunications engineers, wireless will have both its fervent supporters and its skeptics. Wireless is fickle - its effectiveness is often influenced by factors such as line of sight, weather, and the crowding of radio spectrum.
Cell phones offer solutions also. Thousands of farms already have full strength mobile services, broadband included. Yet in a quirk of the system the Kiwi Share still requires Telecom to provide land lines to these sites at a loss, and mobile phone companies to pay money to Telecom as a share of these losses, even if the mobile company could service the farm at a profit. Crazy economics? I think so.
Then there are more left field ideas - telephony over power lines, fibre cable run through sewer pipes, and others that raise their head now and then. Are they right for parts of rural New Zealand? Who knows?
Finally there is fibre optic. Slowly but surely, the fibre cable that used to exist solely in the high-density core of telecommunications networks is moving closer to the customer. For city dwellers, fibre all the way to the customer's premises is the holy grail. It enables vast broadband speeds, interactive television, and other services that will come to fruition only as the connectivity reaches the required critical mass.
Could fibre to the farm ever happen? On the face of it, unlikely. Yet New Zealand's farmers occupy a unique role as contributors to our economy, as well as enjoying a reputation for innovation. Its an outside possibility but one that should not be dismissed.
Underlying all this is the debate about who pays. Like most countries New Zealand has long had a universal service policy for telecommunications, requiring a standard price where those consumers who are cheaper to service subsidise those who are dearer. The philosophy is that everyone benefits from network ubiquity - my phone in the city is of more value to me because I can use it to contact those in the country.
Questions around the universal service obligation, or Kiwi Share, are also part of a government review. Key ones are whether there is an equivalent case for a subsidized broadband service, and whether any subsidy should be funded by phone users via their phone bills or by taxpayers.
The next few months will be critical in shaping the future of rural phone services. But rest assured, the government is on the case. Metropolitan and rural challenges may have very different solutions, but both are of equal importance. We are heading into interesting times.
Ernie Newman
Chief Executive
Telecommunications Users Association of NZ Inc (TUANZ)
