The tragic state of New Zealand's broadband

Speech given in Parliament, Feb 14th 2006

We all like to take pride in our country. We like to think of Aotearoa as a place of innovation and creativity. We like to think of ourselves as an adaptable people and able to meet the demands of the time.

Of course all those qualities will be enormously important in meeting some of the very significant challenges that we face as we go into the 21st century. My co-leader, Jeanette Fitzsimons, mentioned some of the very significant environmental and economic problems that we face right now and that we need to start preparing for.

One of the most current, I guess, is peak oil, the rise in the cost of fossil fuels for the foreseeable future as it becomes more expensive to extract and transport and, of course, the effects on transportation costs and the like. That is very significant for us as a country that relies significantly on exports. What we are likely to see is a physical localisation.

But, of course, coupled with that, and what is new in human history, is that at the same time we are seeing an unprecedented ability to share information globally and that is what makes the difference. In fact, perhaps the greatest leveller of New Zealand's comparative disadvantage of our geographical distance from our markets will be a world-class information and communications technology infrastructure.

That is why the current state of New Zealand's broadband is so tragic. The Prime Minister drew attention to this problem in her speech, and I will just highlight a couple of things.

She talked about the need to get faster Internet access and at more competitive prices. She said that broadband is a critical enabler of productivity, growth, and economic transformation, yet New Zealand is lagging behind. She indicated a number of ways in which that was the case. She said: 'While recent announcements of price reductions and other changes are welcome, the Government will be addressing the relevant policy, legislative, and regulatory settings as a matter of urgency. We want to work with other parties on solutions, which will not only enable New Zealand to catch up with the rest of the world, but also enable us to keep up as these technologies develop further.'

I highlight that because, as the only other political party that seems to have any opinion at all on this enormously important matter, let me say that the Greens are very keen to participate in that discussion.

We are very keen because it seems abundantly clear that the approach taken by the Government to date has been an abject failure; such a failure that the mainstream media has been headlining broadband. Now that is amazing. This is a subject normally reserved for the geek sheets and the obscure pages of the information technology section of the business section of the New Zealand Herald. This is a technically complex matter—a matter that is difficult for journalists to understand. They will tell us that they do not report it because it is difficult for the public to understand, but we know the real reason. So normally journalists avoid the subject matter. But the other day we saw TV3 news headlining broadband. Now any MP who has tried to get the media to pay attention to an information technology matter knows how unlikely that is, and that is just an indication of how bad the situation has become, because New Zealand's access to high-speed broadband has become a national scandal.

First of all, let us be clear; broadband is incredibly important because it could unleash enormous potential in New Zealand businesses and provide staggering new technologies for New Zealand households. Those of us in select committees who have made use of video conferencing and sometimes talk to submitters from the other side of the world in real time have got a small idea of the amazing possibilities on offer. The enormous growth internationally in things like Skype, in peer-to-peer data sharing and the like, and the trend towards the PC becoming the core of the home communication and entertainment centre are all things that give us, today, a very, very small taste of where information technology is going, and what broadband can offer us over the next few years.

The increasing dependence of New Zealand businesses on their information technology and on the ability to both download and upload enormous amounts of data is simply going to increase as new technologies unleash new possibilities.

New Zealand could, and should, be at the forefront of that development. At the moment that is extremely unlikely. There is one very simple reason in my view why it is unlikely, and that is because of the monopoly that Telecom currently holds over our information and communications technology infrastructure. That is my opinion, and that is the opinion of many information technology commentators as well.

What is that all about? We are talking about the copper wire - the telephone line network that was paid for by New Zealand taxpayers. When Telecom was privatised it was sold along with it and its monopoly was established. Well, fair enough, OK, in those days the Labour Government did not have the foresight to see what was coming. And fair enough, not many people did. But let us hope that it has some hindsight, because it now has an opportunity to break that monopoly just as it had an opportunity a couple of years ago when then Minister Swain took a recommendation to Cabinet for local loop unbundling; that is, freeing up the copper wire network and allowing Telecom's broadband competitors direct access to the copper wires and the telephone exchanges so it can go in, put the gear in, and unleash new possibilities for its customers. We are one of the very few countries in the world without local loop unbundling, and New Zealanders face an enormous disadvantage as a result.

Well, just prior to today Telecom has been trumpeting its new plans on broadband and it is being hailed as the saviour of the information technology infrastructure as a result. Of course, it is no coincidence that the rolling out of its new pricing plans and the like has been clearly timed to pre-empt the Prime Minister's statement today and the indication that the Government intends to take some regulatory action. As usual, as has been displayed time and time again over the past few years, Telecom has left it until the last moment and, of course, always displays great reluctance to meet even the goals it has set itself.

What has it actually done? Well, it has done some useful things. It has brought business prices in line with residential prices. That is going to be of enormous benefit to New Zealand businesses, some of which will save considerable amounts of money, but I have to say that it was simply the timely end of an unjustifiable extortion of New Zealand businesses. I cannot see how Telecom could ever justify the kinds of prices it was setting in New Zealand for its business plans for broadband.

The company has announced some new prices for residential customers and some new speeds. What it is talking about is entry level broadband at just under $30 a month, with download speeds at 256 kilobits a second and upload speeds at 128 kilobits a second. In Australia, for the same amount per month, people get a download speed almost twice as much - 512 kilobits a second - and an upload speed also of 128 kilobits. But people who live somewhere where they can get asymmetrical digital subscriber line 2 can, for the same price - $30 a month - get a download speed of 24,000 kilobits per second. That is 24,000 kilobits compared to 256 kilobits in this country. They can also get uploads of 1,000 kilobits a second compared to 128 kilobits in this country for the same price. Of course, asymmetrical digital subscriber line 2 is not available everywhere - but that is the point - it is not available anywhere in this country. It is not available in this country at all. In fact, broadband is not available at all in parts of this country, as the rural sector is very keen to tell us. It is constantly complaining about it, and rightly so. In fact, the greatest speed that Telecom is offering is 3.5 megabits download speed and 512 kilobits upload speed, compared to 24 megabits download speed in Australia and 1,000 kilobits upload speed. Telecom is manufacturing congestion on New Zealand’s information highway.

Maybe it is not economic to introduce asymmetrical digital subscriber line 2 here, but that should be a business decision. We should not allow Telecom to continue to deny access to its competitors. If IHUG wants to go to the exchange and put in ADSL 2, as its sister company has done in Australia, it should be allowed to do so if there is a business case for it. One thing we do know is that if Telecom maintains a monopoly, asymmetrical digital subscriber line 2 will not happen in this country for a very long time.

Let me finally just say that I hope the Prime Minister is serious about addressing this issue but I warn the Government that if it is planning anything less than local loop unbundling, the Government will be short-changing New Zealanders.