What's the point of faster broadband? Here's what

By Anthony Doesburg

Will ultra-fast broadband be a game-changer or a costly toy? Anthony Doesburg found five companies already showing what better internet connections can mean.

Tuanz head Ernie Newman believes that ultra fast broadband sceptics need to 'lift their sights'. Photo / Thinkstock
Tuanz head Ernie Newman believes that ultra fast broadband sceptics need to 'lift their sights'. Photo / Thinkstock

Economists who can't see how New Zealand will recoup its investment in ultra-fast broadband need their vision adjusted.

That's the view of Ernie Newman, head of Tuanz, the telecommunications users organisation that has been banging away at successive governments to put serious money into national broadband infrastructure.

When the National-led Government was elected almost two years ago, Tuanz - and the rest of us - got the promise of a $1.5 billion broadband spend-up. By next month Crown Fibre Holdings, the company set up to manage the investment, is expected to have advised the Government how to spend the money.

Remaining UFB sceptics should lift their sights, Newman says.

"People either are visionaries about this stuff or they're not. Most people accept that if you put the infrastructure in, the applications will quickly follow. The difficulty is when some economists, particularly, insist on trying to quantify the value of tomorrow's connectivity based on yesterday's product."

Looking for a UFB payback from faster access to email, for instance, misses the point, Newman says.

"The killer application for dial-up was email. The end-game tomorrow is something entirely different. This is an enabling technology that will completely change the range of services that operate across it."

He cites the change to the airline industry because of online booking as an example of what is to come.

"Most of us would hate going back to the situation where you had to make a phone call in order to book a flight, and that has undoubtedly saved airlines around the world vast amounts of money.

"The key to it is that effectively unlimited bandwidth at affordable prices, for most businesses, becomes their most cost-effective way of connecting with their customers, and indeed with their upstream supply chain."

Businesses will interact with customers in new ways. For example: flower exporters who let buyers take a virtual glasshouse tour via the internet, selecting the blooms they want before they're picked.

"For most industries it completely changes the business model and offers a lot of efficiencies. But the precise way in which that might apply differs from industry to industry."

One change is the way in which faster broadband helps people in far-flung places collaborate. internetNZ councillor and Tuanz board member Michael Foley says that has spinoffs for productivity.

Treasury figures in 2006 put New Zealand labour productivity at 30 per cent behind Australia, 44 per cent behind the US and 25 per cent below the OECD average, despite our working longer than any OECD country except Iceland.

Foley's answer was to build a company of nearly 20 staff and several million dollars' turnover that has no offices other than the employees' own, from which they communicate via broadband internet (see "Business without walls", Pg 13).

"It is a way of diverting cost from non-productive to productive directions," says Foley.

UFB also has potential as a spur for regional development, says Brian Mackie, who operates an international business from rural Hawkes Bay (see "Found in Translation", Pg 14).

Those who question the investment should look at the increasing concentration of jobs in the main centres and ask whether that's good for the country, he says.

"The centralisation of career opportunities is very harmful for provincial centres."

In Hawkes Bay, for instance, unemployment in June was 8.4 per cent, compared to the national average of 6.6 per cent.

"Unless you're a shop assistant or a shepherd or a barista, there's very limited scope for people with qualifications."

Better broadband could help reverse that trend, Mackie believes. "If you've got these means of communications there's no earthly reason you couldn't shift entire government departments away from Wellington."

Here are the five companies:

1. Awarua Station
2. Voco
3. La Vinotheque
4. Tras@ction
5. Marathon Photos

- NZ Herald

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