State-owned network plan aims for level playing field

By Peter Griffin

He is launching a new company he wants to take global, but that hasn't stopped Wellington entrepreneur Rod Drury from formulating a plan he says could end our broadband woes.

Drury has published a report, Securing our Digital Trade Routes, in which he suggests the Government invest in a fibre-optic cable broadband network. Telecom's broadband network is mainly a combination of fibre and copper lines.

The Government and local councils would be responsible for "NewZealand.net", access to which would be offered at low cost - Drury suggests cost plus 10 per cent.

Connections in each city would be provided to central "peering exchanges", to which any internet provider could connect for national and international connectivity.

The move, he says, would create a level playing field away from the politics and complications involved with using Telecom's network.

He says telecommunications is experiencing "market failure" because of Telecom's conflicting roles as national infrastructure provider and shareholder-controlled corporate.

"We need to treat the fibre part of the internet just like our national highways," said Drury.

"Telecom's more interested in investing in Australia, its growth market, than our national infrastructure."

The founder of software company Aftermail, which sold last year for $45 million, Drury is chief executive of Xero.com, an online accounting venture he plans to float on the stock exchange. He's an adviser to TradeMe and New Zealand Trade and Enterprise's Beachhead Advisory Board.

He admits he is "no expert" in telecommunications networks but believes the cost of building a national fibre network to main centres is not excessive and would be balanced out by growth in productivity and trade.

"It's bigger than any one company but it's probably not that big an investment in terms of a country," he said.

Drury said he was convinced the Government needed to take ownership in broadband infrastructure after meeting a cross-section of people from the IT and creative industries at Kiwi Foo Camp, a conference held last month in Warkworth.

"We had left-wing and right-wing people there and there's this growing consensus this is an option that needs to be looked at," he said.

"I voted for Act in the last election and I'm saying that the market's failed. It's as bad as that."

Communications Minister David Cunliffe attended Kiwi Foo Camp where he heard the concerns of the IT industry first hand.

Drury's plan extends to the Government investing in international fibre connections to ensure high-speed access to key overseas markets such as the US and Europe.

"We should investigate another big bit of glass between here and the rest of the world and charge it back on a cost plus basis," he said.

"We can't have people in Northland building internet sites for people in Wyoming if we don't have that straight connectivity."

Internet entrepreneur and commentator David Slack said Drury's idea was likely to catch the attention of politicians.

"With an election looming there's a yawning gap in the market for bold and visionary plays," said Slack.

Drury wants his six-page discussion paper to be read widely and hopes it will spark debate about the way forward with such a venture. He thinks the time is ripe for the Government to move on it.

"There's plenty of private equity around, there's talk of infrastructure bond, we've got Rod Cameron talking about how we introduce capital into our SOEs to build infrastructure."

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