KEY POINTS:
Telecommunications commissioner Ross Patterson is adamant that personalities matter when it comes to New Zealand playing catch up in the international broadband stakes.
Patterson surprised a few of the capital's in-crowd (policy wonks, Government department heads, business people and politicians) at a Vector soiree when he said he
had a good relationship with Telecom's new chief executive Paul Reynolds.
His signal that the old days of Telecom playing Monopoly against the Commissioner (my words not his) are a thing of the past, will come as sweet music to the ears of Communications Minister David Cunliffe who is charged with delivering on the Government's Digital strategy.
Cunliffe has now chalked up another political victory in the long march to decent broadband in New Zealand after Reynolds announced Telecom would invest $1.4 billion (three times what it had previously said it was prepared to stump up) in extending the reach of its ADSL2+ technology so that 80 per cent of New Zealanders could have access to broadband at speeds of up to 20 megabits per second by 2011.
There are three critical players whose performance is integral to a successful telecommunications revolution in NZ:
Patterson - who has to ensure (in a robust and impartial manner) that NZ has an effective and competitive telecommunications environment which delivers long term benefits for end users;
Reynolds - who has to perform the difficult balancing act of shepherding through a $1.4 billion investment in broadband infrastructure, yet, at the same time, ready the company's wholesale and retail operations to compete against other comers on an upgraded Telecoms platform without subverting the competition;
Cunliffe - who, through a combination of bullying and charm, has got Telecom to make this substantial investment without clobbering it (yet again) with more egregious Government dictates, but knows that if NZ is to compete internationally, the Telecom investment will simply be one step in a necessary multi-billion investment needed to deliver first-class communications to business.
The personalities of this particular trio appear to have gelled.
Reynolds is clearly not of the monopolistic cast of his predecessor Theresa Gattung, who resorted to endless legal cases to protect Telecom's position.
The former BT executive has declared Telecom's foundations as a company are broadband and readily acknowledges NZ's future prosperity will be, in part, based on a rich array of broadband and internet protocol services.
Inevitably, there will be some criticism that the rollout will be limited to towns with at least 500 lines. But it would frankly be a step too far to expect Telecom's shareholders to shoulder the cost of installing top-speed broadband into every small (distant) hamlet in NZ without a Government subsidy.
This is an issue that Cunliffe needs to consider at next month's Digital Summit, when focus is given to how faster broadband is delivered so the Government meets its objective of delivering better service to 90 per cent of New Zealanders.
Cunliffe has demonstrated competence in handling a tough portfolio and showed courage in standing up to Telecom's bluster.
Patterson took over from Douglas Webb in July. But the longtime competition lawyer has already impressed the industry during discussions on the mobile platform front over his firmness with Vodafone, admonishing that company not to fall back on the standard threats that incumbents resort to when facing regulation.
At Vector's final winter lecture this week, NZ Institute chief executive David Skilling - fresh from being viciously beaten up (verbally, not a la Trevor Mallard) for daring to break the so-called climate change consensus - found himself on more welcome territory arguing the case for a first-class broadband strategy to underpin the growth in the weightless economy.
The theory goes that NZ's distance from global markets puts local firms at a competitive disadvantage. By engaging in more outward direct investment and offshore production, as well as growing activity that can be transported electronically, NZ firms will be able to level the playing field with their global competitors.
The institute's agenda for action ranks a world-class communications infrastructure at second place among four other necessary steps: Creating a business environment that supports international growth by NZ firms; investing in R&D; investing in the education system (particularly universities); and attracting foreign direct investment into NZ by firms in the weightless economy.
Among the industries that Skilling cites are: the film industry; biotech research; software design; and digital media.
He argues that communications infrastructure could be as transformational for the NZ economy as refrigerated shipping was for parts of the primary sector 125 years ago.
Investing in a major broadband infrastructure could also provide a platform for an offshore financial industry in NZ to take advantage of the time zone, as National's John Key has argued in more daring days.
Broadband is not a silver bullet for the NZ economy. But it is obvious that if Cunliffe does not continue to keep pressure on the necessity to get our communications infrastructure up to scratch, it will become another negative in the tick-boxes that investors go through when deciding whether to expand investment here or go overseas.
Don't think this is purely an issue for foreign investors.
NZ companies faced with the distance from markets also have to decide whether to continue here or shift to somewhere like Australia - which will undergo a huge investment in broadband infrastructure irrespective of which party wins the election - or even Singapore, which offers substantial taxation incentives to attract skilled people and plans to be a global leader in communications, creating 80,000 new IT jobs within the city state inside a decade.
International studies suggest that business productivity can be increased by 4-10 per cent through high-speed broadband which has plenty of band width.
The Economist Intelligence Unit estimates NZ could boost its GDP by $13.1 billion by 2030 (10 per cent of current GDP) if the country moves to the top quartile for broadband performance in the OECD.
This is the objective that Cunliffe needs to keep centre-stage next month.
