High-speed promise shuffles ever closer

National is working on its pledge to provide fast data. Photo / Kenny Rodger

National went into the 2008 election campaign promising to serve up a high-fibre diet of broadband to the masses, an initiative it said would boost productivity and the country's international competitiveness.

It promised to spend $1.5 billion over 10 years on a nationwide fibre-optic network capable of delivering data at speeds of at least 10Mbps (megabytes per second) to all the country's schools and hospitals, and to the doorsteps of the 75 per cent of the population who live in the 33 largest cities and towns.

Will National keep its broadband promise?

Even though the impact of the global financial crisis has put the squeeze on the Government's books, and its $1.5 billion broadband pledge, Cabinet has remained committed to the initiative.

Last week Prime Minister John Key, in his agenda-setting statement to the opening of Parliament, said "fibre will begin to be laid" sometime this year as part of the initiative.

Why will it take up to two years to start putting cables in the ground?

Officials have been working behind the scenes to put a structure in place so companies can bid to be involved in the work. Communications and IT Minister Stephen Joyce, in charge of the initiative, slowed the process last year, saying it was more important to get the process right than to move quickly.

A government body, Crown Fibre Holdings, has been set up to oversee the project which will involve the creation of 33 "local fibre companies" - one for each centre covered by the network. Businesses were invited to submit bids to partner with the local fibre companies. By the deadline at the end of last month CFH had 33 proposals from 18 organisations and consortiums. It is now assessing these.

Who is in the running?

Two companies have put their hands up to build the entire 33-centre network: Telecom and Axia NetMedia, a Canadian firm specialising in fibre network builds.

The other 16 bids have come from members of the Regional Fibre Group, a collection of 19 electricity and broadband companies including upper North Island players NorthPower, Vector, Counties Power, WEL Networks, Horizon Energy and Unison.

RFG members have lodged individual and combined bids to build pockets of regional broadband infrastructure which they say will combine to exceed the Government's requirements, bringing fast broadband to about 80 per cent of the population and covering more than the 33 centres specified.

The group also says it could complete the task ahead of the Government's 10-year schedule.

Ten RFG members have already begun building fibre networks in their local catchments.

Should Telecom get a look-in?

Given the company's dominant position in the local telecommunications market, critics argue Telecom should be excluded from building the planned new network, which should provide competition for its own infrastructure, to the benefit of consumers.

"The whole essence of what the New Zealand Government is trying to do is provide a competitive service to the existing telecommunications broadband network because competition breeds innovation, new products and services and better pricing," says Kim Kersey, a United States-based fibre network consultant who has been working with RFG members.

"The only way that level of competition can truly be implemented is by having another entity provide that service."

But Telecom says duplicating parts of the network would be a waste of taxpayer money and it has the staff and skills to build a "future-proofed" infrastructure which would then be made available for use by its competitors.

Do electricity companies have the skills to build broadband networks?

Some observers - admittedly mainly from the telecommunications camp - argue there is a big difference between supplying power and delivering broadband to consumers. They question whether regional electricity businesses have the skills to adequately build part of a national fibre network.

RFG members reject the criticism, saying many of them are already operating successfully in the broadband business. Kersey says regional lines companies are well placed to be involved in the Government's initiative because they know the infrastructure business and, being owned by ratepayers, are focused on their communities' best interests.

Who is Axia Netmedia?

The surprise overseas player putting its hat in the ring is a Toronto Stock Exchange-listed company with a relatively modest market capitalisation of about C$100 million ($135.7 million) and reported annual revenue of C$64 million last year. Axia Netmedia may be small but it has experience with similar projects, having been involved in fibre-network developments in Singapore, Canada and France.

It missed out, however, on a bid to be involved in building Australia's National Broadband Network.

Industry newsletter Communications Day reported Telecommunications Users Association chief executive Ernie Newman describing AxiaNetmedia's involvement in the local bidding process as being "very exciting".

"It provides validation the government got the fundamentals of the proposal process right," Newman said.

What happens next?

Crown Fibre Holdings is due to announce any day now its timetable for assessing the proposals it has in front of it and awarding contracts.

The Government's vision of a super-fast broadband network reaching the majority of homes may still be several years from reality but Key and Joyce are clearly keen to be seen to have made visible progress on it before they head into election year next year.

If nothing else, expect early fibre-laying photo opportunities this side of Christmas - with a mix of happy and disappointed telecommunications and utility companies.

BROADBAND BIDDERS

Eighteen organisations, a mix of individual companies and consortiums, have lodged a total of 33 bids to build all or parts of the Government's planned national broadband network. The bidders include:

TELECOM
Has submitted two alternative proposals to build the entire national network by adding to its existing infrastructure. Says it has the resources and expertise to build a robust "future-proofed" network.

AXIA NETMEDIA
A relatively small Canadian company specialising in building fibre broadband networks. Like Telecom, it is bidding to build the entire national network. Is currently building a similar network in Singapore.

REGIONAL FIBRE GROUP
A group of 19 utility companies who have collectively lodged individual and joint bids covering the entire network. Ten of the group's members have already begun building regional fibre networks.