Ultra fast lessons from Singapore
From NZ Herald October 6, 2010
Ultrafast broadband is almost upon us. Or so we're told. Almost two years ago a change of government meant the Labour socialists' plan to stimulate the market to give us broadband was shelved.
Instead, the fiscally rigorous right would spend more than $1 billion in taxpayer dollars. Oh yes, which would be matched by selected private sector partners. Typical New Zealand Alice Through the Looking Glass politics.
If that piece of political and economic theory has you scratching your head, it flummoxed the industry.
The only thing it could count on was no substantial decisions from a new government for at least 18 months, so any spending was risky. There was a subsidy, but there was no way to construct a business case without seeing what the strings were.
Things finally started to move last month, with the Minister for Communications and Information Technology, Steven Joyce, announcing negotiations on binding agreements would start with three regional fibre providers.
They are NorthPower in Whangarei, Alpine Energy in Timaru, and the Central North Island Fibre Consortium covering Tauranga, Hamilton, Cambridge, Te Awamutu, Tokoroa, New Plymouth, Hawera and Whanganui. Note they are all lines companies, not telecommunications companies. Which would indicate Vector is a shoe-in for Auckland, justifying its saturation TV advertising campaign. But you can't count Telecom out yet. Subsidy or not, it has fibre, copper and customers it wants to keep.
With the promise of a fibre in the air, it was timely of Huawei to hold a conference on ultra-fast broadband in Auckland. The Chinese state-owned telecommunications equipment firm, which is providing the gear for 2degrees, wants to sell to whoever is building the infrastructure.
Despite the short notice, Huawei pulled together impressive speakers, including two people involved in rolling out Singapore's Next Generation National Broadband Network. Khoong Hock Yun is assistant chief executive for the infrastructure and services development group of Singapore's Infocomm Development Agency.
That's a statutory board under the Ministry of Information, Communication and the Arts responsible for acting as the Government's chief information officer, setting the nation's information technology strategy, encouraging use of technology in innovative ways. It's the regulator, promoter and developer.
Eighty per cent of Singaporean homes use broadband, with the target 90 per cent by 2015, when the next generation network is completed.
The aim is for what the Singaporeans call an "infocomm-savvy", globally competitive workforce and industry.
The next generation includes both fibre optic and wireless networks, with an open access model allowing multiple wholesale and retail providers to emerge.
The immediate aim is for download speeds of up to 100 Mbps and uplink 50 Mbps, with the expectation the system can eventually handle 1 Gbps downlinks.
A Singapore internet Exchange was opened in June. Above the passive infrastructure layer, OpenNet, are active infrastructure companies selling wholesale bandwidth services.
The first of these is Nucleus Connect, which is a separate subsidiary of internet service provider StarHub.
Its chief executive, David Storrie, told the conference the aim is to have a fibre network accessible to 95 per cent of households and businesses by June 2012. By the end of this year it expects to have 60 per cent coverage. Its pricing plans start at 25 Mbps, but Storrie says it makes as much sense commercially to start at 50 Mbps.
Singaporeans are talking about more video, including for things like online video-conferencing, remote health services, greater uptake of cloud computing and software as a service, new ways to teach and learn, interactive TV with new advertising models, the usual Jetsons scenarios.
Incentives have been built into Nucleus Connect's contract with the Government to encourage it to push higher capacity downstream, so retailers are offering the full 100 Mbps, rather than breaking it down into slower speeds for customers. If such innovation does come out of Singapore, New Zealand users may take a while to catch up.
Crown Fibre Holdings is talking about 30 Mbps downlinks for entry level consumers and 100 Mbps for small to medium business, but the minimum commitment rate is only 2.5 Mbps. It wants to have something in place for priority users - education and healthcare providers, government and business - by 2015.
Given the Singaporean example, there could be a case this country needs to take a more New Zealand Inc approach. Singapore is spending not just on infrastructure but on providing customers, promoting broadband use.
It is also using its power as a customer. In New Zealand, governments seem unwilling or unable to aggregate government demand, which could be the first step in creating an network that makes economic sense.