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The Far North Development Trust is loudly championing a wireless network as the solution to high-speed Internet access for the region.
The first thing to note is that this would effectively bypass Telecom's copper network. Where it gets even more interesting is the fact that the scheme would cover the entire community from the word go, and if no suitable retail service provider can be found, it proposes the setting up of a new telco to do the job.
"Northland is a large region with many isolated communities and from the start we felt it was important that all residents could benefit from modern communications, not just those who live in towns," said Trust chairman Chris Mathews.
"This 'whole of community' issue has become quite contentious in our region and others, but we're sticking to our guns. The new telco is a direct outcome of the belief that every Northland business, child and family should have access to high-speed services, just as we all expect the lights to come on when we flick a switch even if we live on a farm in the middle of nowhere."
In one fell swoop it will banish the region's broadband blues. And we'll all be home in time for tea? It's heady stuff, earning the scheme front-page headlines and, hardly suprisingly, the ear of the Government.
Hmmm, brave words. But for all the fanfare, is this really the future for the Northland user?
The reality is that the situation in Northland isn't as I've described above. Far from it. Questions remain whether the hype and the hoop-la can be turned into a successful business venture. More ominously, words are about as useful as a stick in a sword fight - good for prodding but if you prod enough the beast will stir. And Telecom is certainly stirring.
Earlier in the year the Far North Trust signed a memorandum of understanding with Broadcast Communications Ltd (BCL) to co-operate in developing high-speed wireless Internet and telecoms services using BCL's existing broadcasting towers.
Okay, so the deal was non-exclusive but they must have been rubbing their hands at having a major player in their corner. Someone with a little bit of clout to help them beat the big boys.
Well, they need to think again. Last month BCL signed a deal with Telecom to trial wireless technology to extend broadband to areas not covered by DSL.
Taranaki is the target for now but I wouldn't bet my last chocolate fish against this little arrangement being a blueprint for other regions, Northland included. Nor, it seems, would Telecom.
"We see Taranaki as a model," said Telecom's Andrew Bristol. "So we would be looking to do the same throughout the country and would be open to ideas for the Far North."
So the Trust's biggest ally is effectively also in bed with the enemy? I don't need to tell you that this has, to put it mildly, strained relations between the two.
When I asked BCL whether there was any reason why a deal similar to the one in Taranaki cannot be done in the Far North between BCL and Telecom, Managing Director Geoff Lawson said: "There is no reason why any retail service provider will not be able to buy services from any area of BCL's access network."
The commercial reality is that the Trust doesn't have the playing field to itself. You only have to look as far as Telecom's timely roll-out of DSL in the Far North to measure its hard-nosed business intent.
"How Telecom behaves is that it just responds to competitive threats," lamented Mathews. "A year ago they were saying hell would freeze over before we had any of those kinds of services up here. I think that's a shame myself, but nevertheless, I think that's how you understand them, isn't it?" Of course Telecom takes a slightly different view of the situation.
"Telecom has been exploring and implementing various regional initiatives," said Bruce Parkes, its general manager government and industry relations.
"We've been steadily rolling out DSL as the economics justify it and as we get more confident we'll extend to smaller towns. The idea that we're a Johnny-come-lately to the regions is not borne out by the facts."
I'm not sure that a little more than a year of dipping ones toes in regional broadband matters really qualifies but I guess that's a debate best left for another time. The upshot is there's no shortage of alternatives.
In Auckland, Walker Wireless and Vodafone have together launched a $6 million trial on wireless technology that offers users fully mobile, high-speed Internet access.
The pair's intent is clear when Walker Wireless CEO Bob Smith says: "Our goal over the next two to three years is to cover 70 per cent of New Zealand's population. We are very keen on the rural areas and believe it is an ideal application for a rural market as well."
Both Telecom and Vodafone are testing their mobile technologies as a way to reach more isolated regional users.
RadioNet has been steadily building a wireless network across the country. While its current northerly reach is barely beyond Whangarei, new owner Compass Communications has expressed a willingness to develop the network.
TelstraClear has no fibre north of Whangarei and would need to work with other suppliers to offer a full service to the Far North. However, it also "has a number of such partnerships either in place or under discussion", according to Grant Forsyth, manager industry and regulatory affairs.
High-speed Internet access, anytime, any place, anywhere, is exactly the type of challenge the much-vaunted Third Generation (3G) technologies claim to be able to fix. So, to the list of usual suspects - Telecom, TelstraClear and Vodafone - also add CallPlus and Econet Wireless, both of whom have acquired pieces of 3G spectrum.
All of a sudden, the one horse race I described at the start is reading more like the Melbourne Cup, with our incumbent friends in Wellington holding the inside line.
In fact, the Far North Development Trust remains a rider without a horse. It is currently inviting expressions of interest from potential service providers, as well as looking at options for going it alone.
"We have had several approaches in mind in terms of retail service provision," explained the Trust's Mathews. "One approach that came early on was that we would develop our own retail service company and that we would tap into expertise on a contracted basis.
"Concurrent to this, we've also been looking at engaging with existing service providers in the telecommunications industry who have expertise; who have capital already; who have an understanding of the business and all the implications in running a business of that nature.
Demand - by which I mean the desire to have broadband - is one the biggest challenges to the success of any broadband solution. Interestingly, Mathews had this to say on the subject.
"Demand doesn't exist anywhere for broadband.
You have to think about how you are going to push the demand. Because we're economic community development people, we've been thinking about this sort of stuff for four or five years now. So we know, we think, how to develop demand for broadband not because we want to fill the telecommunications companies' coffers with profit but because we want high quality services delivered at the fringes."
"We believe the demand will be driven by practitioners at the coal-face who will come up with requirements for applications that will come back into the market - the demand and push for broadband will become significant."
"Broadband, one way or another, is going to become a significant revenue stream for those who get involved in it. We've never understood why Telecom and other key players in the market haven't understood that and weren't prepared to invest in looking at how that might work."
So, build it and they will come? While it might be an admirable approach, it's a somewhat risky strategy when you consider some of the results from Otago's roll-out of DSL where access might be available but in some places take-up is next to nothing.
This raises another issue. Who are 'they'? According to Statistics New Zealand, there are about 150,000 people in Northland. That's an awfully small number to begin with. Factor in the number of those with existing broadband access, those without a PC and those who couldn't afford any service, and that figure could halve or more.
No project will work without numbers to support it.
The Trust is pinning its hopes on aggregating demand. The obvious candidates are councils, hospitals, schools and business sectors, whose numbers would create the critical mass and financial clout to subsidise coverage of the remaining users.
"Aggregating demand in rural areas is a key point here," said Mathews. "We have four or five key aggregations that we believe we can deliver into our commercial model. We're looking at $4-6 million annually. If we have a commercial case we can build further business development around it, in terms of our residential and our small businesses."
Leading the charge is a memorandum of understanding with the Federated Farmers to ensure that all of its 3,000-plus members in Northland will be covered - and get a favourable deal.
"The farming community is very excited about this," said Northland President Ian Walker. "Anything less than 100 per cent coverage and most farmers would miss out."
Individually, it remains the farmers themselves who will decide whether or not to sign up, although geography dictates that this group would benefit more than most by extensive broadband coverage. Other groups, however, don't necessarily find themselves in such a position.
Already, FarNet-Learning Communities has provided 10 isolated Northland secondary schools - that's 4,500 kids and 280 teachers - with high-speed Internet access. With $750,000 being spent to upgrade Telecom's backbone network in Northland to enable frame relay access, these schools are unlikely to change any time soon.
Telecom continues to roll-out DSL to the likes of Kaitaia, Kerikeri and Paihia. Companies signed up for JetStream - and who presumably receive a host of other services from Telecom - will likely take some persuading, to shift, too.
The Far North District Council - which is already seed funding the Trust to the tune of $50,000 a year - offered a conditional 'yes'.
"We're prepared to put our money where our mouth is," said FNDC communications officer Rick McCall. "The project is of particular interest to us because any profits are going to be returned back into the community.
"The Council is looking seriously at some of the telecommunications contracts it's currently engaged in and is cautious to ensure that the length of the contracts are timed so that, if and when the thing is running and it's a viable alternative, it's in a position to become a customer."
Although highly supportive of the Trust, there's no "done deal" according to Northland Regional Council's chairman Mark Farnsworth. I also understand that both Whangarei and Kaipara district councils have been talking directly with Telecom.
The Trust will need these to sign up but judging from these comments there remains a question mark over whether they will do so.
One of the selling points of the Trust's plan is that
it's what it calls whole-of-community - 100 per cent coverage for 100 per cent of the population - the whole nine yards from the moment the switch is first flicked. Indeed, Mathews condemns what he sees as the 'cherry picking' of easy-to-reach customers, even among other regional pilot projects.
"As a commercial solution, it might suit a shareholder-accountable organisation in the short run, but for communities like mine, cherry-picking has meant that we will be excluded forever from having access to that infrastructure.
"I don't want to criticise the Otago initiative but it is not a whole-of-community initiative and the technology is only being delivered to areas where there is a commercial case to answer. It's what the private sector has been doing for the last 15 years."
I think we'd all agree that complete coverage is all very laudable. But is it practical? While a sizeable chunk of accessible Northland users continue to wait for broadband, Otago has quietly got on with the job and now boasts 85 per cent DSL coverage.
Copper might be last century's technology, but as much as it pains this technophile to say, it remains one of the best bets for quick and basic, cost-effective broadband. Telecom claims 85 per cent coverage.
The Trust's guiding vision of a whole-of-community approach doesn't just refer to 100 per cent service coverage. It also means a service owned by the people, for the people.
"What you've got to have is an acceptance of what we're trying to achieve here as a strategic objective, not just a narrow commercial objective within the confines of someone's business case," explained Mathews.
"Now, of course, that's very antithetical to the Business Round Table, hands-off, laissez faire, let the market provide - anything that's got public involvement is evil and satanic and for goodness sake don't have anybody involved in anything other than somebody who sits around a board table. That kind of moronic thinking just has to go down the dunny."
Should such talk start the alarm bells ringing? In terms of telecommunications, the age of 'doing something for the good of the country' died with Telecom's privatisation. In today's world, the likes of Telecom and TelstraClear aren't going to roll over and let a new telco take market share. There's a prevailing sense of 'good on 'em' among the majority of people I've spoken to about the Trust's plans.
"Initiatives like this, led by consumers who are suffering from a lack of choice and competition, are
a wake-up call to the industry," said TelstraClear's Grant Forsyth. "They are to be congratulated for taking the lead."
If the enthusiasm of Chris Mathews and others could guarantee success, then it would be a done deal. I can't fault the social and moral principles behind the Trust's aspirations but desire alone isn't enough. New Zealand is far from a 'nanny-style' state and, the truth is, there will always be a business case to answer.
The tough talking - as much about tactics as technology - has done more than piqued the industry's interest; it's raised the expectations of
the Northland user.
But, when all's said and done, they don't want fast words, they want fast Internet. After having been dangled the carrot of ubiquitous broadband, the user deserves to see some results. It's far from a done
deal and it'll be a bitter pill to swallow if they now don't deliver.
One way or another, the user is going to get broadband. The choice of wireless - especially for the 15 per cent of New Zealand users that are 'hard to reach' in a geographical sense - is almost certainly the right one. (Satellite is also a solution but an expensive one.)
Unfortunately, the Trust is not alone in exploring that particular technological option and the longer it prevaricates, the more likely it is that others are going to step up to the plate.
However, the revolutionary idea that Telecom ain't going to have its finger in the pie remains more a dream than a destiny.
The fact is that it looks suspiciously as if it could end up by being Telecom and, for all its pleadings of non-exclusively, BCL by default versus The Rest.
The alliance between these two former state-owned behemoths seems the perfect way to bring regional broadband into Telecom's hands.
If there is a battle to be fought it is going to be between Telecom/BCL, Vodafone/Walker Wireless, and a multiplicity of ad hoc smaller operators - including the Trust and its allies - who are standing on the sidelines at the moment and deliberating about what role they might play.
Users can console themselves with the fact that if nothing else, the talk has certainly helped to raise the profile for their plight. What worries me is that, unfortunately, all it's gone and done is spur Telecom into taking a firmer grip.
Greg Adams is editor of TUANZ Topics. |
October 2002
By Greg Adams
First published TUANZ Topics 2002
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