Extending New Zealand's fibre network

Last week engineers completed the first UFB stage. The UFB1 fibre network reaches three quarters of New Zealand.

UFB2 will stretch that to around 87 per cent. We can take fibre further, but that needs taxpayer money. A lot of it.

When New Zealand built its copper telephone network, government saw it as a nation-building exercise. Copper phone wires reached almost everywhere.

The number you often see quoted is that it reached 99 per cent of the country. It could have been one or two per cent less. That’s not the point.

Copper went everywhere

What’s important is that it felt as if copper reached every part of New Zealand. Perception is important.

There’s no technical reason the fibre network couldn’t do the same. The arguments against running fibre everywhere are economic. A nationwide fibre network is expensive.

Yes, it was expensive laying copper to outlying settlements and buildings. We did that at a time when there was less money around.

State-owned monopoly

We also did it at a time the telecommunications network was a government owned monopoly.

The copper network was built as a public service, not a profit making business. Laying copper to the nation’s furthest reaches and maintaining the network created good-paying jobs for workers in regional New Zealand. That would have been a consideration. We rarely hear that argument today.

In a sense it was still about getting the maximum return on the investment, but not in the way modern companies measure investments and returns. There was a social component.

How far can fibre network go?

We’re not about to go back to a state-owned telecommunications monopoly. But there is still a social component to network building. So how far can we go given today’s conditions?

The easy answer is somewhere between the 87 per cent already earmarked and the 99 per cent the copper network achieved. It won’t be 99 per cent, it will be more than 87 per cent.

If pushed I’d say a little over 90 per cent in the next five years with further add-ons later. But that depends on many moving parts. It also depends on technology not changing, which experience says is a mug’s bet.

Brutal economics

Many forces drive decisions to extend the fibre network. The most brutal economic fact is that the further you go, the more it costs to add each extra address to the network.

By the time you get to the last few per cent the cost is way higher than can be justified by an investor looking for a rational economic return. At least as things stand today.

A nation building government could find the money.

The good news is that fibre uptake is much higher than anticipated at the start of the UFB project. It’s already close to 60 per cent and will climb well beyond that number.

This means investing money connecting what were once marginal addresses is now more likely to pay off.

There will be places not included in the 87 per cent covered by UFB1 and UFB2 where connection makes sound economic sense.

Politics of a fibre network

Another force pushing the number higher is political. People in rural areas see people in towns getting Netflix and high quality streaming Rugby pictures. Their kids want to play Xbox games.

People want fibre and may pressure politicians to deliver. Never underestimate rural New Zealand’s ability to lobby government.

By now the people connected to fixed wireless broadband on the RBI network know they have second rate broadband. It will take a long time for their service to improve, if ever. There are stories of capacity problems.

Not everyone who wants a wireless connection can get one. It is unlikely rural fixed wireless will ever match fibre. That’s more pressure.

One way or another government needs to subsidise further network extension. So the answer to the how far will the network goes question is a matter of the willingness of governments and taxpayers to put people in rural New Zealand on an equal digital footing.

Before you ask how far will fibre go, ask yourself how much you are willing to pay?