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telecommunications

Extending New Zealand’s fibre network

Last week engineers completed the first UFB stage. The so-called UFB1 fibre network reaches three quarters of the country.

UFB2 will stretch that to around 87 percent. 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 percent of the country. It could have been one or two percent 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 we go with fibre?

We’re not about to go back to a state-owned telecommunications monopoly1. 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 percent already earmarked and the 99 percent the copper network achieved. It won’t be 99 percent, it will be more than 87 percent.

If pushed I’d say a little over 90 percent 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 network extension decision making. 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 percent 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 percent 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 percent covered by UFB1 and UFB2 where connection makes sound economic sense.

Politics of fibre

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?


  1. Discuss this by all means. Even if you think it is desirable, it’s unlikely. ↩︎

By Bill Bennett

Not actually a geek, more a chronicler of geekdom. Still mainly a journalist, sometimes a blogger.

8 replies on “Extending New Zealand’s fibre network”

You do realise that overhead cabling costs more right?

Sure, its cheaper to run out but the maintenance goes up astronomically. Many Auckland power cuts have been caused by lack of maintenance. Trees that grow over the lines so that a storm that breaks the trees also breaks the power lines. In some cities that have been reported lately the old wooden poles are so rotten that they’re being kept up by the lines rather than the other way around.

Overhead cabling is a short term solution that requires plans for under-grounding later. Unfortunately, in this underfunded profit at all costs society, such necessary plans never materialise.

The arguments against running fibre everywhere are economic.

Actually, its not. It’s financial. The reason why private companies don’t run fibre out to far flung settlements is due to profit. Small settlements simply don’t have large enough economies of scale to make a profit from.

It’s the same reason as to why small towns don’t have the same variety as larger towns and the cost of living is also higher in some ways.

And its very bad mistake to confuse financials with economics. It’s the financials that had us with landfills rather than recycling. Throwing away resources was seen as being cheaper.

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.

True but it was still making a profit. Quite a healthy one and that profit was fully spent back into the network, thus, bootstrapping itself. The first year after the Post Office was split into its component parts Telecom posted a $300 million dollar profit. It was something that was hidden in the financials before hand although I’m sure that the government knew the truth – they just didn’t tell anybody and allowed and encouraged the lie OMG, the Post Office is losing money which allowed them to sell off a major profit making venture for chump change to the private sector.

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.

Actually, we hear it quite often and usually in association with private companies shafting the taxpayer. Rio Tinto and the aluminium smelter. Sky City and their government subsidised conference facility that just got burned down. There’s more of course.

We’re not about to go back to a state-owned telecommunications monopoly.

Even though its the most economic way to do it. Uneconomic profiteering is king – ATM.

One way or another government needs to subsidise further network extension.

And that, of course, is a major reason why we need to return to a state monopoly for telecommunications. Private business should not be subsidised by the government.

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