Fibre for the other 13 per cent

Around seven out of ten homes that can connect to fibre choose to do so.

Fibre has more than proved its worth. Its biggest test came when companies and schools sent employees and students home to work and study as the nation went into lockdown in early 2020.

Fixed wireless broadband stumbled. UFB didn’t miss a beat.

Not enough fibre

While 87 per cent fibre coverage is an achievement. It is not enough. Everyone should be able to enjoy the benefit of fast, reliable and modern communications.

Anyone who does not have the ability to connect to fibre, might, understandably, be unhappy about being left behind. They may, with justification, feel like second class citizens.

That’s not acceptable.

Money may be tight. It’s likely that a recession is on the way. That’s not a reason to avoid investing taxpayer funds in finishing the job and building fibre deep into regional and rural areas.

Nation building with networks

Our ancestors managed to build a copper telephone network that reached close to 99 per cent of the population. They did that last century when money was shorter than it is today.

The copper build was seen as a nation-building project. We could do with the same can-do spirit today as we lift our nation out of the challenges left by the worst pandemic in living memory.

You might argue that the rural broadband network gaps are filled by other technologies. They are, but it’s not the whole story.

We have spent millions on fixed wireless broadband networks to cover many of the areas not covered by fibre.

Beyond that there are large corporations who have, or soon will, spend billions on low-earth orbit satellites that can deliver broadband to out of the way locations. There are local wireless internet providers doing a sterling job in parts of the country.

Fixed wireless broadband's role

Fixed wireless broadband can be good. But it isn’t always.

There are places where rural fixed wireless performs poorly and other places where there are waiting lists for connections.

Even the best fixed wireless using the latest 5G technology can’t match fibre for speed, reliability and latency. It’s the right product for certain groups of people, but it is not the best broadband experience.

Given the option, many of those who get rural fixed wireless broadband today would prefer fibre.

It says a lot that European nations, who are now extending their fibre networks to reach 100 per cent or close to 100 per cent of the population, regard fixed wireless broadband as an interim technology.

Satellites

Starlink, the first low-earth orbit satellite network to sign customers, performs well. It can’t match fibre for speed, reliability or latency, but it comes close enough so that the difference doesn’t worry the majority of users. It’s inferior to fibre, but it is not a bad substitute.

That doesn’t mean it is problem free. A Starlink connection requires a hefty upfront payment for the hardware and the monthly fee is about twice the price of a standard fibre connection. In other words, users pay twice as much for something that is not as good.

Starlink’s high price puts it out of reach of many rural people.

At the moment Starlink is in a growth stage. It’s not always possible for people who want to connect to get the service, like fixed wireless broadband networks, the company keeps a lid on customer numbers because there is a limited amount of bandwidth to go round.

Starlink has hiked prices in certain overseas markets in recent months - that could happen here at any time. The cost of a wholesale fibre connection is regulated in New Zealand and everyone, everywhere pays the same. Our regulator has no control over satellite operators.

The case for more fibre

Although it wouldn’t make economic sense to build 100 per cent fibre coverage in New Zealand, there’s a case for pushing well past today’s 87 per cent coverage. A government investment of around $2 billion could push fibre coverage to around 95 to 97 per cent of the population.

That’s a lot of money. But remember, seven out of ten people who can connect to fibre choose to do so. That number continues to rise, by the time we finish building an extended rural fibre network around eight of ten will connect to fibre.

On that basis, the investment could be recovered in a reasonable amount of time. On top of that there are huge potential savings for government from having better rural communications. Many services are digital, more can be.

A report Chorus commissioned from the New Zealand Institute of Economic Research concludes that extending broadband into rural areas would deliver economic benefits of $16.5 billion over 10 years.

That makes spending $2 billion on rural fibre look like a bargain.