Fibre network done, now transformation

Writing at the Spinoff, consultant Rohan MacMahon worries about the impact of New Zealand’s recently finished fibre network.

He says: “New Zealand leaves Australia for dust on internet speeds and our children are practically born using fibre, but major challenges lie ahead.”

MacMahon was part of the Crown Fibre Holdings team that oversaw the UFB network build. (CFH is now Crown Infrastructure Partners).

MacMahon’s point is that despite New Zealand’s broadband network being the envy of other nations, we’re not doing enough with it.

Or at least not yet.

Transformation missing in action?

The nub of his argument is: “UFB was supposed to be about transformation, not just watching Netflix in 4K or admiring the result of your internet speed test.”

It would be wrong to say that has been no transformation. Although the transformation we have seen is not what MacMahon has in mind.

UFB transformed the telecommunications and entertainment sectors. This was always part of the plan. Both sectors have seen unprecedented disruption.

Sky and Vodafone are different beasts now we have a fibre network. TVNZ is getting there. The change at what used to be called Telecom is more dramatic. Telecom is now Spark and Chorus. Spark now competes with Sky in entertainment.

None of the UFB architects anticipated Netflix, Lightbox, Sky Now or Disney’s foray in streaming video.

Competition

Most of all, the telecommunications sector is far more competitive. UFB flattened the playing field. This has had knock-on effects.

Competition means people and businesses now spend less on telecommunications. They get far better services in return. Even customer support has improved.

We have faster broadband and unlimited data plans. Today, cost is less of a barrier to trying new things.

There’s no hidden charge for going over your data cap if you want to move data to the cloud. Likewise using video-conferencing won’t bust your cap. We can experiment without fear of a cost blow out.

Abundant data

Abundant data and reliable fast broadband make a difference.

There’s a clear projectivity gain, although it is hard to put a dollar value on it. At a guess, the financial benefits already outstrip the cost of building the network.

Sure, none of this is transformational for the public, but it is a huge benefit.

The problem with words like transformation is we look for it in the wrong places. We expect obvious, observable cause and effect when often the changes is more subtle, maybe too subtle to see.

Cause and effect

It’s not an ideal comparison, but no one anticipated the emergence of fish and chips when entrepreneurs built Britain’s rail network.

Railways made fast fish delivery to inland towns possible. Overnight ordinary people had access to better and cheaper food.

Railways ran to a timetable. Which spawned a need for clocks and watches so people could meet trains on time. Before long people realised they could commute to work and live further from city centres.

None of this was thought about when the railways were built.

We didn’t anticipate online media and advertising or streaming when the internet first appeared.

Hidden transformation

It’s possible the transformational effects of fibre are already happening. We can’t see them yet. Or maybe the network has to hit a critical mass before transformation kicks in. Either way, we’re going to get more than “Netflix in 4K”.

MacMahon’s other point is a bigger concern.

He says: “We also have a stubborn problem with digital inclusion. A lot of Kiwis don’t use the internet much or at all, particularly those who are older, rural, Māori, Pasifika, on low incomes, or have disabilities. In the 2018 census, 211,000 households (13 percent) stated they do not have internet access at home.

“It’s clear that lack of access to broadband is a diminishing issue. The main challenges are now affordability of broadband, motivation to use the internet, trust (for example in e-commerce) and skills. The government is still working on building a comprehensive blueprint to close the digital divide. In the meantime, many of the current initiatives are underfunded and sub-scale.”

Challenges

Yes. Big challenges indeed.

The cost of broadband has fallen in relative terms since the UFB project started. So has the cost of a device needed to access the network. This helps, but not enough.

When I wear my optimistic hat, I think we’re onto these challenges. There are useful initiatives. It concerns Kris Faafoi, the communications minister. If anyone can find a solution, he will.

In my darker moments I fear the problem is harder than we, as a nation, imagine. It may not even be about money.

The problems Spark encountered helping customers watch the Rugby World Cup show the digital divide is not just about the financial haves and have nots. There’s a skills gap and an information gap. Bridging all three is the challenge.

As an aside, I know only the first stage of the fibre network is done. Any other headline would have been too long. This isn’t the Daily Mail online.