Pacific Fibre reboot: public infrastructure or private investment?

Xero founder Rod Drury offers an alternative technology-focused budget (no longer online) at the NBR’s website.

Drury’s first item is a Pacific Fibre reboot:

The government announces NewZealand.net, a new Crown-owned company that commissions and manages a new international fibre cable that connects Australia, New Zealand and the USA. The government commits $50 million of funding; the NZ Super Fund invests $100 million from Kiwisaver; and the government seeking expressions of interest from other investors such as iwi and ACC. The cable will cost $US300 million and deliver in excess of 12.5TB/sec of new capacity. Its charter would be to return 10% return annually on funds invested with other income used to improve New Zealand internet.

There’s nothing wrong with a government building infrastructure. That’s how roads are still built. Governments built railways, airports and copper telecommunications networks.

People have argued that a submarine cable would have made a better investment than the ultrafast broadband network.

Drury’s plan suggests two questions:

First, Pacific Fibre failed because Drury and some of New Zealand’s richest people couldn’t convince commercial backers of the project’s viability. They were unwilling or unable to finance it themselves.

In other words, a trans-Pacific cable is too risky for people who have deep pockets and an appetite for risk. Does that make it a prudent way to spend taxpayer funds?

Second, should government compete with the existing and planned commercial submarine cables?