Clare Curran says: “We have to do more than better connectivity”. The minister for broadcasting, communications and digital media was speaking about the digital divide at last month’s Tuanz Rural Connectivity Symposium in Wellington.

Curran names ‘closing the digital divide by 2020‘ as one of her two big goals. The other is for technology to be the second biggest contributor to GDP by 2025.

Both are fine goals. Neither will be easy.

Digital divide

There are at least two types of digital divide. The first is geographic. To use Curran’s words, that issue is one of better connectivity. People in rural areas don’t have the same easy access to communications networks as people who live in towns.

Blame economics. The cost of getting fibre to a city dweller is lower than the cost of connecting someone living in a remote area.

Both types of customer pay the same price for a connection if they are on the regulated UFB fibre network. This means people living in easy-to-connect areas subsidise those elsewhere. Almost no-one complains about this subsidy. It’s a step towards bridging the digital divide.

And anyway, a flat rate simplifies billing for service providers. Billing is expensive, so simple bills help keep costs down.

Clare Curran at Tuanz rural connectivity symposium - digital divide

Drawing the dividing line

By the time the UFB project completes, 87 percent of the population will be able to connect to fibre. while the other 13 percent are more at risk of being the wrong side of the digital divide, they won’t all have second rate connections.

While the 87 percent cut-off point seems arbitrary, it is a reasonable place to draw a line. At least for now. Beyond that number each extra fibre connection gets more expensive to build.

Theory says that some point fibre isn’t economic. It’s not clear where that point is. When our ancestors built the copper phone network they managed to cover 99 percent of the population. We weren’t richer in those days, if anything the job was harder. So the choice about where to draw the line is as much about social priorities and politics as economics.

Beyond 87 percent

One day we may stretch the network further than 87 percent. There are already plans for still more fibre. Getting to 90 percent coverage wouldn’t be economic unreasonable. Getting to 100 percent would be.

As things stand there are more cost-effective ways of reaching the most remote 13 percent. Most involve wireless. That’s the approach favoured by the government subsidised Rural Broadband Initiative.

The problem is that wireless technologies are not as good as fibre. They offer slower speeds, are contested and they not as reliable. They are, in theory at least, cheaper. It costs less to beam radio waves across paddocks than to build fibre lines over them.

Contested

Contested means that users on a wireless network share bandwidth. If a lot of people are online at the same time everyone’s speed can drop. In contrast UFB fibre is uncontested. Contracts between fibre companies and the government guarantee performance.

Another problem with wireless is there is less network capacity. To get around this service providers impose data caps on users. Most fibre connections have uncapped plans. Wireless users get a set amount of data each month.

Although some fixed wireless data plans are generous, life is not carefree when you have to limit, say, your television viewing towards the end of the month to be sure of having enough data left for other uses.

Rugby World Cup

These issues could come to the fore during next year’s Rugby World Cup. Spark and TVNZ won the broadcast rights. Spark intends to stream games, the technology is like Netflix. We love the game nationwide, but Rugby’s heartland is rural New Zealand. Will fixed wireless networks cope when every connection on a tower is streaming high-definition television? Spark doesn’t say so in public, but some insiders have voiced fears about how this might go.

Wireless plans often cost as much as fibre plans. They offer less. Not a lot less. Yet on a like-for like basis they are more expensive than fibre plans. The extra cost may be an annoyance, but it doesn’t put a customer on the wrong side of the digital divide.

There’s a handy proof for this. Spark offers fixed wireless to customers everywhere on its network: rural and urban. Thousands of city dwellers have chosen fixed wireless.

If fixed wireless was dreadful you’d hear more about it. There would be a lot of angry people. Sure, there are some unhappy fixed wireless broadband customers. Yet citizens aren’t marching on Spark’s headquarters with pitchforks and burning torches. For many people it’s not bad.

Fixed wireless broadband may be inferior to fibre, but people who have it are on the right side of the digital divide.

Not there yet

It isn’t quite that simple. There’s a limit to the number of connections a wireless tower can accommodate. This means its possible there are some rural users who can’t get a connection because their local tower is full. Carriers can add capacity, but it may not happen immediately. A handful of people may miss out.

A bigger issue is that fixed wireless broadband doesn’t reach all the last 13 percent of the population. Not yet. The exact number is hard to gauge. At the Rural Connectivity Symposium, someone said there could be as many as 100,000 homes still out of reach of RBI. That’s about 5 percent of total connections. I’m afraid I didn’t make a note of who said this.

Moving goal posts

There’s another aspect to this. A decade ago when the Rural Broadband Initiative was being set up, the aim was 5Mbps. That’s enough for web surfing, email and movie downloads. Today’s acceptable broadband threshold is the 30 to 40Mbps needed to stream HD video. RBI towers can and do deliver these speeds. Wireless internet services providers do a terrific job getting connectivity to remote places.

Today’s rural network performance is way past the 2009 test of acceptable broadband. Also, thanks to the wisps, today’s broadband network reaches further into valleys and outlying areas than the 2009 RBI architects expected.

Yet the question mark hanging over the Rugby World Cup tells us there is still a rural-urban divide. Today the bar isn’t 5Mbps or even 40Mbps. It’s “is there enough broadband for people in rural New Zealand to enjoy the Rugby World Cup on an HD screen?”

And that’s the rub. The urban-rural digital divide is a moving target. Some rural New Zealanders will always feel they have second-rate broadband right up until the fibre network reaches them. Whether that’s reasonable or economic is a political matter, not one for the industry. Are we as a country willing to spend what it takes to get fibre as far as we managed to spread those copper lines?

Closing New Zealand’s rural-urban digital divide was first posted at billbennett.co.nz.

Rural VDSL2

Cynics were quick to label the government’s generous broadband funding announcement as pork barrel politics. There’s something in that. New Zealand is, after all, in the run up to what looks like a tightly fought election.

Yet anyone looking closely at the existing fibre network and the second phase of the Rural Broadband Initiative could have figured out that government needs to spend more to fill the remaining broadband gaps.

It was only a matter of time.

English, Bridges plug holes

In the event, Prime Minister Bill English and Communications Minister Simon Bridges managed to find the extra money needed to plug the holes. Sure, it is smart politics. It is also a smart communications strategy.

By the time the money is spent, New Zealand will have world-class broadband infrastructure. The cities were always going to get that. Now the regions will too. On paper New Zealand will have the world’s best rural broadband.

What’s more, we get that world-class network sooner. Five years from now the earth movers, fibre-laying gear, hard hats and high visibility jackets will be packed away. Just about everyone in New Zealand will be able to watch high-definition streaming video or quickly upload vast amounts of data to a cloud.

Fibre, copper, wireless

Before this week the government committed about $2 billion to building a fibre network that would reach around 80 to 85 percent of the population. Another 10 percent or thereabouts would have either VDSL from fibre-fed cabinets or a fixed wireless connection of some description1.

This week’s spending brings the total spend up to around $2.5 billion. Between them the network builders2 will invest about twice as much again. That’s all private money. No-one uses the term in telecommunications; New Zealand’s new broadband network is a classic public-private partnership.

The cost to taxpayers is minimal. The $1.5 billion or thereabouts put aside for the first wave of Ultrafast Broadband was a soft loan. By 2025 the treasury will get that all back.

Old money

Much of the remaining billion dollars from government is either the same money recycled, or funds raised from levies imposed on telecommunications companies.

While taxpayers will ultimately cough up for this through higher service prices, it’s still clever accounting. And the cost per user is minimal. My back of an envelope calculation3 puts it about 50 cents per month.

Compare this with the tens of billions Australia is spending on NBN. Many figures have been used over the years, around A$50 billion is the most common current estimate.

Australian’s will tell you it’s a bigger, more ambitious job reaching more people and spreading further. It’s true. Even so, it looks like the New Zealand people are getting a far better deal. Most of us also get better services than Australians too.

99 percent

At its peak, the old copper telephone network reached around 99 percent of the population give or take. You can assume the last one percent is beyond reach in practical terms.

Connecting the 75 percent of the population living in cities and towns isn’t that hard. Laying fibre to the door for these people isn’t prohibitive.

The next ten percent of the population is harder to reach, the cost per connection might be one and half to two times the cost of connecting the first 75 percent of the population. It’s harder, takes longer and is more expensive. But it’s still doable.

Problems start with the remaining 15 percent. In many cases it is cheaper to reach them with wireless services. Some of the last 15 percent will be in communities which already have fibre connected to a local school. In others, there may be enough people in one spot to make fibre-fed cabinets and VDSL over copper a viable proposition.

Where fibre gives way to wireless

In round numbers the cost per connection rises with each percentage point as you move from the 85 percent mark to 99 percent. At some point along this line the economics of fibre and copper give way, first to cellular fixed wireless and then to the more tailored, local approach used by wisps.

Fibre is the best way to get a broadband connection. Fibre-fed cabinets and VDSL over copper is second best so long as you are near enough to the cabinet. Today’s wireless technologies can often perform almost as well.

This plan leaves almost no-one behind and anyway, govenment will plug the few remaining gaps over time. New satellite technologies promise to perform almost as well as fixed wireless.

There’s a clear political slant to this week’s announcement. While the timing is deliberate, the decisions are money well spent. This is a sound infrastructure investment.


  1. Fixed wireless services from wireless internet service providers or wisps are not quite the same as the RBI fixed wireless broadband services delivered from cellphone towers. ↩︎
  2. Chorus, Northpower, Enable Networks, UFF, Spark, Vodafone, 2degrees and the wisps. ↩︎
  3. Total levy is $50 million a year. Divide that by the number of mobile, landline, fixed wireless and broadband accounts and then by 12. At a guess I’d say there are eight to ten million telecommunications accounts. ↩︎

CommsDay reports that Vodafone Australia is considering an alliance with regional wireless ISPs.

Wireless ISPs or wisps provide local wireless broadband. Most operate in areas the big carriers find uneconomic to service. They might connect a handful of properties further up a valley, or behind a range of hills.

You can take it as read one or more of New Zealand’s mobile carriers have considered a similar alliance here. There are discussions and deals between carriers and wisps.

Carrier-Wisp resource sharing could happen with official blessing as part of RBI2. The idea of devices being able to hand-off from a wisp to a cellular network is attractive to many users. And there are places where wisps already have informal arrangements with carriers. Some act as resellers.

Australian spectrum

The situation in Australia is different. At least for now. There is talk in that country of reallocating spectrum in preparation for 5G mobile networks.

The Australian Communication and Media Authority wants to optimise some frequencies used by wisps for fixed and mobile spectrum. Its logic is that this would be a “higher value use” of the resource.

In other words, spectrum used by Australian Wisps may be packaged up and resold to mobile carriers.  Australia’s authorities may see that as better for the wider economy. The wisps aren’t happy about the idea, but Australia’s government has a track record of this kind of market interference.

There is scope for other co-operation between New Zealand carriers and wisps or other regional players. One area of the market that has never caught on in a big way here is mobile virtual network operators. That is where a carrier licenses its network to another player. The most visible MVNO example in New Zealand is Warehouse Mobile, it piggybacks off the 2degrees network.

Bigger wisps, or a consortium of wisps, could find value in an MVNO deal.

Health is one area where rural broadband can change lives, even save lives.

Broadband gives health professionals and patients fast access to resources and expertise. In rural areas this would often be difficult, expensive or time-consuming to get any other way.

Broadband helps move patient records and test results. It’s fast and can be secure. Thanks to broadband a single medical specialist can serve a larger geographic area.

A Ministry of Health press release says hospitals and health centers in country areas benefit from the government’s Rural Broadband Initiative.

To date 18 rural hospitals or health centres that have either already connected to the RBI network or are connecting.

Half-way there

The Ministry of Health identified a total of 37 rural centres that could use broadband. Which means the job is still only half-done. Over time all, or almost all, will have fibre.

Health is the focus. Yet, running broadband to rural hospitals, health centres and clinics has another benefit. The buildings often act as centres in civil emergencies.

After the Kaikoura earthquake, the town’s local clinic became a communications hub. Crowds gathered outside the building to use connections to let their families know they were safe.

Hokianga Hospital, Rawene
Hokianga Hospital, Rawene

Hokianga Hospital in Rawene recently got its fibre connection.

John Wigglesworth, CEO of Hokianga Health Enterprise Trust says fast broadband makes a difference. He says: “The technology improves data linkages between the hospital and its central GP clinic in Rawene with its nine primary health clinics situated in remote locations throughout the Hokianga.

Rural health video consultations

“This data network means patients don’t have to remember details or repeat their medical history if they go to any of the clinical locations. Medical staff don’t spend so much time re-gathering information that’s already available in the central database.”

Wigglesworth says the hospital uses tele-medicine. Patients in remote areas can have video consultations. The obvious benefit of this is that health professionals spend less time on travel, there’s also a cost saving from this.

He says the hospital also uses these links for planning and administration.

In a similar way, staff can take part in online training sessions. Again, without the need for travel.

Hokianga Hospital uses fibre to send x-rays to radiologists and specialists for diagnosis. In the past couriers handled this. Broadband means responses can be instant — and that can be vital in some cases.

Patient portal

Wigglesworth says: “Having improved internet services available to parts of the community means people who are connected will be able to access their own health information via a patient portal.

“This means they will be able to check their lab results without having to phone their clinic, look up what vaccinations they’ve had and medications they’re taking, and review their medical history. The patient portal provides an opportunity to save everyone – patients, clinicians and administration staff – time. It also enables people to play a greater part in managing their own health care.”

There are still gaps in broadband coverage. The second phase of RBI and UFB will take broadband further into rural areas. Most likely it will mean fibre in places with wireless networks filling the gaps. For some people in remote areas, boosted cellular coverage will give them mobile internet.

Wigglesworth helped ISPs with proposals that could give fibre connections to remote clinics in the area.

He says:“The goal is for our rural health services to have equitable access to the same digital technologies available to urban centres, technology which ultimately contributes to improving health care outcomes for all.”

Vodafone NZ RBI2 bidCrown Fibre Holdings’ Rural Broadband Initiative and Mobile Black Spot request for proposal closed on Monday.  That’s RBI2 to the rest of us.

At stake is $150 million of money funded by the Telecommunications Development Levy. Of that, $100 million is to finance high-speed broadband. It needs to reach to the last 15 percent of the nation not covered by UltraFast Broadband. The $50 million is to improve cellular coverage in areas not yet served.

The process is confidential. So far four bidders have gone public revealing some aspects of their plans. There could be others.

Chorus: extend and improve existing land-based networks

Chorus aims to extend the reach of its fixed-line network beyond urban New Zealand. The company says it is willing to work with others. It did that when it joined Vodafone to build the original Rural Broadband Initiative.

Extending can mean new fibre and maximising the use of existing fibre in rural areas. It can also mean upgrading copper.

Chorus says it wants to improve fixed-line network performance in rural areas. This could mean upgrading copper to VDSL. Newer copper technologies are also possible.

It says its fixed-line networks are not prone to congestion at busy times. They don’t need to use data caps to manage demand. That’s a dig at fixed wireless broadband on cellular network.

Central to the Chorus proposal is its networks will be open access. Any retail service provider can use them.

Choose wireless say Vodafone, Spark and 2degrees

Vodafone, Spark and 2degrees have combined to offer a cellular-based approach. Their proposal includes up to 520 new cell sites.

They say the extra towers will extend the reach of today’s cellular coverage by 25 percent. Not only will the three companies share rural towers, they will also share antennae and spectrum.

That’s a huge step for Vodafone and Spark but it makes economic sense. It will reduce capital expenditure, stretching the money further. And it will keep running costs down.

Updated: While the companies’ press didn’t say the RBI2 towers will be open access, Spark says they will be. This echoes the approach in the first stage of the RBI where Vodafone built towers, but other carriers can use them.

Wispa makes case for small, local service providers

Wispa, a coalition of small rural wireless ISPs aims to win up to $2 million from the fund for each of its 30 members. Spokesman Chris O’Connell says Wispa member already serve 40,000 customers. They deploy wireless broadband in areas bigger companies often consider uneconomic.

In some cases Wispa members work with the big telcos reselling their services.

Wispa members are experts at rural broadband. They know the terrain and they are close to their customers. Most know how to deliver great broadband on the smell of an oily rag. Many will be able to deliver CFH the greatest bang for the buck. On the downside, it can be harder managing 30 small players than cutting a deal with the big operators.

Alongside Wispa, Aird Towers aims to build what it describes as “operator agnostic” towers. In other words an open access alternative to the carriers. The Aird plan would allow the main mobile carriers and small wireless ISPs to share access.

Mix and match

The mobile carriers’ joint bid looks like an ideal way of fixing the mobile black spot problem. Otherwise, when it comes to delivering the best possible broadband to rural users at the least cost; it’s not a case of either or. All the proposals have some merit.

Tuanz CEO Craig Young says users would probably be best served by a combination of the bids. And that’s the most likely outcome.

Most bidders accept there is overlap and room for co-operation1. Vodafone CEO Russell Stanners told Stuff: “..it makes sense for the Government to spend all the $150 million it has earmarked for improving rural telecommunications on new cellphone towers. With none going on improvements to the fixed-line network.”

Even then there is a case for Chorus to provide fibre to the new cellular towers. There is also a case for any towers to be open access so that Wispa members can use the infrastructure.

After all, it seems wrong to deny rural users the benefit of full broadband competition.

RBI2 reaches the last 15 percent

When work finishes on the second stage of UFB, 85 percent of New Zealanders will have fibre access. The RBI2 plan is to boost broadband for the last 15 percent. In some ways they need it more than city folk. And the rural economy makes up the bulk of exports.

Fibre is the best way to connect to the internet. In an ideal world, everyone would get it.

It makes economic sense to connect the first 85 percent of the nation to fibre. Once you get beyond that segment of the population, connection costs rise fast. Each home in the next five percent costs, say, twice a much on average to connect as the bulk of homes. With the last 10 percent, the per house costs rise further.

So away from any low-hanging fruit, wireless is likely to be their best option. The most cost-effective way of getting broadband to the wop-wops is a mix of fibre and wireless.

Crown Fibre Holdings says it is now assessing the RBI2 proposals before moving to negotiations with shortlisted suppliers. It hopes to announce contracts by July.

For another take on the rural broadband extension bids listen to InternetNZ deputy CEO Andrew Cushen talk to Kathryn Ryan on RNZ Nine-to-Noon.

Bill Bennett is editing The Download magazine for Chorus and has previously worked for Spark NZ.


  1. Originally the story said the mobile carriers didn’t talk about co-operating. Spark clarifies this saying: “We haven’t said we won’t co-operate.  All we’ve said is no more $ should be spent on copper”. ↩︎