Ultra-fast Broadband, a real opportunity for New Zealand?

The “ultra-fast broadband” roll out in NZ will ensure the country stays technologically up to date in   telecommunications companies to install a new fibre network that, over 2 stages will service 85% of New Zealanders, their businesses, schools and hospitals by 2024. The largest portion of contracts was awarded to Chorus who will provide 70% of the network. As of March 2017, 71% of the overall network has been completed with 21 towns and more than 1 million homes and businesses have access to download speeds of up to 1Gb per second. Furthermore, uptake of the service is growing at 13% per quarter (as of December 2016 quarter) with over 330,000 households, businesses, schools and hospitals connected (Crown Fibre Holdings, 2017). With the project costing the government overall more than $2billion NZD, what exactly are the benefits other than faster Netflix streaming times for example?

By implementing this infrastructure project, the New Zealand Government is subscribing to the idea of faster internet means greater prosperity for the people. A quote from the OECD report “All onboard, Making Inclusive Growth Happen” from 2014 states that “Innovation is a driver of long-term economic growth and has an effect on the distribution of opportunities and outcomes”. So, by upgrading the existing cable network to fibre, the greater technological capacity and connectivity attained will lead to prosperity for all. The initiative is not only destined for business growth but also targets education and health services and community groups for enhancements in efficiencies, collaborations and other opportunities. A concrete growth target for the government is in the tech industry which currently accounts for nearly 10% of GDP. For every $1 invested in the sector there is a $3 return on investment according to NZTech, a representative that promotes the New Zealand technology sector. Therefore, the faster internet speeds can directly lead to an increase in tech start-ups and entrepreneurship. Enhancing entrepreneurship is seen as a “Key conduit for inclusiveness” (OECD). Having access to a fibre internet network reduces New Zealand’s key disadvantage which is isolation and distance from the global market place. It essentially levels the global playing field allowing different people the opportunity to start and operate businesses successfully.

This ideology of increased competitiveness that is dominant in the global capitalist economy has wider implications than just improving a city’s prosperity. It implies that there is a competition between cities for the same resources, opportunities and people of which are limited in this economic sector. Another weakness linked with this is that as the OECD states in its report, “Innovation policies tend to focus on productivity and growth objectives, rather than on how the fruits of growth are distributed”. This is a key weakness to the argument it is for all New Zealanders as it is clear some will still not be able to afford the increased connection costs and the employment opportunities are limited to a very limited demographic. Below is a screen shot of Spark NZ’s internet prices. Spark is New Zealand’s largest telecommunications provider with around 50% market share. We can see that it would cost an extra $45 a month which for many New Zealander’s struggling to make ends meet, is simply unaffordable. This shows that despite the technology being “available” for everyone, the immediate benefits are not significant enough to warrant this extra expense.

Following the model of Chattanooga, Tennessee, the town with the western hemisphere’s fastest broadband speeds, Chorus launched a competition for the fastest broadband speeds in the southern hemisphere for one town in New Zealand in 2013. To win the prize, each town had to mobilise a social media campaign on Twitter and Facebook that involved residents writing status updates using the hashtag #gigatown and the name of the town you want to “vote” for. There were nearly 6 million conversations on social media about Gigatown and the power of ultra-fast broadband which is unprecedented for a country of 4 million people. The next stage the top 5 cities had to present a plan for “Gig Success”, or how their city would benefit from winning the prize. The eventual winner, Dunedin presented ideas on innovative ways of learning, playing, fostering business and community action. Along with the prize of the fastest broadband in the southern hemisphere, there are also community grants and development funds worth around $700,000, mentoring services for business start-ups, and an advantageous price to access the fibre service for 3 years.

As the competition has only recently finished, it is too soon to see if the aspirations of ultra-fast broadband will live up to reality. The Chattanooga model of fostering tech start-ups is something to aim for as it involves community engagement and social solutions to city wide problems, not seen in other tech hubs such as Silicon Valley. For Dunedin and the rest of New Zealand, this infrastructure investment will undoubtedly have positive impacts on the economy and community, action must be made however to insure the equitable redistribution of these positive impacts and not the select few that make up the “creative class”.

 

Blair McLEAN

 

 

Sources:

Crown Fibre Holdings. 2017. UFB uptake up 13 per cent in the last quarter. Retrieved the 10/4/2017 from: https://www.crownfibre.govt.nz/2017/03/ufb-uptake-up-13-per-cent-in-the-last-quarter/

Chorus. 2017. Gigatown, The Winner. Retrieved the 10/4/2017 from : http://gigatown.co.nz/the-winner

OECD. 2014. All onboard, Making Inclusive Growth Happen. Retrieved from: https://www.oecd.org/inclusive-growth/All-on-Board-Making-Inclusive-Growth-Happen.pdf

Spark. 2017. Internet Plans and Pricing. Retrieved the 10/4/2017 from: http://www.spark.co.nz/shop/internet/plans-and-pricing/

NZ Tech. 2017. About NZTech. Retrieved the 10/4/2017 from: http://www.nztech.org.nz/who-we-are/