Scoop Election 08: edited by Gordon Campbell

Gordon Campbell: The Broadband Bonanza

April 23rd, 2008

John Key’s $1.5 billion boost for broadband is his first major policy announcement that isn’t an endorsement of existing Labour practice ( interest free student loans etc) or a dog bone and whistle ( boot camps for young offenders) to a niche support bloc.

The spend-up planned on broadband is also a self-declared example of the public/private partnerships that are emerging as John’s Big Idea on the economy – much more so than the usual centre – right grounds of tax cuts, upon which Labour will be competing.

Embracing PPPs so vigorously is also something of an ideological sea change for National. Likening this broadband investment to previous governments that built our railroads – as Key did in his speech – is quite a novel approach for a party whose supporters tend to regard government’s role in the economy as (a) inherently inefficient and (b) unnecessary. Under Key, National now seems prepared to concede that the wealth of New Zealand is something that government has a leading role in stimulating, and co-managing.

Mind you, the pedigree of this idea is mixed. The last time PPPs were seriously touted in New Zealand, it was by Ross Armstrong, in the context of roading. It was an idea that never really went away. Earlier this year, Labour was still touting PPPs as a possible way of financing the Waterview Connection in Auckland.

PPPs are now openly back on the agenda. Instead of National selling state assets to its business pals, it now seems more inclined to build them for them – in partnership of course. Enhancing the access to ultra fast broadband clearly has merit. We would all benefit from faster and wider broadband access, especially if government can engineer a market able to keep the costs down and the technology up to date.

Shame though that Labour – when it sold Telecom as a monopoly provider –and National, which practiced ‘light handed’ to non existent regulation throughout the 1990s, haven’t grasped that point far earlier. If John Key really wants to know why “ New Zealand has fallen behind its global competitors when it comes to broadband” he could take a long hard look across the caucus table at his colleague and former Telcos Minister, Maurice Williamson.

For the best part of a decade, Williamson left telecommunications to the vagaries of a hopelessly skewed ‘market.’ Not surprisingly, Telecom milked its virtual monopoly and under-invested in new technology, and New Zealand slipped down the broadband ladder while Telecom’s shareholders partied like 1999 was here to stay.

Question : does Key think National’s ‘light handed’ regulatory regime during the 90s worked well, and benefitted New Zealand ? Does he now embrace the recent steps David Cunliffe has taken to foster market competition – and how does Key plan to ensure this huge injection of funds does not benefit the main incumbent player, and thereby jeopardize the fledgling steps towards greater telco competition that are currently in train ?

That’s always the tricky thing about PPPs – the detail is crucial., and we don’t yet have it. The chronic criticism of PPPs is that the state gets to carry the can for the risks and associated costs, while business reaps the profits. Under Key’s plan, business will be first in line to have their broadband installation costs paid for by government – its an investment, right – then schools, health facilities and then the first tranche of homes.

As things currently stand, Key’s “five principles” meant to guide this $1.5 billion investment could hardly be more general. What he means by an ‘open access’ network is unclear, as Russell Brown says.

I’m also dead curious to see how Key intends to set about meeting principle two, about ‘ ensuring the investment does not see already planned investments cut back.’ I’d have thought the moment Key announced his plan to earmark $1,5 billion for broadband, telcos and businesses across the country starting putting a lot of their own money back into their wallets.

As for the other principles… Sure, after spending $1.5 billion on expanding broadband access, you’d hope there would be “increased broadband services.” Again, with a spend-up of this scale in mind, its hard to see Key can really be serious about “ making sure we do not end up lining the pockets of incumbent industry players.” See the Telecom comments above. How exactly, does he propose to stop this happening ?

Not that voters will get to find out anytime soon whether Key has delivered. Russell Brown estimates this ambitious plan will take at least ten years to implement – which is three elections hence. Not quite the 15 elections we will have to wait to see whether National meets its climate change goals for 2050, but once again….don’t hold your breath.

ENDS

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    1. 8 Responses to “Gordon Campbell: The Broadband Bonanza”

    2. By Dushko Bogunovich on Apr 24, 2008 | Reply

      Showering NZ with broadband looks like a spectacular waste of public money. It is based on the assumption that all (or most) NZ businesses and households have something useful to sell to the rest of the country or world, or need something useful to buy from it. It’s like providing gigantic water pipes to everybody and encourage them to keep the taps open whenever possible regardless whether they are watering gardens and orchards, or washing cars and irrigating lawns every day.
      Superbroadband should be available, but on a selective basis. In other words for a price, where the price is seen as low by those businesses which have got something useful to export in digital form to the rest of the world, and by those homes which have got to buy something in digital form which will truly improve their quality of life.
      It is important for NZ to rely on technological breakthroughs to conquer the tyranny of distance – like it did with the freezing ships a century ago – but to be successful you also need something the world needs – like we had meat then.
      Nowadays you can make more money with selling good ideas than just meat and wool, so the question is what is the ‘sheep’ of the knowledge economy era that we could export to the world on the ‘freezing ship’ of today, the internet?
      In a world likely to hit the wall of environmental disaster very soon, unless environmental solutions are massively and rapidly are deployed all over the planet, NZ has a golden opportunity to exploit its green and clean (and cool?) image and become a leading exporter of environmental solutions (RMA; green design in all areas; clean technology; organic food & fiber production systems, etc).
      But the idea that, on a shrinking planet, the government should actually influence what is produced and what is consumed is too odious to the liberally minded National.

    3. By Jum on Apr 24, 2008 | Reply

      Doesn’t anyone get the fibre-link between Maurice Williamson’s passion for tendrous fibres into every home and his earlier passion for microchipping our drivers’ licences, which Labour stopped but our licences, which National said were all about safety on the roads, became under National, all about ID cards?

    4. By Gerald Jackson on Apr 25, 2008 | Reply

      Speaking as an expatriate NZer living in Denmark (probably the most “broadbanded” country in the world), the scepticism about broadband is amazing. On a daily basis we see new ways in which fast internet connectivity is opening up all manner of opportunities. Nor do I mean simply business things (as a publisher, having fast internet is crucial) but even ordinary things like being able to read newspapers from all over the world without charge (courtesy our local public library), managing all manner of communication with local authorities, utilities, etc., and of course entertainment (Danish kids are some of the world’s heaviest participants in online games, indeed the biggest user group for “World of Warcraft” is in Denmark). My essential point is, however, that the very fact that the high-speed link exists means that new uses for it rapidly follow. And for an isolated country like NZ which frankly is off the edge of the world but has hugely talented IT people, it is a no-brainer. Just how it should be done is another matter, however. Certainly this is a matter for careful planning not simple electioneering hype. That said, full marks to Key for putting the issue back on the agenda.

    5. By Claire Breen on Apr 25, 2008 | Reply

      What John Key is promising is a $1.5b hand out to a privatised “strategic asset”, a corporation which, given our population, should never have been sold in the first place. It shows once again that the Nats, and their Act pals, cannot be trusted to act as guardians of the public purse.
      This proposition is known in the transnational corporate brotherhood as socialism for the private sector while the rest of us scramble to make a living in the dog eat dog world of free market capitalism. We pay while the wealthy shareholders of Telecom pocket the profits.
      We sold Telecom for $4.25b with a net benefit of only $227m to the public purse. “We wuzz robbed” as the saying goes.
      Rather than giving Telecom $1.5 billion I suggest we either re-nationalise telecommunications or insist that the profits to the shareholders remain in NZ and go towards paying for the up-grade themselves.
      The value of Telecom has risen from $2.5b to $16.6b. (1997) More than 80% of this $12.3b increase has gone to overseas investors.Double that to bring one up to 2007.
      Asset stripping in all the privatised assets has seen our economy shrinking to an unbelievably low level.
      Time yo take back our country and our assets, not give them a windfall.

    6. By geoffrey Waring on Apr 26, 2008 | Reply

      Stop this ongoing looting of strategic national assets paid for by generations of New Zealanders get rid of the parasites sucking this country dry. Buy back telecom; $1.5B should do it nicely.

    7. By Stiofan Mac Suibhne on Apr 26, 2008 | Reply

      NZ benefits from slow and expensive broadband in the same way the Auckland economy benefits from lack of transport infrastructure. Have any other developed nations decided to pursue a an expensive and slow broadband service as part of their economic strategy? I have not heard of that. They must all be sitting on this amazing secret.

    8. By George L on Apr 27, 2008 | Reply

      It is amazing that the National party with such a strong belief in the state not interfering in the market economy would propose to whore itself in such a way.

      The market through telecom has stated that we NZer’s do not need super fast broadband, the market has decided how dare the National party propose state intervention.

      Lets not roll back the neo liberal economy of the last20 years , and trust that as demand increases telecom will then supply super fast broadband without the State becoming involved.

      If National is keen to spend tax payers money on interfering in the market economy then how can we believe in the purity of the market ever again.

      Leave state interference to labour and the left.

      The market will always provide, we don’t need to use tax payer money, Telecom will use it’s profits when the time is right, that is the great thing about having a market driven economy.

    9. By dave on Apr 30, 2008 | Reply

      telecom a player in a pure market? now thats humour.

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