2009-11-14

A rural ambition for broadband

12 November 2009

A rural ambition for broadband

Presentation by Donald Aubrey, Federated Farmers vice-president and telecommunications spokesperson, to the Telecommunications Users Association of New Zealand (TUANZ) Rural Broadband Symposium in Rotorua

Thank you for allowing me to speak on the very important issue of rural broadband, which will have a profound affect on the social and economic future of rural New Zealand.

I would like to thank Chris O’Connell, chairman of TUANZ, for inviting me to speak today as well as his co-chair, Federated Farmers President, Don Nicolson.

I appreciate being given the opportunity to discuss the way in which fast broadband, of the kind taken for granted in our cities, can be rolled out across New Zealand’s hinterland.

The final decision on whether this does happen ultimately rests with Communications and Technology Minister, the Hon Steven Joyce, so I thank the Minister for being here today.

The way my farming colleagues and I see it, Minister Joyce must ensure this once in a generation opportunity is implemented on a fair basis to all New Zealanders.

I would like to express my gratitude in advance to the Minister for taking some of Federated Farmers solutions on board in order to get this complex issue right. Though I also want to remind him that we are here today to speak frankly about the future of rural broadband.

As the title of today’s symposium highlights, we must ‘set New Zealand on the right track for rural connectivity’.

To get connected, of course, the necessary funding must be in place. Let me begin then by asking whether the Government’s broadband policies will satisfy the wishes of farmers and our rural communities.

The short answer, at this current time, is an unequivocal no. Rural New Zealand is certainly not ungrateful for the funding on offer, but clearly it remains inadequate.

I remember Prime Minister, the Hon John Key’s election campaign promise that he would be “ambitious for New Zealand”. The proposed funding that aims to hasten the roll-out of ultra-fast broadband to everyone exemplifies that ambition.

Today we need to ensure that the way forward for rural broadband is clear and that, more importantly, there is adequate funding in place to achieve it. We need immediate action so that the words that roll readily off the tongues of our politicians at election time do in fact have meaning.

I recall a skewed comment made in the heat of an election campaign by Al Gore who claimed he had “invented the internet”. While a peculiarly fallacious statement, it certainly sounded good at the time.

Part of our ambition at Federated Farmers is to ensure that what is said at election time is not only implemented, but done so in a fair and equitable manner.

If you’re an urban New Zealander and a part of the 75 percent of the country promised ultra-fast broadband, you may think Mr Key’s ambition is about to pay off. But, again, if you’re a part of the 25 percent who reside in our beautiful countryside, you won’t.

That’s despite the fact that rural New Zealand is the true engine room of our economy, generating 64 percent of the countries export receipts.

So where’s the ambition here? Missing in action, that’s where. Because to tell the truth, the rural community’s being forced to settle for second best - and that’s just not good enough in my book.

New Zealand is a country of four million people, one million of whom are being short changed by the Government’s current broadband plans.

Although it has promised to invest $1.5 billion to roll broadband out to urban folk who already have fast internet, the rest of us are left with the scraps.

That’s just $48 million of direct Government funding! Or less than 10 percent of what each of the other three quarters of the population are projected to receive.

So from the outset, we were $452 million short. Don’t get me wrong, rural people aren’t asking for more than anyone else - we simply want equality.

If the Government wants to treat us differently, then do it by investing more, rather than less, into rural broadband. One look at New Zealand’s geography suggests that would not be a bad idea.

We do, however, acknowledge Minister Joyce’s energy and effort in lifting this level of investment after the initial, ill-conceived broadband funding announcement.

This energy and effort led to the proposed restructuring of an existing industry levy to top that investment up to $300 million over the next six years; though it still falls well short of the $500 million urban New Zealand are set to receive.

According to the Commerce Commission, the existing Telecommunications Service Obligations (TSO) levy is worth at least $70 million a year, so over the next say 20 years, it could provide $1.4 billion for investment in rural areas.

Yet under the new draft proposal, which abolishes the TSO levy in favour of a ‘new’ $50 million per year levy over six years, falling to $10 million over 20 years, the total will be $440 million, or about $1 billion less.

This amount of investment is no small cheese. Federated Farmers is definitely behind innovative thinking but when such innovation leaves the rural sector a billion dollars short, we suggest caution is in order.

For example, we congratulated the Minister for listening to Federated Farmers call for a rethink of the proposed State Highway 20 Waterview connection tunnel, which would have cost $3.2 billion.

The Minister wisely reviewed the project and looked to skin the cat another way, saving the taxpayer about $1.7 billion dollars in the process. Like the axed TSO investment, that’s a significant amount of cash. It is clear the Government has underestimated the rural populations’ desire and need to access broadband.

I hesitate, but I have to state the obvious - we are people too. We are from the same ilk as those who don’t live in the country. But we don’t want to deny urban dwellers fast broadband and neither does ‘the market’.

The fact is fast internet is already available to most townies and existing providers such as the Christchurch City Council’s Enable Networks are currently rolling out commercial solutions to expand their market in this densely populated area. So my point is, solutions already exist for many urbanites.

Farmers, on the other hand, can’t keep up with the world without fast internet. Without it, we can’t monitor milk supply, pay bills, check the latest rural news or even see where the weather’s heading.

There’s also a range of practical analytical tools that offer a leap forward in farm productivity. Land, rain, fertiliser and stock monitoring technology, of the kind farmers dream about, are all accessible with broadband.

In light of our proven track record in innovation and improving productivity, which is well above the entire economy’s average, we deserve an opportunity to make the most of this technology. It simply doesn’t make sense to deny farmers an enabling tool like broadband, which boosts productivity and production.

If we want to catch up with our Aussie neighbours, it doesn’t make sense to deny our engine room the very tool that can provide a step change. It also doesn’t make sense to deny our rural population when Australia is going to invest in its rural people.

Providing the rural community with fast internet will benefit everyone. It’s worth remembering that rural New Zealand may only account for one quarter of the population but we produce two thirds of the country’s export wealth.

When the milksolids payout falls, or production is stricken by drought, everyone knows the rest of the economy suffers with our farmers.

As critically important, though, is the social aspect of broadband.

We don’t need ‘shower nozzle’ like social engineering that creates a two-tier society, consisting of those with and those without broadband. If we want to attract and retain people in rural areas, we have to push back the tyranny of distance.

Like all other New Zealanders, we want to be socially connected through networking sites like Twitter, You Tube, Facebook and other emerging technologies that connect people together, globally.

Becoming a digital backwater or digital ghetto is quite simply not something we aspire to. If this Government desires to keep our developed nation status, it has to think like a first-world country. That means first-world solutions to broadband in our countryside, not third-world failures.

The third world’s not a place any New Zealander wants to be but it’s exactly where we’re heading if we don’t get this broadband issue sorted.

Minister Joyce; I am sure you do not want to be recorded in history as the architect of regression.

Rural broadband is a critical issue that all New Zealanders have a stake in. What this Government does over the next few months will impact in a very real way on rural New Zealand over the coming half century.

But enough about the problem - what’s the solution?

Firstly, let’s talk about funding. Money matters because it helps get things done.

Under the current proposals, there is $1.5 billion in funds from Government, with $48 million for rural and a further $252 million from the new levy - a total of $1.8 billion.

We appreciate that everyone is still on the recession roller coaster but haven’t farmers been playing their part to lift us out of the downward spiral?

For example, the increase in dairy payout since the start of the season will inject an additional $1.8 billion into the economy. No other sector can match that boost. If it was all taxable, at say 30 cents in the dollar, it would give the Government an additional $600 million from dairying alone.

Given this, we believe the Government does have room to dip into its pocket to top-up the $48 million identified for rural broadband. So Minister, any consideration by your Government to do just that in the next budget would be warmly welcomed.

The Federation’s recent submission on the new levy recommends it remain at the current $70 million level for at least six more years, adding a further $120 million to the pot. That would push the total amount raised for rural broadband over $480 million - much closer to the $500 million figure we see as the minimum target.

I also have to ask why the proposed new industry levy will raise only $50 million per year when the TSO levy currently collects $70 million per year? Why not increase it? These measures alone would help redress the current funding imbalance between the rural and urban broadband plans.

Once we have the ‘pots’ topped up to a more equitable level, the issue will be how the Government allocates the ‘gold’. The Federation sees some merit in allowing access to the $1.5 billion fund to provide rural solutions.

For a start, the space between any two urban centres is always rural and urban centres need to be connected.

The problem is the Government is allocating money to a section of our society that has not been failed by the ‘internet market’. Whereas the market failure of broadband is rife when it comes to our hinterland.

More emphasis should be placed on where the market has failed in that area between the urban centres - the countryside. Federated Farmers believes there are innovative ways to leverage off this investment so that both rural and urban benefit.

That’s why I was heartened to read the Government is looking at options ‘outside of the square’ such as providing wireless broadband through analogue television broadcasts. Our compliments Minister for taking such an innovative approach.

Though logic dictates this is less than an ideal in rural areas, where analogue reception is often patchy at best. So what about transferring the idea onto urban broadband? Why not look at using frequencies now carrying city-wide analogue television broadcasts as a means of providing some urban residents with wireless broadband?

Surely that would spare up some of the $1.5 billion earmarked for urban broadband? Even better, the savings could be used to spread fibre across the countryside, as there’s not enough in the bank to do it justice right now. So to recap.

If we can…

· acquire more funding from the tax from the increased dairy payout

· increase the new levy (to replace the TSO levy) by at least $20 million per year

· have some flexibility regarding access to the urban broadband fund, recognising the realities of our landscape, and

· seek innovative solutions such as analogue television reception for urban rather than rural environments

…we will make progress on the funding side of things and head towards where Federated Farmers believes we need to be.

The final matter I briefly wish to discuss today relates to actually getting a step change to occur in our rural areas. How and what we do with this funding matters and the targets we set are critical to a positive outcome.

It’s not unrealistic to set our farms a broadband target of 100 megabits per second (Mbps). We’re certain fibre optic is the preferred technical solution, as it provides a 100-year lifespan.

Yet we also understand other complimentary technologies such as wireless and even satellite may have a part to play in the future of New Zealand broadband.

But back to our 100 Mbps target; why do we believe it’s possible? Well, it’s simple - we’ve already done it. Over the past few months, Federated Farmers has been working on a broadband pilot scheme that is already connecting farms to fibre at speeds of 100 Mbps.

The scheme is operating as we speak in a remote valley that was once a notorious dead zone for high-speed internet. And, of course, it is already revolutionising the way that small country community thinks, acts and does business.

We want this aspiration to grow from that small seed into wide spread broadband for our rural community.

To conclude, I want to compliment the Government for actually doing something in the rural broadband space, even though, it isn’t good enough.

We are ambitious for agriculture and our rural communities but we’re not convinced the Government and its officials share that ambition. They need to up their game and take a more flexible, innovative approach to solutions.

We don’t want the Government to show any sign of tunnel vision or think farming doesn’t need broadband. As part of the wider community, it does.

As for Federated Farmers, make no mistake, rural broadband provision is a top strategic priority. It provides a once in a generation opportunity to make a change that will affect the next half century, while setting this country up to remain a world leader.

Minister Joyce, allow me to say we appreciate your efforts to date but the consequences of getting this project wrong, or of doing a half job, will be significant and long standing. That’s why Federated Farmers is strongly urging you not to fall into the trap.

Our country wasn’t built by the ‘can’t do’ club. It was built by those who dreamed of a better life, thought laterally about solutions and stepped up with their ‘can do’ attitude in order to make it happen.

The economic and social success of our country goes hand in glove with the development of reliable, fast broadband technology. Please give us our fair share of the broadband pie or our rural community risks falling behind.

Let’s get it right. Thank you

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