NBN vs. the world: The New Zealand experience

New Zealand has taken a different approach to Australia when it comes to rolling out high-speed broadband, with the country already housing fibre-to-the-node infrastructure.

Australia has had a longstanding rivalry with New Zealand, and now the two countries are competing on a new front, with the rollout of high speed broadband networks occurring in both.

However, each country is taking a different path on the road to implementing high speed broadband for its citizens.

This story is part of a series on how other countries have dealt with their own broadband networks and what Australia could learn from their experiences. Read about the American experience and the Korean experience.

The New Zealand approach has been spearheaded by two initiatives: The Ultra-Fast Broadband (UFB) initiative and the Rural Broadband Initiative (RBI).

A UFB working party was established in 2010, with broadband to be rolled out to 75 per cent of New Zealanders over 10 years via fibre-to-the-home. In the first six years, schools, health services and businesses would be prioritised, along with greenfield developments and some residential areas.

New Zealand’s fibre network will be capable of achieving 100Mbps speeds, with uplink speeds of at least 50Mbps.

However, unlike Australia, New Zealand already has an extensive fibre-to-the-node network, with the UFB initiative building on that network to extend fibre to premises.

Telecom's structural separation

Telecom New Zealand, the country’s equivalent of Telstra, has been a main player in the UFB initiative. Like Telstra, the company was required to undergo a structural separation, which it carried out in November last year, to be eligible for work with the project.

“The previous regulatory regime which started in 2006 [already] had us operationally separated [and] we were already a long way towards being fundamentally split into two companies anyway,” says Ian Bonnar, head of communications at Telecom New Zealand.

Bonnar says the option was to either structurally separate or not get involved with UFB and “have the risk of having your assets get overbuilt”.

The company was eventually separated into Chorus, which owns the country’s copper network and will help build the new fibre network, and the retained Telecom brand, which carries out retail and mobile operations.

However, Paul Budde, telecommunications analyst, says in the beginning Telecom was reluctant to co-operate with a structural separation. “It took longer for Telecom to come around than [Telstra]," Budde says. "In the end the government really had to put the legislation in place before Telecom accepted that, and obviously [it] had to play ball from that moment onwards."

Three other partnerships are deploying UFB, along with Chorus, which is providing most of the UFB coverage (69.4 per cent) — Enable Services; Waikato Networks; and Northpower. Eventually, the Chorus UFB network will pass by more than 800,000 premises by 2019, according to a report by BuddeComm.

While Australia’s National Broadband Network (NBN) will cost around $36 billion, New Zealand's UFB is considerably less, with the government investing NZ$1.5 billion (A$1.2 billion), managed by Crown Fibre Holdings (CFH). Private investment is also expected to make up some of the funding, but it is still unclear what role it will play.

Australia is also grappling with funding models, with a recent joint committee on the NBN calling on NBN Co to provide details on how and when it plans on transitioning to a funding model which uses private equity.

However, unlike NBN Co, which has stated the NBN is being built for the public good and not to maximise profit, CFH has stated it will provide a commercial return on the Crown’s investment. The UFB would also be operated as a business under the direction of the government’s ministers and the minister for communications and information technology.

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