Chorus: NZ would be irrational to duplicate 5G infrastructure

Friday, 5 January 2018

OPINION: There's no question that access to high quality and affordable internet access is only going to grow in importance for our economy and for our society.

The opportunity the internet offers to Kiwis to efficiently connect, learn, use government services or do business is enormous, and should be made available to everyone, everywhere.

Leaving people behind, without access to the internet, could create a lasting digital divide that would hold the country back.

We are now in a fortunate position in New Zealand that by 2022 almost nine out of 10 of us will have access to great fibre broadband infrastructure.

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By then we will be ranked number five in the world for fibre access, and competition is flourishing, with about 80 service providers to choose from, but that is only part of the story.

New Zealand is far from alone in understanding the importance of connectivity in giving its people fair access to opportunity.

Around the world, most countries are seeking the right policy frameworks that aim to balance a clear social need for high quality internet access with the increasingly challenging economics of building and delivering the technology.

The capital investment required to sustain ever more frequent technology upgrades continues to grow rapidly.

Chorus views internet access as a utility - like power – a commodity that needs to be provided as affordably and reliably as possible while allowing innovation and competition to flourish on a level playing field.

In New Zealand, in fixed line broadband, we have struck upon a successful model that has our country punching above our weight, and it flows directly from the industry reforms earlier this decade.

Those reforms separated accountability for the building and maintaining of infrastructure from the provision of internet services to customers.

Infrastructure investments are decades-long paybacks, but there are investors who will support opportunities with low but predictable bond-like returns over many years.

The next big investment cycle in telco is 5G – the next mobile data standard that looks likely to emerge from 2020 onwards.

In Chorus' view, we should look to see if some of the model that has been adopted for fixed line broadband could also be used in the mobile sector.

With a relatively small population, it seems irrational to duplicate or even triplicate infrastructure.

It is right that anyone who builds a network should seek a return from that investment, but if as a country we are paying for things three times over, that is a poor way to deliver an important service.

We can already see the impact of that in the costs of mobile data in New Zealand, where at one extreme we rank 33 out 35 in the OECD for value.

The other impact from leaving the provision of essential services to the market is that, quite rightly, commercial organisations go where there is money to be made.

That means duplication of infrastructure in cities, and little focus on rural areas, for example.

Chorus thinks there should be a dialogue about the rollout of 5G, with the aim ensuring high quality services are made available more broadly and more cost effectively, through a smart industry structure that also limits the need for subsidies by simply being more efficient overall.

Chorus is open to playing a role in that, sharing the infrastructure we have on an entirely even basis to deliver better outcomes for New Zealand. We hope others are open to joining us in looking for a smarter way.

Kate McKenzie is the chief executive of telecommunications infrastructure company Chorus.

Editor's note: A right of reply column will be offered to Spark, 2degrees and Vodafone.