It must be election year when Steven Joyce is seen popping up in as many photo opportunities as he has this month past.  Whether he is hauling in a fibre cable or opening a new road, he has good reason to look pleased in each photo.  In his role as Minister of Information and Communication Technology, his pet scheme to bring ultra fast broadband to 75% of New Zealanders has commenced its roll-out.  He should be admired for doing so at a cost to the taxpayer that represents exceptional value compared to what Australia is spending.

The pity of his scheme is that most rural New Zealanders, the 25% of the population that contributes around 66% of our productive exports, are excluded from the benefits of ultra fast broadband. 

Alongside the $1.5Bn investment in ultra fast broadband for urban areas, Mr Joyce is spending $52M of taxpayer funds and $248M of telco levies on his rural broadband initiative.  The rural scheme will only give broadband speeds that urban dwellers have long taken for granted and at an installation cost that urban people will not have to pay.  More importantly, the broadband speeds promised to rural users will not support the diverse health, education, productivity and entertainment services that will power our economy to its internationally competitive future.

The focus of the government’s rural broadband solution is wireless connectivity.  But it uses obsolescent 3G mobile technology.  The promise is that this old technology will be upgraded to 4G, or LTE (Long Term Evolution), technologies within the 6-year term of the rural broadband contract.  

It is clear that the new technology does have the capability to deliver broadband speeds that could be considered ‘ultra-fast’.

LTE/4G technologies are in use in Europe right now but New Zealand must wait until 2013 before the spectrum to deploy that technology becomes available.  That spectrum is the “digital dividend” 700MHz band that our analogue TV presently operates over.  The government are promoting the switch over to digital TV, and are now seeking public submissions on how to utilise the radio spectrum released.

In their public documents, the government show a preference for that spectrum to be made available for mobile applications - that is, a replacement for 3G services.  Their reasoning is that the explosive growth in mobile broadband demands a significant increase in spectrum.  And so it does.  

Mobile broadband however, has alternative spectrum available to it.  Mobile applications do not need the 700MHz band.

Rural broadband does need the 700MHz band.  This is because signals in that band, just like analogue TV signals, can be transmitted over longer distances and will penetrate obstructions better than other bands.

With mobile broadband data increasing so rapidly, it is becoming important to separate rural broadband from mobile broadband connections in to different bands.  Already, those of us using 3G rural broadband services suffer significant loss of service performance when telephone calls peak on the 3G networks.  In a world increasingly dependent on broadband connectivity, this service disruption is becoming less acceptable.

Committing the 700 MHz ‘digital dividend’ spectrum to fixed rural broadband services represents the best solution for ensuring that rural communities have access to ultra-fast broadband.  

Is the government likely to do this?  

Simply because the 700MHz is expected to earn the government over $1Bn in licensing fees.  If the mobile phone companies buy that spectrum, then they will of course recover that capital expense through high-margin mobile usage charges with rural broadband taking second place.  

Next week, we will explore the opportunities in taking a people-centric view on the use of the digital dividend spectrum.