…the conclusion is inescapable, rural people are paying too high a premium for broadband.
How much more do you believe rural people should pay for equivalent broadband services above what urban people pay?

Amidst a growing belief around the world, that fast broadband access is becoming a necessity for participation in our society, equality of access is becoming a contentious issue.

On the one side, we have Norway defining broadband access as a basic human right. Australia has invested significant capital in a broadband network that ensures near universal access.

On the other side, politicians see rural broadband is being economically difficult.

If the broadband leaders are correct, and it is more of a utility than an entertainment channel, then all countries must provide for equality of broadband access as a basic principle.


InfoNet’s wireless rural broadband service

Despite a $1.8 billion spend on broadband projects, New Zealand does not yet accept this principle. We differentiate between urban and rural people, investing $1.5 billion in urban areas and $52 million in rural areas. The government say that rural people need to pay for it themselves.

If urban broadband services are economic at $75, what would be a reasonable price for rural people to pay? I have posed the question many times and no one has taken up the challenge.

Should the premium be double? Is it reasonable to expect that rural people pay four times the urban price?

For equivalent bandwidth and data caps, rural people pay five times more than the urban price.

I for one, think that is an excessive premium.

That excess is compounded by our cheapest broadband prices being around twice the global average residential broadband tariff

Global average tariffs are published every quarter by Point Topic. Their fourth quarter 2012 results show average global tariffs for residential broadband at NZ$2.62 per megabit of connection speed.

A copper DSL connection in New Zealand can cost as little as $75 for 30GB of included data. At a speed of 5Mbps, this equates to $15 per Mbps, around twice the global average price for copper-based broadband of $7.26 per Mbps. Shift to a fibre connection at the same price and the price drops to $2.50 per Mbps (66% more than the global fibre average of $1.505 per Mbps).

How does that compare to rural broadband prices?

Vodafone’s RBI service costs $110 for 10GB of included data. At the promised speed of 5Mbps, this equates to $22 per Mbps for 10GB of included data. That’s three times the urban price for one third of the data allowance. Purchasing additional blocks of data to bring usage to 30 GB raises the price per Mbps to $38 or over five times the urban price.

An alternative to Vodafone’s service is that offered by Franklin’s InfoNet wireless that I am presently trialling. That is priced at $100 for 10GB at 10Mbps, giving a comparative figure of $10 per Mbps, still 50% more than the global average for copper but less than half of Vodafone’s.

This analysis has not factored in connection costs, typically $600+ for rural people (free for urban), nor other non-price differences. Next week, I will complete a more detailed comparison of Franklin’s rural broadband offers and consider the impact that competition in the rural sector has made.

To me, the conclusion is inescapable, rural people are paying too high a premium for broadband. We may be grateful for the better-than-dialup speeds we now get, but that is not sufficient for the future. What do you think?