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‘Frenemies’ unite for rural

01 Dec 2010
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We believe that our joint bid proposal for the Rural Broadband Initiative will deliver a step change in connectivity for New Zealand’s rural community. The bottom line is, rural New Zealanders deserve the same opportunities afforded to urban Kiwis – access to fast broadband speeds and near ubiquitous mobile coverage.Telecom and Vodafone are addressing this together by proposing to build and deliver a new open-access network which combines both fibre and wireless to serve the rural sector. We believe this solution provides better bang for the taxpayers’ buck and better coverage, speed and choice for rural New Zealanders.For the rest of the country it means our valuable rural sector is equipped for the 21st Century. This is critical, given it is New Zealand’s economic heartland, accounting for 60% of New Zealand’s exports.The solution will meet the stated objectives of the Rural Broadband Initiative – provision of fibre to 97% of rural schools and a minimum of 5Mbps broadband service to 80% of rural households within six years, and priority users with fibre-based broadband services. If successful, it will exceed the government objectives of delivering in speed, coverage and customer choice, and can be rolled out faster than the government timetable.The solution will be achieved through the extension of Telecom’s existing fibre infrastructure to key rural points of presence, including schools and hospitals, and an expanded Vodafone wireless infrastructure using the power of this technology to deliver high- speed broadband services wirelessly. Chorus (Telecom’s national fixed access infrastructure provider) will build the fibre and DSL network, and Vodafone will build the mobile towers. XT and Vodafone will put their equipment on the towers and provide independent services to their wholesale, MVNO customers as well as directly to retail customers.Key to this proposal is the principle of open access. Both fibre and wireless components will be available on an equivalent basis to access seekers and wholesale customers, allowing any party to offer a retail service over the new infrastructure.This means XT, 2degrees and regional Wi-Fi operators can put their equipment on Vodafone’s cellphone towers and provide independent services to their customers, competing on equal terms. The result? The prospect of strong retail competition, and a real choice of retail solutions and providers for rural customers.Many people were surprised to see us put together a solution with our fiercest competitor. But the answer is simple: it was clear to both of us that it simply wouldn’t stack up from an economic point of view for a sole operator to go it alone. It made complete sense for us to collaborate by putting forward a set of solutions that are truly complementary and which can really deliver for rural New Zealand.We believe this is the new state of the telecommunications industry: we compete vigorously on one hand and cooperate on the other. The design of this solution means we will continue to compete fiercely in the retail market – and have created a platform that enables other operators to compete with us.It also sees New Zealand’s two foremost communications specialists pooling their strengths – our combined experience and expertise is unsurpassed.Our proposed solution will provide rural customers with the choice of either fixed broadband, or fixed mobile broadband. Mobile broadband provides additional social advantages by enabling wider use of mobile voice and text, two important communication channels for individuals and communities.In fact, research company Synovate recently carried out a survey among rural customers to determine whether they would prefer a mobile or fixed line solution. Participants were given the option of mobile broadband in the home and increased coverage for their mobile phone in and around their home/farm, or fixed line broadband delivered to their home through their current telephone line. This option would not improve the mobile coverage in and around their home/farm.The research found that 56% of rural households preferred a mobile broadband solution over fixed line (44%). When the mobile solution was delivered in one to three years, as opposed to one to six for the fixed line option, preference for fixed line almost halved from 44% to 25%. The research also found that those households which already had broadband access were more likely to prefer mobile.One of the key questions raised on this issue is: why can’t fibre be rolled out to all of New Zealand? The answer is simple: the economics just don’t stack up. This has been reinforced around the world as other countries consider how to deliver broadband and make the financials work for both private and public entities.Internationally, best practice is to provide rural communities with broadband delivered over wireless networks, with Ireland, Germany, the US and Australia all committing to wireless as a key solution for delivering broadband to rural communities. Wireless meets the needs of rural users not just at home but on the farm. It reduces the impact of geographical isolation, opens up communities and reduces social isolation.Wireless is also a future-proofed solution. It will give rural customers access to next-generation mobile technologies such as 4G (otherwise known as Long Term Evolution – LTE), the next generation of data transfer technology, at the same time it’s made available to urban customers. The main advantages with 4G are faster data rates, lower latency, shorter delays and loading times, and ultimately a much improved end-user experience.We’re thrilled that, together with Telecom, we have a solution that can truly bridge the urban/rural digital divide in New Zealand.The Ministry of Economic Development is running the bid process for the RBI, which has now closed, and a decision by the Minister is expected to be made by Christmas.