The New Zealand government has put up $1.5 billion to create an open access, ubiquitous fibre-optic network in partnership with private companies that will reach 75% of the population in 10 years. It is difficult to put a dollar value on better connectivity to the New Zealand businesses, although some estimates show that if successful, a Fibre to the Home (FTTH) could be worth between $2.7 and $4.4 billion a year to the economy, according to the New Zealand Institute.
Key to the debate about the worthiness of the government's scheme is the potential uptake of services by New Zealand businesses. Business New Zealand (which represents 80% of the private sector) CEO Philip O'Reilly believes that education is essential to business uptake. He says that while there are a lot of ICT-savvy business people in operation, there are also a lot of companies that are not aware of what faster services can do for their businesses.
While rolling fibre out to businesses seems to be a core government policy, there also needs to be a focus on equipping businesses with information on what fibre can actually do for their businesses.
O'Reilly says that there will need to be a step change in business models, business planning and equipment spend in the business community, and that businesses in New Zealand will need to be prepared for this. He believes that the "real challenge" is to "sell the value" of fibre to businesses if both the private and public sectors want the proposed uptake of services to bring about a solid return on investment.
"There's an increasing understanding of fibre, but there's a difference between understanding it and paying for it," says O'Reilly. He also points out that in the current environment there is a tendency for companies to take a "cost focus" rather than an "opportunity focus". This general trend could affect proposed takeup of fibre to businesses, which amplifies the need for an awareness programme for businesses.
ICTNZ, which represents the supply side of the ICT industry, agrees with Business New Zealand's perspectives. According to ICTNZ CEO Brett O'Reilley, FTTB is a "critical enabler" for businesses. He believes that fibre can facilitate cloud computing and software as a service, among other things. "This alone will create real productivity gains in the community," he says. "Typically New Zealand businesses are smaller and they don't have dedicated ICT services in house… so to facilitate infrastructure via the web will have significant productivity benefits for both the public and private sectors.
O'Reilley points out that a number of ICTNZ's members have fibre running past their premises, but it's too cost-prohibitive for some. "We have members in Parnell and Ponsonby who can't get fibre at a productive price.
O'Reilley agrees with Business NZ on educating businesses about what faster services can do for their businesses, but he believes that the government needs to take a leading role. "The government has the opportunity to set best practices. It's pretty hard to convince the private sector that cloud computing is useful when the public sector is not using it," he says.
While it is difficult to source the exact number of small businesses based from home, generically it appears that between 250,000 to 500,000 people work from their residential address. Heather Douglas, who is the managing director of Home Business New Zealand, says around one quarter of a million people are running an SME from home, and most rely on ICT to maintain their businesses.
There are also a growing number of New Zealand business people who telecommute, or have flexibility about where they work. While the majority of these workers will probably live in high-density residential areas with reasonable network coverage, most expect the same level of services they receive at their work place. Most will also need VPN and remote access to their businesses' networks, which demands a certain level of bandwidth.
This, of course, depends on the applications and systems that telecommuters use and need. For example, a telecommuter who needs to patch into a video conference from home. Most teleconferencing platforms have high bandwidth requirements. Considering the push from both the private and public sectors for more flexibility around work environments, the demand for better residential networks will need to be considered in the medium term.
