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The 10-min dinner party question

01 Jun 2009

So you’re out with friends and just because you work in the IT department, or the contact centre, or for a telco, you’re expected to be some kind of expert on the latest development in telecommunications. But fear not, Telecommunications Review will save you from socially embarrassing silences on the topic du jour: Fibre to the Home.What is it?Fibre to the Home is a fibre-optic network that will deliver high-speed broadband right to your door.So who’s gonna pay?The short answer is everyone – the National government has pledged $1.5 billion to building a network that will reach 75% of New Zealanders in 10 years.Not in a hurry, then.Well no, first they have to find private companies that are willing to partner with the government in the investment. The idea is that under the oversight of an organisation called the Crown Fibre Investment Company, there will be 25 smaller entities called Local Fibre Cos which will actually roll out the fibre. They will do this in partnership with another telco or electricity company or, well, anyone who’s prepared to stump up the cash.So why would you divide a national network into little bits?Ever heard of a thing called monopoly power? The government is terrified that if one company owns a nationwide fibre optic network they can hold the country to ransom.Oh, you mean like Telecom did before that local loop unbundling?Yep, you got it. Telecom owns the entire copper network – that’s the network most of us currently use to make a phone call or surf the internet – and they wouldn’t let any other company near it until the Labour Government forced them to. Things have improved a lot since competitors like Orcon and Vodafone could put their own equipment in telephone exchanges and effectively ‘rent’ the copper wires that go into their customers’ homes.If we’ve already got a copper network, why do we need a fibre one?Compared to copper networks, fibre networks have the potential to provide users with faster download and upload speeds over much longer distances. For example, the latest copper technology is called VDSL – it delivers up to 50Mbps but you have to live within 1km of an exchange or a roadside cabinet to get it. With fibre you can get 100Mbps and be over 60km from the exchange.OK, I get that fibre is faster, but why would I want 100Mbps – I mean what’s the point?Good question. It’s one that the companies that have already invested in telco networks say needs answering. In its submission to the government, the lines company Vector went as far to suggest that users who take up services on the network should get a subsidy.What did the government say to that?Nothing official – yet. They’re still wading through 103 submissions to the cabinet paper they released in March. But at the recent TUANZ conference, Communications Minister Steven Joyce made it clear that there was only $1.5 billion on the table, so any subsidies that go towards boosting demand will come out of the same pot that’s funding the network build.If this fibre network is so great, why do you need to pay people to use it?In many ways the fibre network is a leap of faith: the idea that in five, 10, 20 years’ time cheap, high-speed, freely available broadband will be critical to New Zealand’s economic survival, so we need to get the infrastructure in place now. We live in a country at the bottom of the world surrounded by water, connected to the worldwide web by one cable, which happens to be mostly owned by Telecom.Only one cable: that seems a little tenuous. Won’t this fibre to the home network fix that too?Sadly, no. The murky waters of international connectivity are another topic entirely.