Thursday, August 2, 2012

A good opportunity for a Public-Private Partnership?

The Government is spending $1.5 billion dollars on setting up ultra-fast broadband around the country. Unfortunately while it is a great idea the benefits are set to be limited for a couple of reasons.

First, data caps in New Zealand are so absurdly low that you will be able to use up all your available data in a few days and be paying enormous excesses for the rest of the month.

And second, the price of broadband in this country is incredibly expensive. At my flat we currently pay $75 a month for 60GB of data from TelstraClear. Contrast this to the UK where I was paying £13 a month for unlimited data with O2 (This included a £5 discount for having my mobile with O2).

New Zealand is miles away from where the vast majority of the content is produced (the US and the UK) and our population is relatively small, so we may never see the sort of deals offered in the UK. But the major problem is the Southern Cross Cable which limits capacity as it is used for all international communications out of New Zealand (data and phone) and as the only international cable has a monopoly.

What New Zealand needs is a second international cable to increase capacity and competition, and in turn bring down prices. But as the DomPost reports:
Pacific Fibre, backed by big-name entrepreneurs including Sam Morgan, Stephen Tindall and Rod Drury, launched in March 2010 aiming to build a 13,000km high-speed fibre-optic cable connecting New Zealand and Australia to California.

But this afternoon, chairman Sam Morgan said Pacific Fibre had failed to raise the required US$400 million ($490 million).
This is bad news for consumers and innovative businesses in New Zealand. Which leads me to ask?

Isn't this a great opportunity for a public-private partnership? Something the Government could use to sell the idea to New Zealanders?

(P.S. I see now the broadband plan I had in the UK is £12.50 a month, whether you have an O2 mobile or not.)

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