The latest blog post from NBN outlines a number of reasons why comparing the broadband rollouts of Australia and New Zealand is like comparing apples and oranges. To make his point, NBN CEO Bill Morrow finds an orange.
Comparisons between Australia and New Zealand are natural — both countries think they invented the pavlova and neither wants to claim ownership of Russell Crowe. In this morning’s post, Morrow tries to explain why we didn’t do things the way the Kiwis did.
Morrow focuses on NZ telecommunications infrastructure provider Chorus, who won a tender from Crown Infrastructure Partners (NZ’s loose equivalent to NBNco) for 70 per cent of New Zealand’s FTTP rollout.
When the NBN was first formed in 2009, the Rudd government threatened to split Telstra into separate companies handling the retail and wholesale aspects of the business.
Chorus is the result of the New Zealand government following through on a similar threat with Telecom New Zealand — now Spark — and then requiring the infrastructure part of the business to become wholly separate as a requirement for winning the Ultra-Fast Broadband tender.
The biggest difference here is that our monopoly telco was unwilling to play nice with our government while New Zealand’s was, albeit with some legislative nudging. As a result, NBN has had to negotiate with Telstra for access to the existing infrastructure, and pays almost $1000 to Telstra in leasing or acquisition costs for every connection in a built-up area.
Morrow mentions labour costs and the different starting technologies there were to work with as explanation for the difference in cost. He mentions one of the reasons Chorus has been able to reduce its costs:
“Much has been made about Chorus reducing [its] FTTP delivery costs over the last few years but the reality of the matter is that a major reason [its] FTTP costs have come down – and this is something Chorus have already made public – is that they were compelled to start [its] FTTP rollouts in more expensive areas and then moved the build to many cheaper areas later on.”
The NBN rollout also started in more expensive areas as a political ploy to try show that something was being done for regional Australia.
Finally, Morrow brings up the reason we all knew was coming: distance.
“The final difference between our goals is simply one of scale — Australia is a massive country and is roughly 30 times the size of New Zealand.
“Moreover, we have to deliver a fixed-broadband model to 93 per cent of premises in this huge country – in New Zealand the UFB-1 model only calls for FTTP to be deployed to around 75 per cent of the country – that is an absolutely massive difference right there. UFB-1 is only delivered to areas within 50km from an urban area.”
Australia is a big country but we’re deceptively centralised. Approximately two-thirds of Australians live within 50km of a capital city and almost 85 per cent live within 50km of a coast. Distance is still a challenge.