Gordon Campbell: The Broadband Bonanza
Gordon Campbell: The Broadband
Bonanza
John Key’s $1.5 billion boost for
broadband is his first major policy announcement
that isn’t an endorsement of existing Labour practice (
interest free student loans etc) or a dog bone and whistle (
boot camps for young offenders) to a niche support bloc.
The spend-up planned on broadband is also a
self-declared example of the public/private partnerships
that are emerging as John’s Big Idea on the economy –
much more so than the usual centre - right grounds of tax
cuts, upon which Labour will be competing.
Embracing
PPPs so vigorously is also something of an ideological sea
change for National. Likening this broadband investment to
previous governments that built our railroads – as Key did
in his speech – is quite a novel approach for a party
whose supporters tend to regard government’s role in the
economy as (a) inherently inefficient and (b) unnecessary.
Under Key, National now seems prepared to concede that the
wealth of New Zealand is something that government has a
leading role in stimulating, and co-managing.
Mind
you, the pedigree of this idea is mixed. The last time PPPs
were seriously touted in New Zealand, it was by Ross
Armstrong, in the context of roading. It was an idea that
never really went away. Earlier this year, Labour was still
touting PPPs as a possible way of financing the Waterview
Connection in Auckland.
PPPs are now openly back on
the agenda. Instead of National selling state assets to its
business pals, it now seems more inclined to build them for
them - in partnership of course. Enhancing the access to
ultra fast broadband clearly has merit. We would all benefit
from faster and wider broadband access, especially if
government can engineer a market able to keep the costs down
and the technology up to date.
Shame though that
Labour – when it sold Telecom as a monopoly provider –
and National, which practiced ‘light handed’ to non
existent regulation throughout the 1990s, haven’t grasped
that point far earlier. If John Key really wants to know why
“ New Zealand has fallen behind its global competitors
when it comes to broadband” he could take a long hard look
across the caucus table at his colleague and former Telcos
Minister, Maurice Williamson.
For the best part of a
decade, Williamson left telecommunications to the vagaries
of a hopelessly skewed ‘market.’ Not surprisingly,
Telecom milked its virtual monopoly and under-invested in
new technology, and New Zealand slipped down the broadband
ladder while Telecom’s shareholders partied like 1999 was
here to stay.
Question : does Key think
National’s ‘light handed’ regulatory regime during
the 90s worked well, and benefitted New Zealand ? Does he
now embrace the recent steps David Cunliffe has taken to
foster market competition – and how does Key plan to
ensure this huge injection of funds does not benefit the
main incumbent player, and thereby jeopardize the fledgling
steps towards greater telco competition that are currently
in train ?
That’s always the tricky thing about PPPs - the detail is crucial., and we don’t yet have it. The chronic criticism of PPPs is that the state gets to carry the can for the risks and associated costs, while business reaps the profits. Under Key’s plan, business will be first in line to have their broadband installation costs paid for by government – its an investment, right - then schools, health facilities and then the first tranche of homes.
As things currently stand, Key’s “five
principles” meant to guide this $1.5 billion investment
could hardly be more general. What he means by an ‘open
access’ network is unclear, as Russell Brown says.
I’m
also dead curious to see how Key intends to set about
meeting principle two, about ‘ ensuring the investment
does not see already planned investments cut back.’ I’d
have thought the moment Key announced his plan to earmark
$1,5 billion for broadband, telcos and businesses across the
country starting putting a lot of their own money back into
their wallets.
As for the other principles… Sure,
after spending $1.5 billion on expanding broadband access,
you’d hope there would be “increased broadband
services.” Again, with a spend-up of this scale in mind,
its hard to see Key can really be serious about “ making
sure we do not end up lining the pockets of incumbent
industry players.” See the Telecom comments above. How
exactly, does he propose to stop this happening ?
Not
that voters will get to find out anytime soon whether Key
has delivered. Russell Brown estimates this ambitious plan
will take at least ten years to implement – which is three
elections hence. Not quite the 15 elections we will have to
wait to see whether National meets its climate change goals
for 2050, but once again….don’t hold your breath.
ENDS