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Cunliffe: Digital Summit 2.0

Digital Summit 2.0

Keynote speech at the Digital Summit 2.0


28 November 2007 Speech Notes

Digital Future Summit 2.0

Nga iwi o te motu, tena koutou katou,.

(Acknowledge: Chair, Rod Oram, sponsors in cash and in kind, display hosts, national and international speakers, organisers from Tuanz under Ernie Newman and MED under Janet Mazenier )

Ladies and gentlemen, New Zealand has a long history of innovation.

We make ideas into realities that, in some cases, have revolutionised our world.

William Davidson and Thomas Brydone of Dunedin pioneered a refrigeration system in the 1880s that enabled NZ to sell meat halfway across the world.

In the 1960s Bill Gallagher and Owen Williamson of Hamilton managed to shock the family cow in to staying off the lawn, solved the problem of electric fences shorting out, and Gallagher Engineering has sold over 20000 fences since!

Alan McDiarmid and his colleagues discovered that plastics could conduct electricity - who knew? - and were awarded the Nobel Prize for Chemistry.

Weta Digital, Right Hemisphere/Nextspace and Taylormade are among the worlds absolute leaders in 3D digital graphics technology - with the result that half the world still thinks we are populated by jolly, squat peasants with hairy feet.

Humanware is revolutionising technology for the visually impaired and is producing the worlds only commercialised GPS for the blind.

It was my honour to assist the New Zealand stand at CeBit 07 - the world's largest ICT show. Our 21 Kiwi companies - many of them are here today - did themselves proud and outshone many others (including, it has to be said, our Aussie mates).

So Kiwis are good at innovation. As a sector, we are on fire with the idea that there isn't much you can't do with a piece of "number 8 fibre".
So here we stand.

.at the beginning of the 21st century

.in a tiny but determined country at the bottom end of the world

.a new generation of innovators called on to take our ideas, our companies, our sector, our economy and our country forward.

.Ladies and gentlemen, to do this we don't need to be good. We need to be way better than that.

.We need to be better than the global market in our chosen niches.

.We need to be better than the cycle times of technology shifts and global product cycles.

The race just got faster. And we must play to win.

You know, one of the things I love about being Minister for ICT is the incredibly smart and talented people in this sector.

I also love the challenge of working in a sector where, just when you think you understand it, technology changes the game again.

During these next few days we are going to challenge each other:
.to get our bearings on where we have come from;
.to take stock of where were are currently at;
.and to contribute our best ideas to an action plan to take us to the next level.

Our task is not just to talk, but to listen, to evaluate and to act upon the best ideas.

We have called this meeting the "Digital Futures 2.0 Summit", because this discussion will be pivotal to the rewrite of Digital Strategy 2.0 in March 2008.

Then, with your further input and consultation, the final strategy will be released in June 2008 to guide the sector's development for the next several years.

Virtually everyone who matters in New Zealand ICT is in this room right now. You have the brains, the ideas, and the means to make it happen. Let's harness that energy and channel it into a bright future for all New Zealanders.

To do so we aim to drive forward:
.The knowledge backbone that is New Zealand's ICT sector;
.The knowledge economy and the contribution that ICT can make to economic transformation and sustainability;
.The knowledge society: how to encourage the most advanced skills and to bridge our digital divides.

Our Summit programme reflects these layered challenges and is organised around five sub-themes, which are:

.Broadband for all New Zealanders. I will kick off the discussion on broadband. The National Broadband map will be launched this afternoon.

.ICT driving productivity. Hon Pete Hodgson will discuss how ICT links with the government's Economic Transformation agenda.

.Supporting our sustainable future. Tomorrow Dr Cullen will be discussing with you the role of technology in promoting New Zealand's sustainable future.

.ICT skills and capability. This section is particularly important for young people and learning. Minister Ruth Dyson will be speaking with you tonight about the Community Partnership Fund.

.New Zealand Community and Content - Focusing on strengthening communities, cultural identity, and our uniqueness. Tomorrow my colleague Hon Trevor Mallard will speak on broadcasting and media convergence. And Hon Judith Tizard will join us to discuss New Zealand's Digital Content Strategy.

My remarks will focus on the challenge of revitalising the ICT sector through updating the Digital Strategy and accelerating the transition to a fast broadband environment.

To do so I will follow the format I have just outlined: recalling where we have come from, taking stock the current situation and proposing a possible action plan for the future.

Where Have We Come From?

Let me begin a quick retrospective by recalling the 2005 Digital Strategy framework.

After much public debate and consultation, the Strategy aimed for NZ to be among the best in the world at using ICT for our economic and social benefit.

To do this we need to get three things right, in parallel because they were intrinsically interdependent. They became known as the 3 C's:

.Connection (including speed, reach and bandwidth) to enable advanced ICT development
.User Confidence (through education, on line security, spam protection etc); and
.Content - the applications and uses that would support uptake and drive business models.

It followed logically that there was interdependence between the actions of business, the community sector and government, and that all needed to be engaged together if maximum gains were to be achieved.

A new governance framework was put in place within the public sector: with key agencies linked by a new Digital Strategy Steering Group, overseen by an ad hoc group of responsible ministers and supported latterly by central agency oversight.

Direct advice was provided by the Digital Strategy Advisory Group comprising representatives of business and the community sector.

Sector advocacy was also provided by the HiGrowth Trust and the nascent ICTNZ working group, as well as by other established membership organisations within the sector, and I want to commend the input of Internet NZ and the Telecommunications Users Association, TUANZ, in particular.

Under the Digital Strategy the government roughly doubled its investments in the 3 C's of ICT development to some $400 million over 4 years.

Since the launch of the Digital Strategy two years ago, some 70 government initiatives have been initiated - some completed, some well underway and some with a few years left to run. These have achieved some great outcomes for our communities.

The Community Partnership Fund has supported local, regional and national ICT initiatives through partnerships with councils and community groups.

To date two funding rounds have been completed with the full $17.4 million being allocated to over 100 projects. Some positive examples include:

.Motatau Marae in Northland received funding for their cyber whare. This allows networking with other Northland community cyber whare to provide access to ICT and training while sharing resources with other community groups

.Kelston Deaf Education Centre received funding to provide computers in homes to 22 families, using videoconferencing to enable them to keep in touch using sign language.

The Broadband Challenge Fund aims to accelerate the provision of affordable broadband services to regional centres. So far, we've allocated $17.6 million to various projects.

Some examples of projects to have benefited include:

.The Canterbury Development Corporation's project to deploy an urban fibre network throughout Christchurch, focusing on councils, schools, health, university, and businesses

.Nelson Marlborough Info region project to expand fibre capacity in main population centres to establish internet exchanges in Nelson and Blenheim with a new fibre connection from Blenheim to Picton.

There are other many other great examples of projects and websites that are using the technology we currently have to deliver services to our communities across sectors.

Among them the Health Information Strategy aims to have healthcare providers connected to a secure health information network, ensuring that the right information is at the right place and the right time. This is something I am keen to progress under both of my portfolios.

And the Ministry of Education's Digital Horizons programme has seen ICT education mainstreams and smart tools provided to schools to the tune of some $40 million per year.

So to sum up, the core idea of the Digital Strategy remains a useful starting point - that to maximise the benefit of ICT we have to get each of connection, user confidence and digital content right, and all at the same time.

Doing so requires each of business, government and the community to work together. Government can assist by partnering and funding initiatives. I would argue that the track record of efforts to date has been most encouraging.

Updating these challenges and identifying the best means of addressing is the central task of the digital strategy refresh and the business of this summit.

A Brief History of Telecommunications Policy

Let me drop down in more detail now in more detail into the first of the three C's - connection.

As many of you know the path to fast broadband hasn't always run smoothly.

A long time ago in a galaxy far, far away, someone thought it would be a great idea to privatise the nation's phone company. According to legend, the wise men of the time (on both sides of the political fence) thought that privatisation without an appropriate regulatory framework would yield the best price.

Back in the real world the idea caught on - Telecom NZ was privatised with only the Kiwi Share, general competition law and information disclosure to protect the customer and the rest of the market.

Shareholders of course did well, but overall, consumers and the country did not. Interconnection pricing disputes lasted a decade and went to the Privy Council. Number portability was not solved for 15 years until the Telecommunications Carriers Forum finally cracked that nut this year.

Speeds were too slow and prices were too expensive.

Broadband penetration and investment levels had put New Zealand's ICT infrastructure into the bottom third of the OECD at 21st or 22nd out of 30 by 2005.

The incoming Labour led government began tackling the issue with the Fletcher led Ministerial Inquiry into Telecommunications in 2000.

The Inquiry identified significant shortcomings and its recommendations were subsequently incorporated into the Telecommunications Act 2001, for the first time putting in place an industry-specific regulatory regime to spur competition and investment.

Some improvements occurred but shortcomings were becoming evident by 2005. The regulatory process was still slow and unwieldy. Commission action was limited to the parties and sometimes contracted out of under potential duress. Moreover the power of the incumbent was not resolved during the LLU debates of 2004. Investment and performance levels were static at best.

These shortcomings were the subject of the 2005/6 Implementation and Stocktake reviews which decided to:

.unbundle the local loop and bitstream,

.speed up of the Commission's regulatory processes

.future proof the role of the Commission

.review the Telecommunications Service Obligation and develop a rural broadband strategy.

.create a fairer wholesale environment by separating the access layer of the incumbent.

Operational Separation was comprehensively dealt with by the Finance and Expenditure Select Committee considering the Bill. I would like to acknowledge the work of two former Ministers of Communications, Hon Paul Swain and Hon Maurice Williamson on that committee

Parliament passed the resulting Telecommunications Amendment Act in rapid time, implementing the reforms by an almost unanimous margin in December 2006.

These changes were a watershed in NZ telecommunications policy.

May 3 2006 - the day policy was famously leaked and announced - will always be etched in my memory. Apparently the messenger did it behind the bike sheds with a mate from Jervois Quay.

At the time we had to make a fast decision to stick with the reforms and announce them early. We did so without hesitation.

The result was that, arguably for the first time since Telecom NZ was privatised, regulatory policy was able sufficiently to stand up to an apparently dominant incumbent.

The resulting changes have been far reaching - I do not need to labour them in detail with this audience.

Industry cooperation has accelerated, and I want to recognise the work of the Telecommunications Carriers Forum that this week unveiled the new Disputes Resolution Service - another significant step forward for the sector and consumers.

Telecom has a new team at the top. We welcome today its new CEO Dr Paul Reynolds. He has demonstrated considerable goodwill in our shared work on operational separation.

Telecom has committed to a more rapid, and legally binding, rollout of an equivalence-of-inputs compliant Next Generation Network (more on this later).

There is some evidence of a new recognition by Telecom of the importance of the customer; a realisation that New Zealand's historical levels of investment have been too low, and that catch up is now required.

Does this mean we should all assume we live in the most benign of all possible worlds?

Of course not. This government will continue to be vigilant and to drive for the best results for the market and for the public of New Zealand.

This sector and its contribution to New Zealand's economic and social transformation are too important to do otherwise.

But I do detect a new enthusiasm in the sector - a belief that once again Kiwi ingenuity marred to high technology can help carry this country forward.

You know I have always enjoyed attending the Tuanz Innovation Awards dinner and the NZ High Tech Awards. In 2005 the mood was one of despair. In 2006 it was one of amazement. In 2007 it has been one of hope.

In other words, we have come from an environment where our broadband infrastructure has been too slow, our cross sector productivity gains too low, and our digital divide too high.

Changes of the past few years have brought new hope. New Zealand today is more competitive and has a better knowledge backbone.

Thanks to all of you the ICT sector is growing strongly. According to an NZTE survey total sales of ICT services rose 7.9% in the 2006 finaincial year to a massive $17.6 billion. Exports grew a whopping 19.9 % to $1.6 billion.

Kiwi creatives are winning on the world stage and this sector is going places.

But good is not good enough. Our challenge is to be world class, with globally competitive ICT infrastructure, globally competitive productivity and international connectivity that supports our domestic transformation.

Our challenge is to translate hope into more real results; to stretch our level of ambition: to redefine the horizon of the possible.

Where Are We Now?

Ladies and gentlemen, we are now operating in an environment where expectations are growing.

GenY has expectations beyond anything GenX or babyboomers can fathom. They want it fast, they want it now. They expect it customised not off the shelf; they want it interactive not passive. We will hear more from GenY soon.

Web 2.0 technology has changed consumer behaviour from passive to participatory. It's enabling peering, wikis, blogs, social networking, open source, file sharing and peer production are enabling us to become 'more global' and more connected at all levels.

Many of our knowledge businesses are "born global". Star performers Rakon, Endace and Xero spring to mind.

New Zealand businesses and consumers therefore need fast, affordable broadband to exploit the benefits that new technologies offer.

Fast, affordable broadband is essential to lift economic growth and to drive productivity.

It is a necessary condition for economic transformation - not sufficient in itself, but without it we don't get to play to global standards.

Towards the Future - The Broadband Pathway

So how do we get there? What is the roadmap to the future of fast broadband?

The government's stated goal is to reach the top half of the OECD for broadband performance by 2010, with our trajectory tracking to reach the top quartile by 2015. Achieving such a goal will require a substantial increase in investment in New Zealand's broadband infrastructure.

The stocktake and regulatory reforms have laid the platform to achieve the goal; however, let me say up front that in our view further government intervention is necessary.

Through the process of negotiating the terms of operational separation, Telecom has proposed to increase its infrastructure investment in urban areas by $303 million above baselines over four years.

This level of investment will make a significant contribution to improving broadband performance, but will not be sufficient for the country's economic aspirations.

By way of overview, the government has formed the view that the particular infrastructure gaps requiring further investment are:

.extending fibre-to-the-node (FTTN) further than is currently planned by Telecom;

.improving the availability of very high speed services to businesses in large cities (such as through urban fibre loops);

.improving rural broadband infrastructure and

.improving the country's international connections.

This range of different targets and the different potential sources of investment dictate a menu-based approach to acquiring the necessary investment.

The government has set a vision; it has moved a long way to achieving that vision through regulatory reform, but is now considering fresh new policies to address the key bottlenecks

The government is interested in alternative ideas for meeting the country's investment requirements and may be prepared to support such ideas through to fruition. Let us turn to consider each of those investment gaps in turn.

Accelerating Investment in FTTN Infrastructure

Telecom's operational separation undertakings to deploy FTTN are necessary, but not sufficient steps for improving New Zealand's broadband performance.

One of the main infrastructure gaps identified in the October Cabinet paper was fibre-to-the-node (FTTN), the deployment of fibre from an exchange to a roadside cabinet thereby shortening the length of copper to an end-user's premises.

Through the operational separation process, Telecom has proposed an investment in FTTN as part of their undertakings. This investment is an extra $303 million above its business-as-usual-investment over the next four years, taking Telecom's investment in fibre from about 200 cabinets per year to around 1000 cabinets per year.

Telecom's public commitment to increase investment levels in the operational separation context is to be welcomed and appears to represent a better alternative for the company than investing in retrofitting its legacy systems with equivalence-of-inputs (EOI) capabilities. We welcome that.

The level of service that is proposed by Telecom is a considerable improvement on current offerings in New Zealand. From a customer perspective:
.80% of households will be able to experience a basic triple play service, which includes standard definition television, telephone and fast internet; and
.The increase in the deployment of cabinets brings fast internet connections much closer to firms that are willing to pay for an extension of the fibre.

The Telecom proposal also leaves open opportunities for other service providers to take advantage of local loop unbundling and provide competing broadband services from Telecom's exchanges.

However while the proposal represents a significant improvement on current standards in New Zealand, we assess that by the time of completion it will be at the low end of performance internationally, with the FTTN proposal still resulting in relatively long copper loop lengths compared with the current upper quartile of the OECD.

Telecom's proposal will result in a significant improvement in broadband performance by 2012, but would leave New Zealand with less than the 2007 capabilities of leading OECD countries and is unlikely to enable New Zealand to achieve its broadband aspirations.

Telecom's design standard is currently being built to suit the roll-out of ADSL2+ technology. Many providers in overseas countries have already moved past ADSL2+ and are designing their networks to support VDSL2, a technology that can facilitate speeds of up to 50Mbps over copper loop lengths of 1km. Telecom's proposal to only cabinetise copper lines that are over 3.6km in length would appear to be very cautious.

A way forward

The government's long term vision is fibre to the home (FTTH); however, the economics for this to occur in the short to medium term are simply too challenging. It is proposed that the immediate goal for the deployment of FTTN is that by 2012:
.Towns with greater than 10,000 residents (representing approximately 76% of telephone lines) will have access to broadband at speeds of at least 20Mbps; and

.90% of New Zealand's lines will have access to broadband at speeds of at least 10 mbps

A key barrier to investment in FTTN is the reluctance of traditional telecommunications investors (particularly publicly listed companies) to accept the levels of return and longer time horizons that are needed to justify investment in fibre infrastructure.

The challenge is to unlock the capital of those investors who are not driven by short-term investment cycles and may be willing to accept a rate of return that is more reflective of a utility infrastructure provider.

There is merit in exploring alternative investment models for investing in the deployment of FTTN. I am aware of growing debate on the potential of establishing an investment vehicle that is receptive to receiving lower levels of return than have traditionally been available in the telecommunications industry.

Tension between LLU and NGN rollout

I am aware of some disquiet within the industry about the effect that Telecom's plans will have on competition and LLU. Despite this I consider Telecom's plan to be a positive step forward.

The deployment of fibre closer to premises is necessary to advance improved broadband performance and enable new applications and greater innovation from the industry and end-users.

I have been advised that Telecom's cabinetisation plans will only affect on average some 40 per cent of lines from a Telecom exchange that has been selected for cabinetisation, meaning that LLU will continue to be viable in many locations. For the short term. Following the initial notice period that has now passed, Telecom must, by agreement with the TCF and the Commission, provide two years notice of any further cabinetisation.

The Commission is also in the process of finalising a new bitstream service that will provide greater options for new entrants. In addition, the government has provided for the regulation of sub-loop unbundling, which the Commission is in the process of working towards. Under the proposed separation undertakings, Telecom's NGN access layer must be EOI compliant.

We will continue to monitor the state of competition within the industry. It is important to note that there will always be a tension between promoting investment and competition within the industry. However, I'm confident that we have the right regulatory settings in place.

Accelerating Investment in Urban Fibre Loops
While FTTN investment will meet the needs of small businesses and residential users, further investment is needed within urban centres to meet the needs of larger firms that have high bandwidth requirements.

With Telecom's FTTN proposal, end users are much closer to accessing very fast internet because the upgraded cabinets can supply a very fast fibre product (1Gbps), as well as the copper-based broadband. Accordingly, it would be much cheaper for small businesses that are dispersed in residential areas to pay for the extension of the fibre to their premises.

Businesses located within central business districts (CBDs) and industrial areas are typically likely to require higher-bandwidth services. While such businesses tend to be able to attract good service from telecommunications companies because of their scale and proximity to core backhaul, it is likely the government could play an important role in stimulating competition with a view to putting downward pressure on pricing.

In a few major urban areas, encouraging some infrastructure competition is likely to have the effect of both getting fibre closer to key firms, thereby lowering their connection costs, and lowering access prices for service providers allowing them to deliver better quality service offerings at lower prices for consumers. Such an initiative would be consistent with the government's economic transformation priorities.

One means of creating competition in the delivery of high bandwidth infrastructure to key business sectors is for the government to continue to co-fund the deployment of open access municipal fibre loops through an extension of the Broadband Challenge Fund (BBC).

Under such an approach:

.Implementation would be rapid, Wellington and Auckland local authorities already have proposals for open access urban fibre loops that are well advanced;

.The targeting of the Broadband Challenge could potentially be further refined by requiring the loops to encompass schools and hospitals.

.Applicants could undertake demand aggregation, which in turn increases the likelihood the infrastructure will be efficiently used and will be commercially viable in the longer term; and

.As the loops are open access any service provider can use them, resulting in competition in service and price.

.A potentially complementary proposal is to broaden the scope of the BBC fibre programme to include a contestable stimulus for fibre backhaul to link together the urban fibre loops. For example, the provision of seed funding by the government may be able to accelerate work being done by FX Networks, with Transpower and OnTrack, to link and leverage latent fibre already deployed.

Rural Telecommunications Services

Currently only ~54% of Telecom's 231,000 rural telephone lines are capable of offering broadband services to users, although there are significant regional disparities across the country.

For a significant period of time it is our view that there has been considerable underinvestment in the rural telecommunications network, for example:

.It is estimated that Telecom has invested $22 million annually on the rural fixed network over the past 13 years, covering both growth and replacement investment.

.By contrast, Telecom's annual rural depreciation is estimated to be $50-$70 million, with the age of the rural network suggesting that an ongoing replacement programme should now have been put in place. It is estimated that Telecom currently receives around $25 million per annum in subsidies from the rest of the telecommunications industry for meeting its obligations to provide a fixed telephone service to commercially non-viable customers under the Telecommunications Service Obligations (TSO). It is fair to say Telecom's average net new investment on rural lines in the recent past has therefore effectively been negligible.

We therefore note the importance of Telecom's role and the need to upgrade rural investment, especially in backhaul services;

A range of technologies are needed to fill the gaps and that the mix will need to be optimised around customer needs and location. Local government has a key role to play in this process.

Imagine you're on the West Coast of the South Island, with its rugged coastline and remote valleys extending from Karamea in the North to Haast in the South. Many of its valleys contain multi-million-dollar dairy farms that are critical to the economy. Like many remote areas, the West Coast's population simply isn't large enough to attract investment in broadband infrastructure.

Project Probe was the catalyst for broadband penetration in places like the West Coast. The West Coast Broadband Taskforce was established and a vision and a plan of action were developed. The Taskforce brought together representatives from industry, education, health, iwi and Development West Coast with a purpose to deliver broadband. By the end of this year broadband coverage on the Coast will have exceeded 96 per cent!

The government is prepared to work with the market to improve the current coverage of broadband and the performance of the network in rural regions, including through the possible provision of funding (such as a broadband toolkit) from the Broadband Challenge Fund.

Of course a range of options are under consideration, but that it is premature to speculate on this in advance of the conclusions of the TSO Review and the finalisation of Telecom's undertakings.

What I can assure you is that the government is fully aware of the needs of rural users, and their importance to New Zealand. A mix of technologies will be used to service this. A range of policies are being considered, including a potentially upgraded and/or contestable T.S.O and possible Crown contributions to Kordia or other vehicles to accelerate rural rollout.

International Connections

The performance and pricing of broadband connections in New Zealand are highly dependent on the country's connection with the outside world. Currently the Southern Cross cable has a near monopoly on New Zealand's international traffic, providing a connection from Auckland to both Australia and the USA.

The problem with New Zealand's international connection is the price of transporting data from New Zealand to the USA as opposed to capacity constraint. Officials understand that the average consumer pays about $9 for international connectivity per month. This is a significant fraction of a monthly charge of between $30 and $50.

In the short term, it is likely that traffic from Australia to the USA will become more competitive because of planned new cables and this may lead to downward pressure on prices. Accordingly, facilitating investment in trans-Tasman connections is likely to be an effective solution for reducing the price of international bandwidth.

A second fibre cable to Australia (and thereby facilitating access to the rest of the world) could also significantly improve our network resilience.

Although there are signals the market will invest in a competing trans-Tasman cable, I do not yet consider that this investment will be sufficient to place sufficient downward pressure on pricing.

There are also potential economic benefits from the increased security and resilience that additional cables can provide.
The country's broadband future is, in part, dependent on greater levels of investment in international cabling.
The pricing of international bandwidth is a significant problem, particularly for the digital content industries and the government is also concerned about issues of resilience.
I recall hearing stories of digital graphics creators waiting until cruise ships entered Auckland harbour so they could upload files to the US via the ships Wifi networks (or worse sending discs on planes via Los Angeles).
The government is therefore examining a range of possible options for facilitating further investment in New Zealand's international connections.
The government recognises the importance of international connections and could consider a partial contestable subsidy for a further fibre cable to Australia for resilience and security purposes, potentially to be operated on an open access basis.

I propose to monitor progress that is being made in investment in international connections and the trend of international pricing for New Zealand users, and to report to Cabinet as needed on this issue.

Summary of Key Messages

Let me take this opportunity to summarise.
The government's long term vision is for fibre to the home, which is consistent with its aspiration to rank in the top half of the OECD for broadband uptake.
The government welcomes Telecom's offer on FTTN investment as a useful starting point and that it expects to make progress on the discussions with Telecom on Operational Separation.
The government's vision in the near term is for speeds around twice those offered by Telecom in towns over 10,000 population (a minimum of 20Mbps) and to extend the Telecom offer of 10mbps to 90% of households by 2012.
The government has an ongoing role as a regulator, investor, owner and customer and sees broadband investment as a priority through these multiple lenses.
Government observes that traditional models of telecommunications companies are challenged by the level of fibre investment required to lift our OECD performance.
The government is aware of work being done to develop new approaches to investment and welcomes fresh thinking on the most appropriate means to deliver fibre investments; we look forward to your discussion on this key point.
The government is building on the substantial changes resulting from 2006 Stocktake.
We are taking a multi-faceted approach, with recent examples including:
.Aggregating demand (particularly government demand)
.Partnerships with local governments and communities
.Removing regulatory barriers
.Auctioning spectrum suitable for broadband mobile and wireless.
I would therefore wish to signal:
.The likelihood of a new Broadband Challenge Fund for urban fibre loops;
.That the government is prepared to work with industry to improve the current coverage of broadband in rural New Zealand, including through the provision of seed funding;
.A reformed TSO and the option for government investment through Kordia are also being considered to improve investment in rural regions;
.The government is actively watching international links and is considering a contestable subsidy for construction of a cable for resilience purposes; and
.The government is actively interested in hearing views from industry on non-traditional models for investment in FTTN.


The challenge of this conference is to NZ ICT to the next level. This will require the partnership outlined in the original strategy - government, sector, and business. But also community.

Contributing to the refresh of the Strategy is only one part of the puzzle. I'm calling on all of you here today to think about how you can contribute to New Zealand's digital future.

By way of example, I recently heard of a person who emigrated to the Wairarapa for lifestyle reasons. He began Fed-Ex'ing tapes to the US to do the Walmart database administration. But with the advent of broadband he was then able to do the database administration overnight. He is now competing on the global market with other database administrators. This made him competitive, helped him maintain the lifestyle he wants, and of course, now he gets carbon credits.

Maybe there is something in this for us to hold on to. New Zealand leveraging its well-deserved reputation of having a great lifestyle and environment with world class technology enabling us to compete and win on a global scale.

We are already good. We are not good enough.

Over the next two days I challenge you to have your say, join in the conversation, reflect on where we've come from, where we are now, and what we must do to advance New Zealand's interests.

Be open minded. Contribute. Have confidence that this is not just about talk but about the development and implementation of concrete actions that will form part of NZ s Digital Strategy 2.0


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