Hard News by Russell Brown



David Cunliffe is ambitious. Whether consciously or not, he has begun to emulate the distinctive phrasing of David Lange when he gives a big speech. And today's speech at the Digital Summit was a big one. The topic was too ridden with jargon and acronym to really support much rhetorical flourish, but good lord, it had content.

The telecommunications industry, and business in general, has been worrying that Cunliffe and his government have charged up a blind alley with local loop unbundling. That the incremental improvements in service and competition it will eventually produce don't come anywhere the kind of infrastructure required for New Zealand to even stay level in telecoms, let alone climb the OECD rankings or enjoy a competitive advantage.

Cunliffe would seem to have been listening. Probably the key point in his speech was his identification of the investment shortfall: in the economy were inherited from our great economic reform, there have not been the kind of investors available who are willing to embrace the more modest level of return and longer horizons implied in broadband infrastructure investment.

The government, he said, is "exploring alternative investment models" -- indeed, soliciting suggestions on same -- that could fund the development of open-access fibre in urban regions, and an alternative fibre link across the Tasman. (The problem with New Zealand's international bandwidth, he pointed out, is not a constraint on capacity -- it's a lack of competition, and the consequent pricing.)

This kind of investment, with its long, secure, debt-style return, seems like a sitter for KiwiSaver funds. That, of course, is not something you could have said 10 years ago -- not only because such funds did not exist, but because here would have been ideological outrage. Telecom's high-return investment model was still being held up as a model practice.

(Cunliffe pointed out that Telecom's capital investment in rural areas in recent years has averaged $22 million annually -- three million dollars less than it gets from all the other operators under their TSO obligations. Depreciation in those areas, meanwhile, has been running at $50m to $70m a year. Go figure.)

Cunliffe also proposed state co-funding of open-access urban fibre loops as an extension of the Broadband Challenge, and an active programme of help for the "least capable" local authorities to bring them up to speed. Open access was a theme. The near-term goal is 20Mbit/s internet access for 90% of the country.

Anyway, gotta run. Suffice to say that Cunliffe has a greater command of the communications and IT portfolios than any minister before him; Labour should regard that as a competitive advantage in itself. His credibility was only emphasised when Pete Hodgson got up and reeled off the string of slogans that is the more usual fare from ministers at these shindigs. As far as Cunliffe was concerned, this was not the Knowledge Wave.

Meanwhile, John Key has a DVD. And he's ambitious too. Sheesh.

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