UFB for all or a new digital divide?

662 2020 Trust 22-05-14LR
Laurence Zwimpfer, Contracts Director 2020 Trust

Minister Amy Adams’ announcement today that more than half a million households, businesses, schools and health centres are now able to connect to ultra-fast broadband is a significant milestone on New Zealand’s journey to become a digitally empowered nation.  What began as a vision some years ago is rapidly becoming a reality for many New Zealanders.  UFB deployment reaches into all urban communities, including areas that have historically been classified as digitally disadvantaged. In Whangarei, for example, the 2013 Census revealed that 21% of households with school-aged children did not have access to the internet compared to a national average of 15% or in the Minister’s electorate area of Selwyn, only 5% of households did not have access.  Yet in the case of Whangarei, 100% of all households now have the opportunity to access a UFB connection.

So the question we really need to be asking is what will it take to match the internet connection rate in Whangarei with that of Selwyn District.  The 2020 Trust will be supporting 40 families in Whangarei get access to the internet during the next 12 months as part of the Computers in Homes programme; our goal is to connect to connect all 40 the Whangarei’s flash new UFB network.  But we have some concerns:

  1. Entry level UFB services are currently priced above naked DSL copper connections – our goal is to procure a fibre connection for no more than a naked DSL connection; this will need cooperation from both the local fibre company and a community-minded ISP.
  2. UFB services come with an installation cost of some hundreds of dollars; DSL services are typically provided for no installation cost.
  3. RSPs are specifying high-priced modems to interface with the LFC’s optical network termination (ONT); a primary purpose seems to be to give the ISP the opportunity to upsell other services such as VoiP telephony over the UFB connection.
  4. Early termination fees can be alarming; RSPs typically require a 12-month contract (mirroring their contract with the LFC).  What this means for the consumer is that they must commit to a full 12 months of costs (typically around $800), even if they move out after only a few months.
  5. Data caps will become increasingly troublesome in a UFB world.  When 7GB high definition movies can be downloaded in seconds, today’s 10GB – 50GB monthly plans will be woefully inadequate.  Smart RSPs are starting to see the value in offering “unlimited” data plans with UFB, but the monthly cost pushes up close to $100.

What does all this mean for our 40 Computers in Homes families in Whangarei?  The current monthly subsidy of $17.50 for the first 12 months means families will have to pay up to $20 a week during the first year (compared to $10 a week for naked DSL), increasing to $25 a week in year 2 when the subsidy is removed.  Will this be affordable or have we just lifted the height of the digital hurdle, creating a new digital divide?