Broadband not crucial to economic growth, says Telecom funded academic

, posted: 20-Sep-2006 09:25

The Herald has an interesting story today about an academic submitting to the Parliament Finance and Expenditure Select Committee that faster broadband that is taken up by more people will not deliver economic growth.

In the Herald story, Bronwyn Howell, a research associate with the New Zealand Institute for the Study of Competition and Regulation or ISCR, says the government's argument that broadband is crucial to NZ's economic growth is flawed.

Home users -of audio, video streaming and gaming appliances - were the ones failing to take up broadband.

"It is not at all clear that the benefits of widespread uptake of these technologies would be easily measured in GDP numbers," she said."

Curious notion that. So residential users facing expensive broadband packages that include a steep line rental, low data caps that rule out streaming anything, under-dimensioned, congested networks on which real-time apps like gaming and VoIP are deliberately degraded aren't interested in such connections? I do wonder why.

If there's no impact on the economy at all with broadband as Howell says, why on earth does Telecom bother with it? Apart from slamming the government's proposed regulation and industry stocktake, it's not clear what the purpose of Howell's submission is. Why is Telecom building an all IP-based NGN when Howell clearly says that such a broadband network is futile?

Nevertheless, according to this Dompost report, select committee chairman Shane Jones heaped praise on Howell's submission. In a rare display of political unity, the Dompost says Jones, ACT leader Rodney Hide and National's communications spokesman Maurice Williamson lauded the 160pp submission by Howell as "the best that had been made to the committee on any issue". It would be interesting to see actual transcripts of that day's proceedings.

ISCR says this about themselves:

ISCR is an independent, nonprofit research institute that focuses on competition and regulatory issues. Established in February 1998, it is located in Victoria University of Wellington’s Rutherford House campus in downtown Wellington, New Zealand and is funded by both private and public sector organisations.

However, Telecom seems to be a core founder of the institute. Its other members include Contact Energy, Fonterra, Meridian Energy, NZ Post, Powerco, Transpower, Vector, Westpac, and Victoria Uni. An acquaintance jokingly pointed out that apart from Vic Uni, all the other members are monopolies and that the institute is perhaps misnamed for that reason.

The Herald says that Telecom commissioned Howell to put together a paper on unbundling in 2003 and she has been involved in telecommunications regulation for a while now. From what I can tell, Howell has consistently opposed breaking up Telecom's monopoly and has attempted to explain away the low broadband uptake with various means.

For instance, I found the below nugget in a transcript from the LLU conference from 2003:

And this is a McKinsey survey across a number of countries, and I know that in the Howell study it refers to Korea having large broadband uptake, she says possibly because people in Korea breach copyright and apparently New Zealanders are more law abiding than Koreans.

Elsewhere on the ComCom site, I found this document that indicates not everyone sees Howell's findings as accurate:

Outline and key findings of Network Strategies’ study

* Network Strategies’ analysis was a simple but sound analysis based on the Oftel methodology

* Our key findings were that:
* Howell’s analysis is seriously flawed and therefore the results are invalid
* Xtra’s broadband ADSL services are competitively priced at low usage levels but at
higher usage levels are priced at a far higher level than other operators

That document is of course from late 2003, and things have changed since then, but this is what TUANZ has to say in response to what Howell submitted to the Select Committee in 2006:

Telecommunications Users Association of New Zealand chief executive Ernie Newman said Howell's work was "substantially out of line with both prevailing international opinion and real life experience".


Other related posts:
TDD vs FDD for LTE
Huawei TDD LTE demo aboard the Shanghai MagLev train
Apropos that new Telecom logo

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