In defence of UFB – NZ Taxpayers Union’s UFB claims flawed

By 2017-04-13 Blog
UFB

Before Christmas (I have been busy, just catching up…) the NZ Taxpayers Union was commenting on findings from a study carried out by Motu Economic and Public Policy Research on behalf of the Ministry of Business, Innovation and employment.

Jordan Williams of the Taxpayers Union had a fair amount to say about this study, and a lot of it can be found in this article, but the key point made was that no productivity gains had been gained and the $2billion spent by the Government had been wasted on corporate welfare (in the form of UFB).

Motu’s report did find that no clear improvement came from simply having UFB, but it also concluded that productivity gains came through what UFB enabled, not through existing in its own right.

By now we should all know that UFB is simply the network on which we can layer more applications and content. If the copper services of 2011 were a single lane road, we now have increasing access to a four lane motorway, but that in itself doesn’t achieve much, it is what we do with that capability.

There are certainly businesses that get a UFB connection simply to increase browsing speeds, but the majority of internet sales now also include IP voice (among other things), something that was much more difficult to run effectively prior to UFB. Even just enabling IP voice results in lower call costs, enhanced features, and better management of remote staff.

The Taxpayers Union seem to be advocating a model similar to that seen in Australia where copper access is used to gain top end speeds of 100Mbps/40Mbps on the NBN network (Australia’s flawed version of UFB). This solution doesn’t scale, and doesn’t cater for the corporate market at all.

UFB is as much about taking the brakes off NZ businesses as it is about providing a direct return in its own right. Having low cost access to internet allows NZ business to play on an even playing field, or in the case of Australia, a fair way ahead.

With only 22% of NZ businesses connected to UFB, and a sample size of only 2013 businesses, I feel that the data set is too small to gain a meaningful insight, but regardless, my experience shows that businesses with UFB have a far greater ability to cut costs through innovation, embrace new technologies, and allow for remote workers.

When the Government builds a motorway, do we all stand back and expect the money to start rolling in? No, we don’t. Nor should we with UFB. But when a motorway is built, we understand trips will be faster, and more vehicles can make the trip at the same time, meaning more goods can be carried and more people moved. The same increases in efficiency and productivity are gained through bigger pipes, and when those fibre pipes are able to scale up with demand over time, rather than being limited in the way copper is, you can’t argue with the value being added to the economy.

Jordan Williams needs to understand that this rollout has secured New Zealand’s online future through building a robust, scalable and cost effective network, and that there would have been a huge opportunity cost in the long run if it hadn’t been carried out.

Brendan Ritchie

Author Brendan Ritchie

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