The hope was revealed as hype when telecommunications competition became focused on wealthier suburbs, industrial parks and the CBD of major cities. Post offices, banks, government departments and businesses continued to withdraw from the provinces leaving ghost towns in their wake.

Despite being the first nation in the world to fully deregulate telecommunication our carriers squandered their global edge squabbling with each other over who had rights to what, more interested in pleasing shareholders than closing the digital divide.

And 15-years later they’re still arguing over interconnection costs, equitable access to Telecom’s last mile and number portability. Attempts by government to speed things up have rarely produced results. Most recently communications minister Paul Swain promised outlying communities would have access to "the same kind of two way high speed internet available to those in major cities" by the end of 2003.

His prediction made in early 2002 has been revised to the end of 2004 and already shows signs of slipping away.

Independent headway

While the government is forging ahead with Project Probe several local authorities, community trusts and private groups including those in Northland, Wairarapa, Taranaki and Southland have made independent headway.

Southland produced Blazing a Trail for the Information Highway, a regional assessment with insights into consumer needs to help commercial players judge market size and demand before going to tender.

Successful consortium Walker Wireless and Vodafone will now deploy 128kbit/sec or faster to 95 per cent of the population by 2004 for a standard rate of about $80 per month. An undisclosed investment has been made to ensure access into marginal areas.

The initiative kicked Telecom into gear with DSL rapidly enabled throughout Southland. Telecom chief operating officer Simon Moutter expects broadband coverage to reach around 80 percent of rural New Zealand households by June 2004 through partnerships and investments using Jetstream DSL and BCL’s wireless technology.

Forcing Telecom’s hand

"We’re already light years ahead of where we were 18 months ago when DSL didn’t even feature here. There’s no doubt going to market for an alternative solution forced Telecom’s hand," says Venture Southland special projects development manager Steve Canny.

Venture Southland has since been swamped by inquiries from other regions wanting to understand how it got its way. "Community leaders have a key role to play in the area of telecommunications. Bandwidth is critical to economic development. Unless you have a competitive environment you will always suffer from a lack of effective communications and reinvestment in existing networks."

Mr Canny says bandwidth and application use is doubling each year. "You need the right architecture and migration path. We might accept 1Mb today but within 12-18 months 2Mb is likely to be the benchmark."

He says pricing of bandwidth is a huge obstacle to the traditional telco model and there’s need to move to open access type networks where you pay for access not megabit usage.

This month the Government-led Project Probe (Provincial Broadband Extension) signs contracts to deliver broadband to 15 remote regions. At least six bids have been received for every region and eight for some - 10s of millions of dollars have been set aside to help offset the commercial risks.

Successful consortia, likely to include BCL and Telecom, Walker Wireless and Vodafone, UCC Technology, Counties Power, Ihug, TelstraClear and others, will need to establish additional cell sites, antennas, DSL and wireless nodes to achieve the required coverage.

Probe not compulsory

While communications minister Paul Swain initially suggested he might require government departments, local authorities and schools to bundle communications needs to attract the best deal from broadband suppliers that may have been a politically incorrect notion.

The Ministry of Health has signaled its willingness to be involved in wider roll out of broadband but they and other government agencies and local authorities have the option to remain with existing suppliers or find new players.

And while Project Probe may have the solution for many regions it also represents a bit of ‘cherry picking’ geared to community based approaches and local schools, says Federated Farmers deputy director policy, John Pask.

"Ideally you need to have access at the individual workplace and you could end up with taxpayers funding something that sounds good but reaches only 50-60 per cent of the rural community. No-one wants to jump in the car and travel 10km to the local school to log in at 10pm," says Mr Pask.

He’s also concerned that different consortia building infrastructure in rural areas could create a complex and possibly incompatible mix of technology across the country.

Mr Pask says the solution proposed by multinational dairy co-operative Fonterra sounds much more attractive with potential to reach 13,000 farmers. "That’s a big dollop of guaranteed customers and they’re likely to get a reasonable deal. The question then becomes to what extent can other players piggyback off that network."

Farming gains promised

Farming remains the backbone – the engine room for the New Zealand economy - and is likely to be disadvantaged without speedier access to the growing number of on-line services that support that industry. An OECD report from December 2002 suggests the dairy industry here might achieve productivity gains of up to $280 million if the right applications and tools were available to farmers over the internet.

An AC Nielsen survey last year found 63 percent of farmers with a gross income of more than $100,000 had access to the internet - with dairy farmers it was closer to 80 per cent. It's estimated about 300,000 users visit an agricultural website monthly.

Currently farmers enthusiasm is curbed by a copper wire infrastructure that often allows less than optimum 9.600 kbit/sec dial-up connections Telecom has committed to upgrade its network to 14,400kbit/sec across most of the country, however that’s still traction engine speed when you talk about web access.

While Project Probe is a bright light for the rural landscape Fonterra’s imminent offering seems about to eclipse it. The first stage of it high-speed internet offering using Telecom's Jetstream and BCL's Airspan wireless services with satellite infill will be live before November.

Users are expecting a flat-fee service with a 500 Mb monthly cap and incentives including discounts on tolls and calls to cell phones for about $80 per month.

Grassroots shock

John Pask of Federated Farmers welcomes both broadband initiatives with caution. "People have been promising these sorts of things for three or fours years. Until it happens I think people will remain a bit skeptical."

One grassroots distraction that has raised a few laughs and apparently a lot of crackles on the line is electric fence interference. New Zealand farmers are among the world's highest users of electric fences and since Telecom first shifted the blame for poor service in rural areas it’s received a lot off attention.

An official brochure, the Five-Step Electric Fence Check, says poorly installed or maintained fences can cause loud clicks on phone lines or greatly reduce the speed and reliability of dial-up internet connections.

Poor layout and tall grass apparently causes fences to earth and ark up the telephone lines. And while preventative measures may improve speed and reliability it’s a poor substitute for replacing or upgrading corroded copper and inefficient insulators.

The greatest irony is that while the major telcos grump on about how they lose money by delivering services to rural customers the fact is they stand to gain long-term business if they make the effort. A survey by Nielsen/NetRatings last year found 42 per cent of dial-up consumers said they would pay more for faster service. The research company found broadband users spent almost twice as much time online.

Eagerness for speed

Meanwhile schools in outlying regions have pent up demand to use video conferencing and distance learning so they can participate in leading edge services and link to campuses in the cities. Rural communities are desperate for smoother surfing to access rich media services and essential information to enhance their business and to engage in e-commerce.

We have the technology and certainly the demand is there but the business model – what’s in it for us - is still being worked on. BCL in the process of upgrading 28 sites in preparation for its wireless services but is still looking for providers to sell its last mile capability. Telecom has a non-exclusive deal with BCL claiming it’ll have wireless coverage to 95 per cent of the population by the end of the year but is non-committal about when and where the tap will be turned on.

Even the success of Project Probe depends on co-operation and commercial arrangements. Being able to say services are within reach is one thing, providing last mile infrastructure and connecting customers is another.

At long last there’s momentum among the carrier community to bridge the digital divide but the pressure must stay on from both local communities and the government to ensure the job gets done.

We’re still at network building stage, the issue of ultimately opening up those networks to give customers true choice will still have to be addressed along with pricing to encourage uptake. Unfortunately, as one commentator pointed out, the current New Zealand model is still based on competition for the network not competition on the network.