NZ research questions the value of high speed broadband

Stuart Corner
Monday, 02 November 2009 11:38

Opinion and Analysis

- "First, our split between fast and slow broadband based on the distinction between cable and other broadband types may be a poor representation of differing Internet speeds. In particular, 'cable' in New Zealand may include technologies with anything from average download speeds of 8Mbps to speeds of up to 1Gbps; by contrast, the average ADSL download speed is 5Mbps. A distinction within the cable category, rather than between cable and other, may be more meaningful (but is unavailable within our dataset)."

- "Second, not all survey respondents may be aware of the technical nature of their firm's broadband connectivity type, introducing noise into the data."

- "Third, the cable/other distinction may be meaningful but firms may have only recently adopted cable and are yet to achieve the full productivity benefits from doing so."

- "Fourth, the productivity benefits of moving to fast broadband may currently only be relevant to a small proportion of firms, and so the full future benefits may not be apparent in the existing data. If this were the case, our average firm effect would not be appropriate as an estimate of future benefits of fibre upgrades across the full economy."

The third and fourth of these are particularly relevant given that the data on which the research is based - Statistics New Zealand's Business Operations Survey 2006 - is now about three years old.

TUANZ seized on this to try and discredit the findings, with CEO Ernie Newman saying on his blog that the report's primary finding was "highly misleading...because the data on which the research is based dates back to 2006 and earlier."

And he accused Motu of "Report[ing] on all this outdated data for 35 pages before introducing any caveat about timing." While the report does raise the issue of timing it makes no attempt to examine the state of broadband in New Zealand in 2006 and look at what has happened since.

The uptake of 'high speed broadband' in New Zealand seems to be very recent development. According to Ernie Newman: "In 2006 few businesses had access to high speed broadband. Many thought they were buying it but were actually getting something less. Very few had enjoyed the benefits for long enough to be able to put it to good use or for these to manifest in a generic annual survey. Developments like cloud computing hadn't entered the radar."

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