The importance of the underlying networks huge for NZ’s future

If all firms were more extensive users of internet services, the productivity impact on national gross domestic product would be as much as $34 billion a year, a NZTech first-ever investigation report into the state of technology says.

The economic impact of the Internet and the importance of the underlying networks are beyond question, NZTech chief executive Graeme Muller says in the landmark report.

“We must ensure that network builders and the operators using them continue to have incentives to invest to maintain our global competitiveness. The regulatory frameworks for telecommunications after 2020 are a current item of discussion. We want to see the Government carefully consider the importance of certainty in the telecommunications regulatory framework when looking at how best to regulate ultra-fast broadband (UFB) services from 2020.

“The largest economic growth opportunities from the internet will come from businesses and government organisations throughout New Zealand effectively using internet services better to improve their productivity. We recommend the government continues the efforts to help New Zealand businesses secure the benefits of increasing use of internet services.

“New Zealand is well placed among developed countries in the rollout of fibre, wireless and international cable networks. The Government’s UFB programme and Rural Broadband Initiative (RBI) are advanced and these networks are critical drivers of economic activity, productivity growth and employment across the economy,” Muller says.

By December 2015, the UFB network was available to 875,000 households and businesses, 60 percent of the total target of connecting 1.459 million households and businesses with fibre to the premises by the end of 2019. The 1.459 million households and businesses correspond to network coverage of 75 percent of New Zealanders, according to the NZTech report.

The critical network infrastructure for delivering fast internet connection is not limited to fibre deployment or fixed networks. With the growing trend of mobility and the use of mobile data the mobile networks are also an essential part of the underlying connection fabric.

Mobile data traffic in New Zealand is forecast to grow at a compound annual growth rate of 43 percent and is now measured in exabytes or a billion gigabytes. In New Zealand in 2015 mobile data exceeded 0.1 exabytes, which may not sound much but it is equivalent to 10 percent of all global traffic only 15 years ago. Most of the demand has been coming from the growth in smartphone connections, but as the internet-of-things grows, machine to machine connections are also growing rapidly.

With the demand for data comes the demand for speed so a continuous evolution of mobile networks is needed. The transition to 4G, fourth generation mobile network infrastructure, is still underway and already the telecommunications companies have started planning for 5G which will only be a few years away from deployment.

Investment in telecommunications is high in New Zealand. New Zealand is near the top of the OECD rankings in 2013 for the proportion of telecommunications revenue that was invested by operators. Total telecommunications investment reached $1.7 billion in 2014 including the UFB and RBI investments, the report says.