Address to the 52nd Meeting of the APEC Telecommunications and Information Working Group

Wednesday, October 21, 2015 - 08:00

Opening remarks

APEC TEL Chair Mr Andrey Mukhanov, Vice Chair Mr Morris Lin, distinguished delegates, ladies and gentlemen.

It’s a privilege to once more welcome you here to Auckland New Zealand, for 52nd Meeting of the APEC Telecommunications and Information Working Group.

Some of you may be aware that this is the second time APEC TEL has met in Auckland – the first was in 2006.

APEC represents a regional bloc of considerable economic and political significance to New Zealand. 

We were a founding member of APEC back in 1989 with 12 other member economies, because even then we could foresee the clear benefits APEC would provide for a small trading nation such as us.

Today, 70 per cent of New Zealand’s two-way trade in goods and services is with economies of the APEC region, and fourteen of our top twenty export markets are APEC members.

As the incubator of regional initiatives, such as Trans-Pacific Partnership, APEC sits at the centre of the region’s economic integration agenda. The work you do is incredibly important for New Zealand, and I’m delighted that we’re hosting you all here.

Mr Chair, let me begin by expressing my appreciation for your stewardship in leading the work of this conference.

I understand a great deal has already been discussed over the previous two days.

In particular, I note there have been successful workshops on cyber security and mutual recognition agreements, as well as roundtable discussions spanning digital convergence, infrastructure investment models and next-generation fibre networks.

I would like to acknowledge the contribution of the New Zealand ICT industry to these workshops, including Spark, Northpower, EMC Technologies, and the Innovation Partnership.

Given you’re visitors to New Zealand, I want to give you a quick overview of how New Zealand is grappling with connectivity and how the Government is responding to that demand, and then talk to some of the initiatives we have underway.

Need for connectivity

Like many countries around the world, New Zealanders have an ever increasing appetite for and expectation of connectivity.

In my view, connectivity has become a vital service for homes and businesses, and is regarded as being almost as indispensable as like running water and electricity.

There are few countries in the world where connectivity is more important than for New Zealand.

We’re a nation of just 4.5 million people in a country situated at the last bus stop on the planet, spread across three islands with plenty of mountains, lakes and rivers in between – and we make our living trading with distant markets.

That tyranny of distance from the rest of the world, our unique geography and low population density make rolling out high-speed connectivity all the more important and all the more challenging.

It connects New Zealanders with one another and with new markets across APEC and the world, and allows our best and brightest to export new ideas, services and products.

The Government’s plan for connectivity

Rolling out faster, more reliable internet is a vital part of the Government’s plan in developing a productive and competitive economy and creating more jobs for Kiwis and their families.

As you know, for the past 25 years, APEC TEL’s primary mission has been to ensure that all people in the Asia-Pacific region have affordable access to ICTs and the Internet.

The New Zealand Government has played our part in what goal by investing more than $2 billion in world-class communications infrastructure into two major initiatives that will deliver faster, better internet: the Ultra-Fast Broadband and the Rural Broadband Initiative programmes.

The Ultra-Fast Broadband network is bringing fibre-to-the-home internet of speeds up to 1 Gbps to 80 per cent of New Zealanders in their homes, schools, hospitals, marae and businesses – including all rural public hospitals and schools, and many libraries.  

As at June 2015, stage 1 of the UFB build was 54 per cent complete with more than 724,000 homes, schools and workplaces now able to connect. Uptake is at 14.6 per cent and increasing sharply month by month.

The Government is also making sure that rural New Zealanders can enjoy the benefits of faster, better internet through the Rural Broadband Initiative (or RBI).

Because UFB isn’t feasible for every rural community, broadband internet with peak speeds of at least 5 megabits per second is being provided to more than 90 per cent of homes and businesses outside the fibred areas.

More than 269,000 rural addresses are now able to connect to RBI. We’ve built 116 new towers and upgraded 314 towers.

Our 700 MHz radio frequencies auctions have paved the way for New Zealand’s three mobile companies to build their fourth generation mobile networks.  I expect at least 90 per cent of New Zealanders will have access to a 4G network and faster mobile broadband coverage within five years.

Together, these initiatives will bring the benefits of improved internet connectivity to 97.8 per cent of New Zealanders, opening up a huge range of business, educational, community and other opportunities.

These programmes are already having a measurable impact.

New Zealand now leads the OECD for fibre connection growth.

Our internet speeds have tripled since 2008 and are set to more than double again.

And New Zealand is the country with the fastest 4G in the world at present.

This represents great progress, and positions New Zealand well for the digital future ahead of us. But there is always more to be done.

Extending connectivity further

So the Government has extended the UFB and RBI programmes even further.

An injection of a further $210 million will increase the number of New Zealanders with access to UFB from the original 75 per cent to 80 per cent, which will mean an additional 200,000 New Zealanders will have access to fibre internet connections.

More rural New Zealanders will have access to the RBI too, with another $100 million to extend it further and another $50 million to fix mobile coverage black spots along main highways and at major tourist sites.

Crown Fibre Holdings, a Crown Investment Company set up to negotiate and manage the contracts around the first stage of the UFB programme, will have ongoing responsibility for UFB and the Government’s RBI and the Black Spot Fund.

We recognise the ever-increasing demand for high-speed broadband across New Zealand, and its importance to regional growth, which is why I recently announced a bold new connectivity target for regional New Zealand.

Under this target 99% of all New Zealanders, regardless of where they live or work, will be able to access broadband at peak speeds of at least 50 Mbps by 2025.

The remaining 1 per cent will have access to 10 Mbps. 

This change will see New Zealand move from 17th in the world for rural connectivity targets to 7th and ensure no-one misses out on the opportunities of the digital age.

We want to see all Kiwis, whether urban or rural, with access to the economic and social opportunities high-speed connectivity brings.

However, it has become clear that in New Zealand, a focus on infrastructure investment alone can us only take us so far.

Embracing the digital economy

A healthy digital economy is also critical to our success.

Last year I launched a report commissioned by the Innovation Partnership that highlighted the $34 billion opportunity to realise productivity gains if all New Zealand businesses were using the internet to its full potential. 

That exemplifies the challenge, and opportunities, ahead of us. 

We are making great progress on rolling out better broadband, but our focus as a country and as a region has to be about getting the most of that investment, and seizing the enormous opportunities it presents.

I’m pleased to see APEC TEL has risen to this challenge.

The new APEC TEL Strategic Action Plan 2016-2020 – endorsed in Kuala Lumpur in March – has strong focus on ICT innovation and skills, and will provide an ambitious statement of work for the next four years.

I also welcome APEC’s establishment of an independent Ad-Hoc Steering Group, which will coordinate cross-fora discussion on Internet Economy issues. This is an important step towards fostering greater internal cooperation in the way APEC addresses ICT issues.

Digital convergence

The disruptive influence of digital technology is opening up exciting possibilities in almost every part of the economy.

While as a Government we made broadband and connectivity a top priority – it’s only the beginning.

There is fundamental change happening as a result of digital technologies and the pace of that change continues to accelerate.

The development of digital broadcasting, data compression and internet-based technologies, coupled with improved infrastructure capability, means that content and services which were previously constrained to one delivery channel can now be delivered over many different platforms.

With a single device such as a smartphone or tablet, we can access services that would previously have required three or four different devices and service providers.

While convergence is great for consumers, it blurs the boundaries between industries which were historically separate and creates confusion when seen in light of our current legislation and policy.

New Zealand’s regulatory and policy framework in this area has worked well for many years, but because of the dramatic shifts in the broadcasting and communications landscape, it is now outdated and out of step with today’s realities.

The regulatory regimes that developed around the telephone and broadcasting industries were based on specific technology platforms, with different rules for each distinctly perceived industry. This approach was widely followed around the world.

For regulators, the challenge now is to make sure our policy and legislative frameworks align with the new market, behavioural and technological realities.

Our regulatory system should reflect reality, and be flexible and durable enough to cope with future change. Regulation and policy needs to enable innovation and growth, while ensuring a fair and even playing field for competition.

To this end, I launched a cross-government work programme to tackle the opportunities and challenges of digital convergence head on.

My view is that we don’t want government leading, defining or constraining innovation in this space, but instead supporting it, so our job is to make sure we have regulation which is platform-neutral, appropriate to protect New Zealanders, and which doesn’t limit how markets will develop or evolve.

Telecommunications Review

The Government is also undertaking a comprehensive review of the policy framework for regulating telecommunications services in New Zealand. 

The review forms a part of the Government’s cross cutting work programme on convergence.

New Zealand’s regulatory regime has generally been delivering competition and choice, and better quality services at reasonable prices.

But the communications market has evolved significantly in the past ten years.

In September, I released a wide-ranging discussion document seeking views from the public and industry on whether the regime is fit for purpose and options for change.

The discussion document looks at market conditions in New Zealand, and asks whether our regulatory systems will be appropriate for a converged communications sector, with changing consumer expectations.

The Review will assess whether the current regulatory framework is the optimal one for competition, investment and innovation after 2020.

Our goal is to develop a framework that supports competition, innovation, and efficient investment for the long-term benefit of telecommunications users and for New Zealanders.

We need to clarify the way UFB will be regulated after 2020, and this is an opportunity to put a predictable and enduring price control regime in place.

The shape of competition in New Zealand is changing. The open access UFB network enables even the smallest of RSPs to launch and provide UFB services.

Our current process for setting wholesale prices for the copper network might not be the best approach in a fibre-based world. The process is also unique to New Zealand, and is bespoke for communications networks. 

Other utility sectors – electricity lines and gas pipelines – are regulated in New Zealand under a ‘building blocks’ model. This could provide one alternative which is more familiar to investors and still delivers for consumers.

Predictability about the way the regulatory regime will operate is critical for players looking to make investments in high quality infrastructure. 

The more certainty they have about the regulatory environment and the more timely decision making process are, the better placed they are to deliver meaningful and timely technology choices for end users.

We also need to support continued competition and coverage in mobile markets.  New Zealand has moved ahead in leaps and bounds in the developing a competitive market for mobile services, but we need to make sure this continues with the rollout of new networks like 5G post‑2020.

We also need to support the provision of quality mobile services to rural areas, by encouraging expanded mobile coverage.

The review also looks at topics like net neutrality, the future of the copper network as consumers move to fibre services, and ways to encourage deregulation where conditions exist. 

This review process is designed to consult widely and get a range of views on the future of our communications regulation.

Closing remarks

For consumers in the APEC region, the digital economy brings greater choice and lower cost.

Today’s consumers can select the devices that best suit their lifestyles and connect them to one or more network providers to access the services and content of their choice.

For policy-makers and regulators however, these rapid changes in technology create the risk that today’s regulatory regimes may rapidly fall out of tune with changing business models and consumer expectations.

APEC TEL’s long-term vision is that by 2020, APEC has established an ICT ecosystem.

To achieve this vision, we must collectively make sure that regulation is not standing in the way of the creativity we seek to foster. We need to make sure our rules and policies are up to date and flexible to achieve a clear, public purpose.

This all adds up to being open to digital disruptions, and driving a strong work programme so we are positioned to take advantage of opportunities.

I hope you find some time among your busy discussions this conference to explore the natural attractions of the Auckland region, including Waiheke Island.

Once again, welcome to New Zealand.

I wish you all a successful and productive remainder of the conference.