Mobile technologies
Telecom NZ and Vodafone both operate cellar networks. Telecom NZ operates a combined digital and analogue network (using AMPS, for Advanced Mobile Phone System, which is the oldest of the mobile technologies in use). Vodafone provides a 2G (for 'second generation') digital service using GSM (Global System for Mobile communications) technology. Only limited data transmission at a rate of 9.6 Kbps is possible. This is sufficient to allow a limited (text only) mobile email service but is not enough for full Internet connection.

Mobile coverage is a significant issue for the rural community. According to the recent MAF survey, while 70% of the rural population use mobile phones, only 24% of those owning them reported no problems and 41% reported very significant problems. Nearly half those not owning mobile phones gave poor coverage as the reason they did not own one.

VSAT Satellite
VSAT (Very Small Aperture Terminal) satellite communications systems can provide a range of data rates from 9.6 Kbps through to the high bandwidth range. A VSAT end user needs a box that interfaces between the user's computer and an outside antenna (0.6 to 3.8 metres diameter dish). Although capable of two-way transmission, it is usually implemented using a ground based (telephone) circuit return, which is subject to all the limitations previously discussed. Two-way transmission is much more expensive than one-way because of the need for a powerful transmission capability at the user end.

Using one way VSAT and a return via existing telephone lines may well be advantageous for some uses. For example a simple email message may be sent via the telephone line to order a video delivered via the satellite. Two way video which may be the requirement for on-line teaching or medical diagnosis would not be suited to this method.

The ISP Ihug is already offering an Internet service of this type. The download capability is very high, with speeds well in excess of 512 Kbps reported, but this is dependent on many factors including the weather. Note, however, that this is strictly a one-way option with the return link carried by the normal telephone loop, with all the inherent limitations already described.

Digital television
This is available through terrestrial and satellite services, although the cost of providing terrestrial broadcasting services may mean that satellite delivery is the most practical method for many remote areas. Sky TV offers a digital pay TV service through the Australian OPTUS satellite. This is a one way broadcast service of an encoded signal which can be decoded by the Sky set top box. Sky TV is ready to extend its services into the Internet area with decoders provided with telephone connections for the return link.

Should Sky TV move deliberately into provision of Internet services, rural areas could be major beneficiaries, at least in terms of downlink capacity. Some rural areas already are heavy subscribers to Sky digital services and would be well positioned to take advantage of such a service. However, the return link would be subject to the rural limitations of the telephone network as previously described.

Microwave options
There is a wide range of relatively cheap point-to-point microwave options available at distances of up to 10 kilometres or so. For up to 1 kilometre, speeds of 10 Mbps are possible. Microwave has some disadvantages in rural locations since the link requires line of sight between the transmitting and receiving station, however one supplier (BCL) claims that 128 Kbps is achievable over distances of up to 50 km.

There are numerous microwave installations linking businesses to ISPs in the main centres, especially in Auckland where there are no cheap high capacity alternatives. Many of these links terminate at the Sky Tower.

Wireless Local Loop (WLL)
There is a range of technologies designed to operate in the 3 GHz, 5 GHz, 28 GHz and 40 GHz bands, which are specifically intended for WLL application. It is similar to the microwave options above and is currently offered in Auckland by Walker Wireless for example through the ISP IproLink. Walker Wireless have announced that they intend their network ultimately to cover 80% of the New Zealand population.

Issues such as attenuation, the carrying distance between points, and the requirement for line of sight, all mean that the viability and cost-effectiveness of these WLL systems is questionable as a means of overcoming rural isolation and distance in the near future.

Emerging Technologies

There are several radio-based platforms, in addition to those mentioned above, with the potential to overcome the limitations of the existing wired infrastructure.

Advanced Cellular Services

Enhancement of existing cellular networks
It is expected that new digital, mobile, services (so called 2.5G services) will be announced by both Telecom NZ and Vodaphone over the next one to two years: Telecom NZ with CDMA (for Code Division Multiple Access) and Vodafone with GPRS (for General Packet Radio Service, which is an extension of GPS technology). These will provide high bandwidth Internet access of up to 144 Kbps. The cost of access is not known at this stage and coverage will be similar to the current mobile technologies.

Satellite voice telephony
Globalstar currently offers voice, roaming and Short Messaging Service (SMS) in a number of countries, including Australia. The mobile satellite phones inter-operate with, but extend the coverage of, terrestrial AMPS, CDMA, or GSM networks, and Vodafone has considered offering the service in New Zealand. Globalstar have announced that the voice service will be enhanced late this year to provide data services at up to 9.6 Kbps.

Third Generation (3G) Cellular
3G cellular is a new global cellular technology platform which promises increased data rates, or bandwidth, up to 384 Kbps when a device is stationary or moving at pedestrian speed, 128 Kbps in a car, and 2 Mbps in fixed applications. 3G will work over existing wireless air interfaces such as GSM, TDMA (Time Division Multiple Access) and CDMA. While still in the development stages, 3G technologies potentially offer full-motion video conferencing and Internet access. In terms of bringing such services to rural areas, however, the infrastructure costs and call time charges are likely to be high. Commercial services are unlikely to become available in new Zealand for at least another three to five years.

Broadband Satellite

There are two satellite networks planned that could dramatically improve bandwidth availability on a global basis. Note, however, that the failure of the Motorola-backed Iridium network marks this as being high risk with the business viability yet to be established.

SkyBridge is an 80 satellite constellation that is intended to provide bi-directional broadband capacity, enabling high-speed local access to multimedia interactive services for business and residential users anywhere in the world. Terminals will communicate directly with the satellite network and support a wide range of data rates (up to 20 Mbps downlink and 2 Mbps uplink. The venture has the backing of Alcatel and is intended to be operational in 2003. It is expected that terminals will cost about US$700.

Teledesic is a similar venture described as "global, broadband Internet-in-the-Sky". The service is intended to begin in 2004. The Teledesic network is promoted as being capable of supporting millions of simultaneous users. Most users will have two-way connections that will provide, as required, up to 64 Mbps on the downlink and up to 2 Mbps on the uplink. The user equipment will mount on a roof and connect inside to a computer network or personal computer.

Closer to the present, Hughes Network Systems have announced the Pegasus/DirecPC system which will provide high-speed Internet connections in the Continental US. Initially, users will have download speeds of up to 400 Kbps, using normal telephone circuits for the return link. However, beginning in 2001, it is planned to enhance the initial service with full two-way satellite Internet access. It is possible that this system will become available in New Zealand at some stage.

Recommendations of the Telecommunications Inquiry

The report of the Ministerial Inquiry into Telecommunications makes a number of recommendations which have a bearing on provision of services into rural areas. The Government has yet to respond formally to any of these recommendations. The principal recommendations involve:

1. Establishing an Electronic Communications Industry Forum which will have statutory backing to ensure the industry can "self-manage of solutions to common industry problems". It would operate under guidelines which would encourage competition and entry into the industry and "have regard to the long-term interests of end users …"

2. Appointing an Electronic Communications Commissioner who would inter alia make recommendations to the Minister of Communications about regulation of specific "designated services" including pricing principles

3. Continuation of the Kiwi Share Obligation but with better definition and embodied in legislation. It would require Telecom NZ to continue to make available ordinary residential telephone services to the extent applying today, maintain unlimited local call dialling, not increase in real terms the cost of monthly rental for ordinary residential services, and "continue to increase the proportion of its residential customers that have reliable low-speed data access". In meeting these obligations, Telecom NZ would be entitled to use whatever technology it finds most cost effective

4. An "Information Society Initiative" with the establishment of a private sector/government body with the primary objective "to facilitate participation in the information economy by all New Zealanders." One suggestion is to provide subsidised access to broadband services to, for example, rural schools, community centres and marae and another is to ensure that access is provided into an area by contracting 'take or pay' undertakings.

Conclusions

There are several different technologies that could offer some hope of overcoming present limitations with access to Internet services. Some are several years away and the costs of use are uncertain. With the exception of the present POTS (plain old telephone service), all the technologies on offer are developing rapidly and may look quite different in a few years in terms of availability, cost and service quality from what is apparent at present. Similarly, there are several potential new providers of services in addition to the present carriers.

The Ministerial Inquiry into Telecommunications suggests some actions which have the potential to assist with poorly serviced areas. However, all of these require specific government intervention and the Government has not yet responded to the recommendations.

Different technologies provide different competitive advantages. There are trade-offs in terms of rural vs urban suitability although there are few, if any, options where relatively sparse rural populations are not strongly disadvantaged compared with urban dwellers. There will always be higher bandwidth options available in larger cities compared with rural and provincial areas. There is a major trade-off in terms of full symmetric two-way capability compared with high capacity down load and poor capacity back-load capabilities. Costs will vary greatly and there are other issues such as ease of use and environmental friendliness.

All this uncertainty in terms of which technologies should be deployed leads to the following conclusions:

• Telecom NZ is unlikely to upgrade present services in many of the more remote areas without guaranteed demand since in two years or so there may be a more cost effective competitor to the copper loop and the investment costs for the upgrade may not be recoverable

• The Government should not get directly involved in the provision of services for much the same reason; it is not clear what technologies will prove to be the 'winners', indeed different technologies are almost certain to be winners in different locations

• The provision of 'Government content' (such as educational or health care information or service) and the technology by which the content is delivered should be kept separate. Increasingly all content and all delivery technologies will be digital and in this environment different technologies will have a competitive advantage in different locations. If content is bundled with a particular technology it will reduce competition and innovation

• The Government should work on the demand side with the intent of ensuring there is a critical mass of potential users, which will enable appropriate technologies to find a market when they are ready. This means working to increase awareness and skills. In government procurement and regional development terms it should consider aggregating its present and medium term bandwidth requirements in defined regions and seeking contracts to supply that bandwidth from competing suppliers using competing technologies

• As an example, by aggregating the requirements of schools, medical centres, government offices and perhaps local government offices (and maybe business) in a regional area and entering into a contract for supply of those services over say, five years it will encourage providers to supply a cost effective service while having a guarantee of income. Competing suppliers will be able to provide the most cost-effective technology for the particular region. Individuals in the region will gain marginal benefits from the increased supply to government and suppliers will be able to factor in the increased demands from individuals when bidding for the contract

• Additional benefits may also accrue, by planning for future use schools, medical centres etc will develop a better understanding of what is available and develop new innovative practices to best use the services they are contracting.