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A war of words has broken out over the Dunedin City Council's plan for a new multimillion-dollar fibre broadband network to be owned by the community.
Details of the scheme were announced yesterday by council-owned electricity lines company Aurora Energy Ltd, which has applied for a $3 million share of the Government's $340 million Broadband Investment Fund to help pay for the network.
The 39km "municipal fibre network" - to be known as the Flute network - would be owned by Aurora and link Dunedin's municipal buildings, key businesses, schools, the University of Otago and Dunedin Hospital.
However, Telecom is already spending millions upgrading its Dunedin broadband network to ADSL2+ speed through its network-access division, Chorus.
Chorus product management general manager Chris Dyhrberg doubted a business case supported the council's plan.
"I wouldn't say 'Definitely no'. I would say 'I doubt it - I very much doubt it'," he said.
"It's a lot of money and I think the council needs to be very, very sure it's good use of its money."
Telecom and TelstraClear already provided "more fibre in the ground than you can shake a stick at" in central Dunedin, and Chorus had briefed the council's economic development unit on its broadband plans, he said.
The company aimed to bring broadband of up to 24Mbps to 99% of homes by 2011, possibly followed by 100Mbps fire broadband for high-end users.
A Ministry of Economic Development spokesman yesterday said the broadband fund aimed to address New Zealand's "broadband infrastructure gap", but warned criteria included a viable business case.
"A council seeking to build a new network in direct competition to an existing supplier will in those circumstances have a difficult task in making such a case," the spokesman said.
However, Aurora chief executive John Walsh, of Dunedin, said the very availability of the $340 million fund was a sign of Government frustration with key market players and their failure to deliver.
"We are responding to the Government's proposals," he said.
Council economic development unit manager Peter Harris agreed: "The fact is, central Government wouldn't have this broadband fund if they felt happy Telecom was going to be delivering broadband efficiently and cost-effectively around the country."
And Mr Harris questioned whether broadband should remain in the hands of just a few large companies if, like roads, it was considered a key piece of community infrastructure.
"Is that good for the country? I personally don't think it is. New Zealand is a long way from anywhere and we need to be able to do business as efficiently and cost-effectively as we can.
"I think we need competition."
Mr Dyhrberg responded that Telecom was now a monopoly "highly regulated" by the Commerce Commission, which balanced competition and the retention of investment incentives.
He supported initiatives to encourage broadband development in areas "where natural commercial drivers wouldn't go".
"But I do question how, like in Dunedin where there are two competing fibre networks today, funding a third network is going to do that. If they are trying to solve an issue, I don't think the issue is lack of fast broadband."
Cr John Bezett, who chairs the council's economic development committee, said the initiative would boost the city's education branding.
"We have got to keep up with the latest technology as far as teaching is concerned, and broadband is part of that."
Those spoken to yesterday declined to say how much the network would cost.
Cr Bezett said the cost would be "substantial", while Aurora commercial manager Alec Findlater said the network's total size, and therefore cost, would depend on the size of any Government funding package.
> Dunedin broadband
• 39km fibre network linking municipal buildings, businesses, schools, local ISPs, the University of Otago and Dunedin Hospital.
• Possible expansion into other inner-city areas, portions of North and South Dunedin and hill suburbs.
• Speeds from 100 megabits per second (Mbps) to 10 gigabits per second, with no data cap for the network's users.
• Delta workers already laying ducting to house the fibre cables.
• The first customer expected to be connected by mid-December, and the network completed within three years.
• Network size and final cost dependent on Government funding to be announced on December 1.
• The investment could reduce Aurora's annual dividend payment to the Dunedin City Council.