Why is rural broadband so slow and expensive?

Published: 5/20/20, 3:21 PM
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This is a regular topic that comes up with potential customers, especially those moving to a rural area for the first time.

There's an old saying that goes along the lines of fast, good or cheap - pick two, but I feel like for rural broadband fast and good mostly go hand in hand and in reality, it's fast, cheap or unlimited, pick two.

The best rural broadband, when ordered by "fastest service", looks like this:

  1. Fibre
  2. VDSL
  3. 4G Wireless
  4. Satellite
  5. ADSL

 

But when ordered by "cheapest service to install", we reorder that list to look like this:

  1. ADSL
  2. VDSL
  3. 4G Wireless
  4. Satellite
  5. Fibre

 

All of the above connection types except for 4G Wireless allow for unlimited data.

The reality is we can now get fast broadband anywhere in rural New Zealand, but it comes at a cost.

Fibre is the fastest broadband available but extending fibre normally costs in excess of $40,000 / km, which puts it outside the reach of most. VDSL has a limited footprint. 4G Wireless almost has ubiquitous coverage (but there are data caps in place to protect the service level of all the users of the shared towers) and satellite comes with a not so modest installation price of $1550 and a high monthly price of $250.

So I'd counter anyone arguing that rural broadband is slow, with yes, if your budget doesn't extend to installing fibre or satellite. For most customers, 4G Wireless is a good compromise on price and speed but I acknowledge the data caps are still an issue and most customers have to be mindful with how much they use the internet or otherwise face running out of their data allowance early in the month.

I wouldn't argue with the expensive part though. Ideally, all of rural New Zealand would have access to fibre but at forty thousand per km there is no commercial return on the capital investment required and infrastructure entities need a hand from central Government if "fibre to all" was the vision.

If you'd like to dig a bit deeper into the economics of rural broadband, Bill Bennett has written some great posts here and here.

 

 

 

Post written by Jesse Archer

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