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Chorus makes billion-dollar case for better rural broadband

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Chorus makes billion-dollar case for better rural broadband

Network infrastructure builder Chorus claims that rolling out high-capacity broadband to rural areas could reap benefits potentially worth $16.5 billion for households and businesses over a decade.

Chorus bases that number on the Rural connectivity: Economic benefits of closing the rural digital divide report [pdf] by the New Zealand Institute of Economic Research (NZIER) which it commissioned.

NZIER believes that by reaching "digital parity" between rural and urban households and businesses, the entire economy will benefit.

Some 835,000 people, or 16.3 per cent of New Zealand's approximately 5.1 million population live in rural areas.

Just under a quarter of all the country's approximately 600,000 businesses are rurally located and spread across a wide range of industry sectors, such as agriculture, forestry, fishing, tourism, manufacturing and accommodation services, NZIER said.

Currently, many rural areas rely on a mix of broadband offerings such as the older copper DSL technology, and wireless connectivity through independent providers and telcos.

These offerings are constrained when it comes to capacity and reliability, something that Chorus says will discourage their use and reduce their economic benefits.

With high-capacity broadband, rural businesses are estimated to reap time-saving benefits worth $344 million, and at least $189.5 million in productivity gains per year.

"The mainstay of the value from the availability of high-capacity networks will go to rural households, who could each expect an annual benefit, or cost savings, of about $6,500," according to NZIER.

"These savings are primarily due to better access to broader employment opportunities and the ability to use telehealth services alongside easier online transactions with government agencies and banks," Chorus said.

NZIER's principal economist Christina Leung who co-authore the report said the COVID-19 pandemic highlighted the importance for people of having access to reliable technology.

"Access to high-capacity networks improves the way we live and work. NZIER has estimated the benefits of closing the urban-rural digital divide for households and businesses," Leung said.

"Our findings suggest a total benefit of around $16.5 billion over the next ten years," she added.

NZIER said its estimates are on the conservative side based on the existing state of affairs, and the $16.5 number could be even higher as improved broadband is rolled out.

"As our estimates only capture the benefits based on the current state of the economy, we would expect that as improved connectivity encourages the development of new innovations, the benefits would grow over the years," she concluded.

Last month, the government allocated radio-frequency spectrum in the 3.5 GHz band directly to telcos and wireless internet providers, with the latter entities in particular operating in rural and remote areas.

Although local users of the SpaceX Starlink told CRN NZ that the low-Earth orbit satellite internet provider hasn't yet introduced rate-limiting or "soft caps" for heavy users, the company has done so in overseas markets with additiional charges payable for more than one terabyte of data traffic per month.

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