The growth of New Zealand’s technology sector is, of course, great news. But behind the glare of the shiny new thing, the primary sector remains a vital part of the country’s economy. Over 70% of our merchandise exports come from that sector and the Government’s growth strategy for 2025 involves doubling these exports. So enabling significant productivity gains in the rural sector is crucial for New Zealand over the next decade.

Passing fibre in front of every house in Remuera does little to grow New Zealand prosperity," says Ian Proudfoot, KPMG’s global head of agribusiness. "But when you run fibre to a farm, you create the chance to transform New Zealand.”

So while connecting the suburbs to Ultra-Fast Broadband helps connect New Zealanders with each other and the world, giving a high country farm access to a high-speed internet connection helps boost New Zealand’s GDP. You’ll also potentially give that farming family a chance to access specialist medical care without having to drive for two hours to a hospital, you’ll allow the kids to get on the internet for their homework, and everyone can access social networks that can help relieve isolation and potentially depression.

A lot of clever stuff is already happening around the country:

A recent trial at a GP practice in Lawrence, a 435-person Otago town having problems recruiting a new doctor for its health centre, saw 14 patients treated via telemedicine by a doctor in Dunedin, 92km away. With the help of a nurse doing the hands-on work, the online GP was even able to successfully diagnose appendicitis in a patient with severe stomach pain.

In Methven, near the western edge of the Canterbury plains, farmers Craige and Roz MacKenzie are using soil mapping techniques to work out water and nutrient levels in different parts of their fields. Then they send this virtual map to the on-board computer in the smart tractor or irrigator out in the field, which puts water or fertiliser only on the areas of the field that need it. Not only does it reduce the farm’s water and fertiliser consumption by 30%-50%, but it means excess minerals aren’t leaching into the subsoil.

Meanwhile, 116-student Manganuiowae-Broadwood Area School, nestled against the Raetea forest in rural Northland, now has a BYOD programme, cloud software apps which allow students to share and showcase their work, and access to the same online learning resources and professional development materials available to any other school in the country.

What unites these three rural projects, plus thousands of others, is fast, reliable broadband. The Government-funded part of the first phase of the Rural Broadband Initiative (RBI1) is now complete. As a result, almost 300,000 rural premises are now able to access fast broadband. Meanwhile, the Ultra-Fast Broadband programme has been completed in 19 towns and cities, allowing in excess of 1 million households, businesses, schools and hospitals to connect to fibre.

One of the most telling statistics is on uptake of fast broadband, which is high in rural areas. In the first phase of the Government's Rural Broadband Initiative, more than 85% of people opted to upgrade to a faster connection. And that’s not surprising. The percentage of people in rural areas who are self-employed or running a business is nearly double those in the city. And more than twice the number of rural people as city dwellers earn income from their own business. Many of those people will be working from home. So connecting up to fast internet does more than give them better access to YouTube videos – it helps them run their business and hopefully earn more money. 

And it’s not just farming. Tourism brought in close to $30 billion in the year to March 2015, generating almost 5% of our GDP. Part of the beauty of travelling in New Zealand is the wonderful scenery and hospitality outside the main centres. But travellers want to check their emails, share their photos, book tickets, and search on the internet for what to do at their next destination.

Impacts of poor connectivity

“For a country like New Zealand to be successful in the global game we need to be world-leading ... New Zealand should be the Silicon Valley of agriculture and horticulture.”

Steve Rieger, Vodafone

 

The problem, however, is that internet access in many rural areas is unreliable, expensive or non-existent, and this has significant economic and social impacts, says Penelope England, CEO of Rural Women, a not-for-profit information and advocacy group for rural communities. “Twenty-three percent of New Zealand businesses are rural-based, but the reality is that for many, internet speeds are simply not fast enough to support data-heavy activities like streaming and content development,” England says. “Over 13% of our rural population have no internet access at all. Others struggle to receive speeds capable of supporting basic activities like internet banking and online grocery shopping.”

Impacts of poor connectivity include:

Lost opportunities for productivity gains and growth in the agricultural sector when farmers can’t take advantage of smart online tools;

Difficulty for farmers meeting mandated business reporting requirements;

Competitive disadvantage for rural SMEs without access to innovation needed to
bring growth;

Increased risk of social exclusion when people can’t access platforms like Skype and Facebook;

Limited access to online Government public services;

Difficulties retaining and attracting young people, who are driven into the cities unless
they can access high levels of connectivity for education, employment and entertainment.

 

England is worried that the completion of RBI1 will still leave about 34,000 people outside the network, and she wants RBI2 to bring rural broadband speeds up to the same standard as urban speeds. She also wants the time-of-day issues resolved. “Many rural broadband users see their speed drop significantly in the evenings meaning that websites do not download, files take a long time to appear, or even fail to be delivered due to timeouts.”

 

UFB2 and RBI2 will solve these problems for many people. The contracts for both are still being negotiated by Government body Crown Fibre Holdings, but Amy Adams wants the two programmes to jointly deliver broadband speeds of at least 50Mbps to 99% of New Zealanders by 2015, plus at least 10Mbps to the remaining 1% by the same date.

UFB2 will see $210 million invested to extend fibre to at least another 5% of the population, and an as-yet-unspecified number of smaller towns, likely to start in the second half of this year. Adams hopes by the end of the project in 2025, technologies will have advanced enough to bring gigabit (1000Mbps) speeds to 80% of New Zealand.

Meanwhile, RBI2 will involve spending $100 million connecting rural New Zealanders beyond the UFB network, plus $50m to fix mobile black spots on rural roads where locals and tourists can’t call for help if there’s an accident.

 

Craig Young, chief executive of the Telecommunications Users Association (TUANZ), says the Government should be congratulated for the level of investment so far, but he’d like to see a more ambitious deadline for connecting the rest of the country. The irony of the success of the UFB programme, he says, is that by delivering world-leading speeds to a large part of the country, the Government has exacerbated the urban/rural digital divide.

The drift to the cities is another very real problem, and not just for agricultural workers. The issue of filling the vacancies left as an ageing medical and nursing workforce retires from rural practices and regional hospitals is very real, says Kyle Ford, CIO at WellSouth Primary Health Network. It’s a big problem, which has a couple of solutions – lure younger doctors and nurses to the countryside, and develop telehealth solutions where some patients “see” their doctor or specialist by video conference from a bigger centre. The patients could be at home, or could be supported by a nurse or GP from a local clinic. Both solutions need good connectivity.

Craig Young says he’d like to see RBI2 finished in 2021 or 2022, and Vodafone wholesale director Steve Rieger says a faster rollout is logistically possible. Vodafone was one of two telcos (with Chorus) to win the RBI1 rollout contracts, and the company is bidding for a slice of RBI2. Rieger believes the Government has done “a phenomenal job” with broadband up until now, but should be aiming for 2021 for finishing remote rural coverage.

“It’s entirely practical that every bit of agricultural, horticultural, and viticultural land could be covered by wireless broadband. If you exclude the Southern Alps and state forests, where broadband isn’t practical or needed, that leaves a target of 70% land mass coverage, up from 50% now. If you assume the physical building starts next year, you could complete that within four years.”

Why RBI2 is important

“For a country like New Zealand to be successful in the global game we need to be world-leading,” Rieger says. “New Zealand should be the Silicon Valley of agriculture and horticulture.”

There’s no doubt getting everyone connected up as soon as possible is the best solution, Amy Adams says. But at what cost? New Zealand’s geography, particularly all those pesky mountains, means delivering an urban-like connectivity experience to isolated farms isn’t cheap. And it gets even more expensive because farmers don’t just need broadband in the farm house and office. They need it anywhere there are crops, fields or animals to be monitored. Amy Adams says on a per user basis, the Government has already spent more on delivering broadband to rural consumers than urban ones. And that’s before tackling the hard-to-reach places.

The second problem is getting people to use their fast broadband once they’ve got it, but here many experts seem to be optimistic. Almost all schools are already connected up and most teachers are embracing the opportunities provided by fast broadband, according to schools’ managed network provider Network for Learning. Meanwhile, Julia Jones, a farm enterprise specialist with KPMG, says while some farmers she sees are reluctant to change practices they’ve used for the last 20 years, there are loads champing at the bit to get internet speeds that will allow them to innovate.

And in the medical profession, Opotiki GP chair of the Rural GP Network, Jo Scott-Jones, says even the last 18 months has seen a sea change in how doctors view technology. “It’s a growing part of the conversations we are having. Even last year doctors might have been saying ‘Do we really need telehealth services?’ Now it’s ‘How are we going to use them?’” The change will come through a combination of patient demand, technology becoming cheaper and more available, and international practices influencing local GPs and specialists, he says.

If you build it they will come. And the sooner you build it the better. ASB rural economist Nathan Penny wants the Government to lift its target for rural peak speeds to at least 100Mbps, and to move the deadline to 2022.

 

 

“While governments in other countries are giving handouts to their farmers, we argue for better tools to improve rural businesses. [Fast broadband] is a tool which can give New Zealand farmers a real edge.”

Nathan Penny, ASB

Rural connectivity is non-negotiable, he says. “This is a real opportunity for New Zealand agriculture – an opportunity to understand our consumer; an opportunity to tell our story more easily; an opportunity to speed up product growth and get scale that hasn’t been there before. But, at the same time, it’s an opportunity to maintain what we love about farming and rural businesses: mum and dad running the business.”

He is calling on the Government to be more ambitious about rural broadband.

"The business case for this investment stacks up very well. While governments in other countries are giving handouts to their farmers, we argue for better tools to improve rural businesses – and this tool can give New Zealand farmers a real edge.”

Who are rural broadband users?

As the countryside struggles to keep its young people, it’s clear the need for fast internet access is about far more than building the rural economy.

By spending $500 a month on broadband I can save $90,000 in fertiliser in a year. This is what a pragmatic Southland farmer told Colmar Brunton researchers interested in what rural New Zealanders wanted when it came to fast broadband.

In the same way there is no average urban broadband user, there is no average rural broadband user. But if you do happen to live in the country, you’re likely to pay more for fast broadband, and get speeds that city folk wouldnt stand for.

As of March 2016, the Rural Broadband Initiative had enabled 285,489 households and businesses to connect to fast broadband – and, of these, 106,482 had signed up. But, while the Ultra-Fast Broadband rollout to 921,625 urban premises has delivered fast fibre with potential speeds of 100-200Mbps, the RBI relies on a range of technologies tasked to deliver at least 5Mbps. Some technologies such as VDSL might be considerably faster, but the blistering speeds of the cities are mostly not possible in the countryside without a fibre connection.

Yet rural users, in particular farmers, have an arguably greater need for fast broadband than city dwellers. From an economic perspective, the primary sector accounts for 7.6% of GDP and contributes over 70% of
New Zealand
s merchandise (as opposed to services) export earnings. Our rural sector feeds 40 million people in 100 countries. And the Governments goal is to double primary industry exports in real terms from $32 billion in June 2012 to $64 billion by 2025. That requires annual growth of 5.5% a year.

 

The Government wants to attract 50,000 more young people into the primary sector over the next 10 years, and there aren’t many who are going to jump into a job where their device can’t connect easily and reliably with the outside world. FOMO (fear of missing out) is even more a problem in the countryside.

All this from an estimated rural population of 620,000, spread thin over two thirds of our land area. Statistics New Zealand defines rural as any area or town with less than 1,000 people. In terms of demographics, rural households are more likely to be married than their urban counterparts and on average have more children. At last count there were 68,295 rural enterprises, 48,228 of which have no employees, which suggests a lot of these will be farms run by a couple and their family.

Farming these days is so much more than a quad bike and a sheep dog. High performing farmers use smart, online tools for everything from managing their accounts and budgets, to measuring the yields of their paddocks and improving the weights of their herds. If the Government wants to have any chance of reaching its primary export growth goal, farmers will need the tools and manpower to lift productivity.

Strong rural economies are nothing without strong and sustainable communities. If you live three hours from the nearest major hospital, you are going to want great online medical services – from video specialist appointments to remote blood pressure monitoring. Meanwhile, almost every school-age child in rural New Zealand is accessing online education, and when it comes to the tyranny of distance, farmers want broadband so they can stay connected to family and friends. Rural folk are hardy and self-sufficient, but face a demographic challenge. It is getting harder to keep the next generation on the farm, with 20 to 39 year-olds making up only 19% of the rural population, compared to 26% in urban New Zealand.

The Government wants to attract 50,000 more young people into the primary sector over the next 10 years, and there aren’t many who are going to jump into a job where their device can’t connect easily and reliably with the outside world. FOMO (fear of missing out) is even more a problem in the countryside.

Research from Colmar Brunton finds rural broadband users are aware of the digital divide. They use the internet as much as their city counterparts and they want the same broadband performance  as urban users. This includes more retail competition and better speeds and reliability, whether broadband is delivered by mobile or fixed connections.

Uptake

RBI

39.2%


UFB

23.9%


People self-employed or running a business*

Rural

29%


Urban

16%


People who earn income from their own business*

Rural

23%


Urban

16%


A survey of NZ GPs

37%

Of rural practices had a vacancy


41%

Of GPs intend to retire by 2025


Average age of nurses in NZ

46