4. Costs and Benefits

• describes the current situation for telecommunications operators, local government and other groups

• identifies the types of costs and benefits that will be incurred as a result of the standards

• examines the costs and benefits by affected group and by the situations in which they will be encountered

• identifies key information that could be researched during the consultation phase.

4.1 Costs and benefits of the standards

A cost-benefit analysis compares the likely effects of introducing the proposed standards against continuing with the status quo. This means trying to compare the likely progression of industry development with the standards against what would otherwise occur without them. The main effect of the proposed package of standards is to enable works that meet the standards to avoid the need to apply for resource consent.

Why are standards being examined?

The principal telecommunications technologies currently available in New Zealand are:

• conventional landlines, generally based on copper cable, but being progressively replaced by fibre-optic cable with greater capacity

• cellular networks (mobile phones)

• wireless local loops (eg, WiMax), which are emergent systems that provide a local access network through establishing local cell sites.

Current trends in telecommunications are being driven by a combination of changing technologies and service possibilities, and commercial considerations. These include a convergence in technological capabilities between fixed-line and mobile services, voice services and data transmission, and between telecommunications and media, with transmission of broadcast content over phone connections. These trends give telecommunications operators a strong incentive to increase their network capacities. Increased use of roadside cabinets and associated works would facilitate this increase in capacity, and also enable new operators to establish networks and increase the competition and choice of services.

Telecommunications facilities are currently subject to resource consenting processes that differ widely between councils. This creates costs and uncertainty for telecommunications operators seeking to extend their networks and improve the capacity and quality of their services. The Telecommunications Act 2001 grants network operators approved under that Act a right to occupy the road reserve in providing utility services. The telecommunications industry views facilitating the placement of equipment cabinets and antennas along roads as crucial for both improving coverage of mobile and wireless telecommunications, and improving the quality of landline services.

How was the cost-benefit analysis conducted?

The cost-benefit analysis was conducted in two stages. First, information of likely trends in telecommunications was collected from existing sources and by canvassing the views of selected telecommunications operators. Interviews were also conducted with a number of councils to establish how the standards would affect the implementation of their functions under the RMA. Second, the quantitative information gathered in this process was used to conduct a simple cost-benefit model, reflecting views on the extent to which expected rates of roll-out of new telecommunications investment would be affected by the standards, and the associated costs of going through resource management procedures, with and without the standards. The difference between the anticipated situation with the standards and without the standards is the basis for the calculated net benefit in the analysis.

What benefits and costs are expected from the proposed standards?

Without the proposed standards, roll-out of new telecommunications services and enhanced capacity will face the cost of resource consent application processes, increasing costs to the industry, and a potentially slowing of the rate of roll-out (and therefore availability) of new services across the community. With the proposed standards the main costs and benefits are likely to be:

• reduced costs for industry in obtaining resource consents and assessing each district’s particular requirements, and reduced uncertainty about the acceptability of particular roadside solutions in different areas

• reduced costs in processing resource consents for councils (over and above what is recovered from applicants through charges)

• benefits for consumers from faster roll-out and access to new services, and from more choice and competition among operators

• costs to government in supporting the introduction of the standards

• potential costs for the community in loss of local control over environmental effects in the roadside

• benefits through providing certainty for public health concerns associated with exposure to radio-frequency fields from wireless telecommunications infrastructure.

The cost-benefit analysis has only been able to quantify the first, second and fourth of these bullets. Some councils expect costs in adjusting planning documents to avoid confusion with the standards, although there is no legal requirement for them to do this. Any such costs incurred by councils as a consequence of introducing the standards were considered appropriate to include in the cost-benefit analysis. Excluding such costs would increase the net benefit.

Results of the analysis

The quantified analysis compared the costs and benefits of the roll-out of facilities in road reserves nationwide under the current status quo of local planning controls through district plans, and under the alternative with the proposed standards. There is likely to be a substantial net benefit from the proposed standards, if the rate of roll-out is anywhere near what the telecommunications operators suggest it will be in the next 10 years (see Table 1). Because the quantified net benefit is so large, the result of the quantified analysis withstands substantial changes in the input assumptions used.

Table 1: Cost-benefit analysis results

PV = present value

There are, however, unquantifiable effects on both the cost and benefit side of the ledger. In particular, there are unquantified costs to residents from the potential of visual intrusion, proliferation of street clutter, and losing their ability to influence decisions on the road outside their properties through the resource management processes embodied in district plans. There are also potential benefits to telecommunications consumers from improved services and new technology, which have not been feasible to quantify in the analysis. The extent to which such new services create flow-on effects and stimulate new activity and innovation, contributing to dynamic efficiency across the economy and community at large, has also not been quantified.

The size of the quantified net benefit suggests that unquantified costs, particularly from loss of community control, would have to be large to overturn the result. There is no ready means of valuing these unquantifiable effects. However, the cost from loss of local consenting controls needs to be viewed in perspective, because the proposed standards limit roadside cabinets to one per property frontage, and councils have other means of managing street clutter through their functions as road-controlling authorities.

The cost-benefit analysis identified some factors that may reduce the net benefits of the proposed standards. Some types of telecommunications facilities, such as 300mm dish antennas, are not included in the proposals analysed, and therefore would remain subject to existing RMA controls. Another factor that may reduce net benefits is how each council exercising its functions as the road-controlling authority in its jurisdiction affects network operators’ ability to exercise their statutory rights to use the road corridor. This may benefit the community if some aspects of concern (such as proliferation of roadside facilities) are still controllable. However, this would not assist those telecommunications operators who report difficulties in dealing with some local authorities in their road-controlling role to the point where they avoid using the road reserve.

While there will be further refinement of the standards in future consultation with stakeholders, this analysis indicates that adopting the proposed national standard is likely to result in positive net benefits, as illustrated by Table 1.

Some cautions on interpreting the quantified analysis

There are limitations in the quantified analysis due to the information available on a relatively small part of total telecommunications activity (roadside facilities) and council resource consenting activity. The principal parts of the quantified analysis are resource cost savings for telecommunications operators in obtaining consents, and for councils in processing them, and resourcing costs incurred by government in supporting the introduction of the standards.

The principal effects outside of the quantified analysis are:

• the economic benefits for both consumers and producers arising from increased telecommunications service use, due to improved quality and/or reduced price of services

• the value to the community of the loss of local control over environmental effects arising from activities in the road corridor.

Although the analysis omits some unquantifiable costs, it also omits some probable benefits, such as benefits to consumers and associated innovation. The figures in the analysis as shown in Table 1 above should be regarded as indicative rather than definitive, and the analysis framework can be revised to use improved information if it becomes available. Such improved information would be required, for instance, to assess changes in the proposed standards (inclusion of new items or exclusion of existing items), because the incremental shifts in costs and benefits caused by such changes would need to be carefully identified.