Kim Dotcom's fibre fantasy

You have to hand it to Kim Dotcom — he certainly knows how to get his name back in the papers.

A few days back, he tweeted that he would resurrect the$400 million Pacific Fibre cable project and with it, offer free broadband to the New Zealand public.

The project, he said, would be funded by his own Mega business activities — or from Dotcom successfully suing the authorities for closing down his MegaUpload operations.

After the initial excitement and enthusiasm, wiser heads have since prevailed.

Dotcom is simply talking pie in the sky and is but a fantasist with his ideas, commentators have rightfully said. Even at the height of his MegaUpload prowess, Dotcom never had $400 million.

And after all his troubles with the FBI and the US copyright industry, there is no way the Americans will approve any project that involves Dotcom.

Furthermore, if he wins this week, President Obama won't do anything to upset his bundlers in Big Hollywood; and if we get President Romney, the Republican who is seeking to restore America's strength, won't want to be seen bending over to little old New Zealand and an eccentric German.

And that's before we even consider Kim Dotcom's long battle to get his assets back.

So where will Pacific Fibre's $400 million come from, if not from Kim Dotcom?

Remember, the original investors spent $5-6 million of their own money trying to get Pacific Fibre off the ground. If the project was viable, then surely multimillionaires like Sam Morgan would have found the cash, or they would have put their money where their mouths are.

The New Zealand government carried out its own inquiries and found that thePacific Fibre was unviable too, but it has agreed to underwrite the project somewhat by being a cornerstone tenant and buying NZ$91 million of capacity over ten years.

Pacific Fibre investor Rod Drury is working on progressing the scheme as a Public Private Partnership. He is backed by Paul Brislen of the Telecom Users Association of New Zealand, who suggested that a PPP could be funded by a "Telecommunications Users Association of New Zealand (TUANZ) tax" on user bills.

There is some precedent for this. New Zealand has a telco levy to fund rural broadband that is paid by the telcos and ISPs — but should the government dig deeper, in addition to the $1.5billion it is spending on ultra-fast broadband (UFB)?

At the moment, I say no. It still remains clear that while there are many benefits from having an extra cable, the costs of building it are still greater, and it is thus not viable.

Yet there might well be a case for government to review its figures and calculations, especially when the UFB has progressed a little more. It certainly owes it to the taxpayer and itself to ensure that the benefits of UFB are maximised, which might need the extra support of the cheaper broadband promised by the Pacific Fibre cable. Government could always own a share of the cable, with it selling this off at a later stage (hopefully for a profit).

Kim Dotcom was right to raise the issue once again, even if his ideas remain a fantasy for now.