Satellite Internet connections in rural areas are booming, but rural consumers still pay more and get less than urban counterparts

Satellite connections have exploded in rural regions, but city dwellers still pay less for faster internet connections than their rural counterparts.

Trade Commission telecoms commissioner Tristan Gilbertson said that while options for rural consumers have increased, there was still a difference in cost and data speed between urban and rural areas.

If you live in a rural area, your basic copper connection, averaging 9 Mbps, will cost you about as much as someone in the major centers pays for a 300 Mbps fiber plan, Gilbertson said.

Rural broadband more likely came with data caps, even if the rest of the country had unlimited data plans, he said.

City dwellers could get a high-performance fiber plan for between 1.1% and 1.7% of median household income, he said.

The same level of expense In a rural area you would only get a copper connection, while a service closer to the urban experience, such as Starlink, costs about 2% to 3% of the median household income, he said.

Differences in cost and performance have driven a shift in rural consumer choice over the past year, he said. Copper connections, the historic backbone of rural connectivity, have dropped below 50 percent of all rural connections with the move to wireless, Gilbertson said.

Satellite connections have increased from 1,900 to 12,000 in the past year and accounted for about 5 percent of all broadband connections in rural areas, one of the highest per capita connection rates in the OECD, he said.

Starlink was a game changer with average download speeds exceeding 100Mbps, he said.

Ron Swenson, of Pelorus on the Marlborough Sounds, said he was on a 350GB rural wireless connection with Spark.

He was happy with the 10MB to 20MB speed, but said the $176 a month was very expensive compared to unlimited wireless for $50 in cities, he said.

We are subsidizing cheaper connections in urban areas, he said.

Swenson said it seemed to him that rural providers were just focusing on filling the gaps with their expansion and not focusing on speed and capacity.

In October, Spark signed an agreement to expand rural connectivity and said it would invest $24 million in funding for the Rural Connectivity Group between 2023 and 2025.

A Spark spokeswoman said a factor in the poor rural connectivity was the limited availability of low-band spectrum that provided the most coverage for rural sites.

Many of the higher frequency bands we use in urban sites are not practical in rural sites as they do not provide the required coverage. Using only low-band spectrum limits site capacity, thus affecting the amount of data that can be offered to customers and the number of customers that can be served on a rural cell tower, the spokeswoman said.

The telecoms sector has worked with the government to free up 600 MHz spectrum for mobile telecommunications use, which would make a difference to rural New Zealand due to its wide-area coverage capabilities, he said.

A New Zealand spokesman Matt Flood, who has worked with telecommunications provider Farmside, said New Zealand’s geography and low population density in rural areas meant it was not economically viable to build fiber or cellular solutions covering the entire village.

It would be the equivalent of building a multi-lane highway for a small New Zealand town. There is no single technical solution to connect rural and regional communities, a mix of mobile, landline and satellite connectivity is needed, Flood said.

More expensive state-of-the-art technologies like satellite have high investment costs, and these costs were passed on to consumers either in the specialist equipment they needed to purchase or through monthly fees, he said.

A New Zealander would work with SpaceX to expand mobile coverage, she said.

Consumers would be able to use cell phones to text anywhere in the country by the end of 2024, followed by calls and limited data services in 2025.