Whither VDSL?

The UFB rollout is slated to take until the end of the decade and arguments about whether that’s 2019 or 2020 aside, for most of us it’ll be years before we see the fibre van roll up outside our homes.

For the foreseeable future, we’re locked in to a copper world here in suburban New Zealand. While I fully support schools, hospitals and businesses getting access to fibre as a priority (SME businesses stand to gain the most from the UFB rollout and New Zealand will benefit from the increased efficiencies that will bring) it does mean there’s a balancing act to be maintained and unfortunately home users are on the wrong side of it.

But that’s OK because the advances in technology in the copper world mean we should be able to see better services on our copper networks in the meantime.

Over on Computerworld, a comment from Malcolm Dick (he of CallPlus/Slingshot fame) caught my eye. Malcolm points to a recent announcement regarding VDSL 2+ with vectoring:

“which gives download speeds of 100[Mbit/s] and upload speeds of 40[Mbit/s] on copper runs of 400metres long - I would guess that covers around 800,000 households in New Zealand.”

Even standard VDSL as it exists today would be great – not so much for the download speed but for the upload.

Currently, as you know, I’m running TUANZ from home – I have a very good ADSL2+ connection and regularly get in excess of 15Mbit/s down. This is fine for my uses for the most part, but the upload speed of at best 1Mbit/s is a killer. I’d be much better off with a 50Mbit/s down, 30Mbit/s up speed which, given my location (less than 600m to the Mt Roskill exchange), should be readily attainable.

Except there are very few VDSL sellers out there and worse, the data caps are so incredibly low. It would cost hundreds of dollars a month more to connect to a VDSL port, for no apparent reason.

Today, each VDSL port costs a premium of about $20 over and above an ADSL port. Why? Because that’s the price the Commerce Commission has set.  It’s a premium service, so it needs a premium connection price, goes the theory.

Given the difference isn’t in the card in the slot but in the backhaul and in the contention rates and so on , this is an artificial price which keeps the retail price too high to be of interest to either retailers or consumers.

Retail ISPs keen on selling VDSL will need to increase both backhaul capacity and make sure the service delivers a higher level of quality than ADSL2 does in order to attract customers. I get that, but an artificially high price point that simply delivers extra cash to Chorus doesn’t really cut it.

And then there’s the “copper versus fibre” model. The argument goes like this – ISPs should not be wasting their time and money investing in copper because fibre is coming and copper is a competitor. We should artificially inflate prices on copper to ensure customers are “encouraged” to take up fibre instead.

That’s all well and good if we all have access to fibre (which we don’t) and if there is absolutely no other incentive in making the leap to fibre (there will be plenty of incentives) but that’s not the case.

Instead I would suggest faster copper speeds serve as an enticement to fibre – that a customer who has already moved up to 30Mbit/s is more likely to want 50Mbit/s or even 100Mbit/s when that becomes available. They’ll have discovered the apps they need to make such speeds worth their while and their service providers will also have figured out which services customers want. All of that is good for the fibre rollout because when it finally arrives at my doorstep I’ll have an incentive to move – an incentive other than “copper’s so expensive now I might as well”.

The telcos I’ve spoken to are all keen to rollout VDSL services. They see the upside to it as they’ve seen the upside to unbundling the copper lines today. They get increased margin, customers get better service, they win more custom as word gets around and everyone’s happy. There’s investment, there’s competition and there’s a dynamism in the fixed line market that we simply wouldn’t have believed only three or four years ago. We were late to unbundling, yet it’s still delivering results.

If we are to hike the price of copper lines to encourage migration to fibre, we run the risk of snuffing out the nascent competitive market in our fixed line world – that at a time when two of the three largest players are about to join forces. That would be a tremendous leap backwards for the industry and we, the customers who can’t get on to the UFB fibre, would pay in terms of service and price.

Copper isn’t a competitor to fibre today. It might be once the UFB is built but for the next seven years or more, it’s simply the only choice we have for bulk broadband services. It’s important we get the regulated price settings right.