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Why don’t you still have a black and white TV?

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In the UK there are still 13,000 homes with black and white TV sets even after the digital switch over. You can still buy them and they’re ludicrously cheap – only $10 on eBay, plus shipping.

So why don’t you own one?

Because the experience with a colour TV is so much better. You can do more, you can see more, the TV sets are now the kind of science fiction experience we used to talk about in hushed tones. Flat TVs that look like windows rather than boxes, that could double for pieces of art in some cases (looking at you, Samsung, with that gorgeous $55,000 4k screen). Coupled with thousands of channels, access to Netflix and Hulu, connectivity with your mobile phone or tablet and suddenly the
TV is so much more.

The fact that you can buy a black and white TV and get perfectly good reception and perfectly good television on it at a crazy low price doesn’t stop you going out and buying the more expensive product because the more expensive product provides a better experience.

You can see where I’m going with this, I’m sure.

But what if that new flat panel LCD screen only showed the same three channels as the black and white TV and only showed them in black and white as well. Would you then spend your money on the newer set or stick with the old?
Then you’d probably have to stop and think about it. Is having a shiny new flat panel telly really that important? The difference is minimal and sure, there are some whizzy bits with it (it uses less power, it’s cooler to look at) but overall the experience is about the same.

At that point I’d probably see the wife acceptance factor kick in and find myself wilting in the face of children’s orthondonture, vet fees and a new kitchen.

We face exactly this dilemma with the move from copper to fibre.

Fibre’s entry level price is being touted as about the same as copper, but the speed is only as good as you get from VDSL2 and nowhere near as good as you get from LTE, neither of which require anyone to come to my house and drill holes in the living room wall.

Sure, it’s fibre, and there are plenty of advantages to making the leap, but you have to put up with your drive way being dug up and your garden being trampled (Enable’s before and after shots say they’ll do a good job and from what I’ve seen they do, but still…) and even then it may not work well I’ve seen failure rates of 80% reported, and frankly, I can do without having to explain to the family why we have no phone or internet for a third day running.

The selling point of fibre is that you can do more with it, so why are we throttling it back to 30Mbit/s down and 10Mbit/s up? There’s really no reason from a technical point of view. Fibre is fibre and can scream along at far more than that. Yes, this will be a contended network and yes, telcos like to differentiate so they can upsell, but when the difference between one service and the other is so close and yet the ‘cost’ of implementation is so high, you can understand why customers aren’t beating down the doors of their fibre companies demanding to be connected immediately.

Keeping the cost of copper artificially high will do nothing to push customers towards fibre. The cost of copper simply isn’t the driver toward fibre that the government thinks it is. People will move to fibre when you give them a reason to and without any promotional work, without readily available content, without a speed bump that makes people sit up and take notice, why on earth would anyone sign up?

Uptake rates are woefully low. Costs are woefully high for Chorus (we haven’t seen the costs per connection for the local fibre companies), install times are long and wait times are growing. Customers in rented property can’t get Chorus to install, customers in multi-dwelling units or down right of ways are in the too hard basket.

The problem isn’t the cost of copper. The problem is the lousy selling job we’re doing on fibre. Fix that and then we can talk about whether copper prices should go up.

 

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Discuss

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The telecommunications review discussion document has lead to quite a bit of, shall we say “discussion” about the review and what it all means. 

As you’ll have seen, TUANZ is part of the “Axe the Tax” campaign as we strongly believe that taking money that was long promised to customers and giving it to Chorus shareholders is simply wrong.

But what do others think? What submissions were received? 

If this was a Commerce Commission process, we’d have a full list of submissions (and cross-submissions) to look at and pick through. We’d see the economic analysis, the legal justifications and the rhetoric from all parties.

Sadly, MBIE tells me they haven’t decided yet on when or even if they’ll put those submissions online.  Given we’re still waiting for the TSO submissions to go public, we could be waiting a long time.

It’s good to have all the submissions in one place and it’s good to have them out there in public. We need to have access to them so we can work out what rationale is being used and why for each position.

So on that score, I invite any and all submitters on the telco review discussion document to send me a copy of their submissions and we’ll make them all public here at TUANZ. 

I’ll email all those I can think of directly seeking a copy but there are bound to be some who have submitted that I don’t know about. It’s a shame – I would have thought the ultimate outcome of calling for submissions on a discussion document would be to have a discussion. 

It seems to be something of an old-fashioned approach these days. 

If you’ve got a submission you want included, send it to: paul@tuanz.org.nz and I’ll add it to the list. If it’s already online, send me the URL (or add it in the comments below) and we’ll save on bandwidth.

 

Is our telecommunications industry really competitive?

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 One of the
main goals of TUANZ is to encourage competition in the market place. Why?
Because more competition means more choice, a better range of products and
services and better prices.

So how do we
measure competition? The Commerce Commission measures it by looking at the
number of customers each provider has.

That’s OK
but doesn’t really tell the whole story. Better to look at the revenue share
each company has to determine just how the market is shaking out.

In mobile,
that means we have two giants (Vodafone and Telecom) and a minnow (2Degrees)
and a raft of also ran virtual operators that have a minute market share.

In landline
broadband, that means we have two giants (Vodafone and Telecom) a small number
of minnows (Orcon, CallPlus and Snap) and then the rest, mostly niche players
and resellers of service.

IDC Research
has released its annual telco report (oddly not available online in any form
that I can find) which shows a flat to slightly declining market across the
board with no sign of relief for many years to come.

In addition,
despite increased demand for broadband services, revenue shrank slightly and
looks set to continue on that path for some time.

In the
mobile space there’s little better news for telcos. Telecom’s shut down of the
CDMA network, says IDC, means it is now the third place mobile operator by
number of customers, but still number two in terms of revenue.

Yet the
telco market is as vibrant as we’ve seen in many years. Multiple players,
differentiation, all the things that appeal to a wider range of customers and
prices to match.

So is the
market working or isn’t it?

In mobile we
are starting to see competition at its finest. Infrastructure-based competition
is the best we, as customers, can ask for and we have two national networks and
a third on the way.

What’s
important in this space is that we make sure we continue to have three viable
networks, which is why the idea that the government can settle for only two
players in the 700MHz auction is unacceptable to us. We need three or we settle
back into a cosy duopoly with all that entails.

Currently
the mobile market isn’t working quite as well as we’d like. New entrant
2Degrees is still fighting for revenue market share and the dominant players are
learning to respond more rapidly to the changing nature of the market. The new
$19 price point is a great example of this – unthinkable a few years ago and
now hotly contested.

In the
fixed-line market we really do see very little differentiation between ISPs.
Certainly there is some – mostly relating to the thorny issue of content
provision – but for the most part we have monthly plans with an “all your line
can handle” speed and a relatively low data cap. You can find some competition
at a structural level with Vodafone’s recently purchased cable network and from
the fixed-wireless providers and unbundlers, but for the most part it’s any
colour you like so long as it’s black.

That’s only
going to get worse as we move to the UFB, where all inputs are more or less
identical, unless the retail service providers recognise the problem and go out
of their way to shake things up.

As we’ve
said before, telcos spend a huge amount of money on central city offices, on
marketing teams and sales managers and on retail outlets. You’d think they were
selling high-end cars, yet their business model will shortly be closer to that
of the electricity companies and their business costs should move in that
direction as well.

The trick for
customers will be to shop around. I know that sounds easy but the inertia that
we see all too often in the market is an ugly and pervasive thing.

Don’t just
settle for what’s familiar, really consider your needs and what you want from a
telco and see what else there is in the market.

We need to
support and encourage those players that are dynamic, that are offering new and
interesting choices and are really trying to win our business. They tend to be
the smaller players (they’re far more willing to try something new in this industry)
and oddly, they’re the very ones that are most at risk from the copper tax.
They’ve invested in new technology, they’ve tried to shake things up and now
they’re facing increased input costs at a time when they’re yet to reap the
rewards of increased revenue.

Without them
in the industry we’ll all be worse off.

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After Fives after match report

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Enable put on a great After Five session last night in
Christchurch.

As you know, Enable is building the UFB in Christchurch but
what I didn’t know is it’s also responsible for another area around the main
city – in effect the satellite towns that feed Christchurch.

The project is going well. I went out on a site visit and
saw a crew drilling along a 30m driveway to reach the property at the back.
Even though the other two residents hadn’t signed up for UFB at this point, the
team were laying in the spurs ready to hook them up should the need arise and,
given the rest of the street’s willingness to swap to fibre (there were four
connections being put in on that street alone) it’s surely only a matter of
time before they put in the call.

What interested me most about the deployment is the uptake
rate – Enable is running at over double the national average at 6% uptake.

That may seem like peanuts but don’t forget the main
residential build doesn’t start for another couple of years yet so to see such
good numbers come in when the country as a whole is barely hitting 3% means
it’s worth taking a second look at Enable’s model.

Enable is co-marketing the fibre deployment alongside its
Retail Service Providers (RSPs) and even without the two big names in the fixed
line broadband world – Telecom and Vodafone – it’s still signing up a
tremendous number of new connections each month.

In addition, word of mouth is strong and that’s in no small
part because of the excellent clean-up job the crews do when laying the fibre.
Instead of the nightmare of trenches, refurbishments, multiple holes in walls,
delays and the like, the teams make sure they clean up after themselves, that
reinstatements of driveways and footpaths are of a top-notch nature and that
they are constantly communicating with both residents and RSP partners. It’s
clearly paying dividends.

Enable has all but completed deployment in some of the
smaller dormitory townships outside Christchurch proper, which means those
people who do live outside the city bounds will find they can work remotely via
fibre instead of driving in and out of the city every day. Enable CEO Steve
Fuller says that’s important to his team as the company is mostly owned by the
council which also needs to consider usage of the roads. If only other councils
were so engaged in the UFB’s potential.

We didn’t agree entirely on the government’s review of the
telco act but I can see where Enable is coming from with its views on investor
certainty and I hope they can see what we’re talking about when I say I don’t
want the Commerce Commission sidelined as regulator.

What must be a concern for both LFCs and customers is that
the move to allow Chorus to pocket price its copper lines in areas where it
doesn’t have the UFB contract is unfair and unacceptable. Quite why MBIE
included the concept in its discussion document is beyond me but the idea that
Chorus will be allowed to keep copper prices high unless it faces competition
is bizarre at best and anti-competitive at worst. I’d hate to see Enable and
the other LFCs go to the wall because Chorus can lower its copper prices and
block migration to the UFB (to follow the government’s own logic), especially
given the stark differences in deployment results.

Thanks again to Enable for a great day and a great After
Five.

Next up for the After Five sequence we have a change of
pace. ASB’s chief economist Nick Tuffley will be talking about the state of the
economy and ICT’s role in it and ASB is hosting it at its new building in
Auckland’s Wynyard Quarter.

After that we have Network 4 Learning talking about its role
in education and what N4L hopes to achieve in the coming years once all the
schools in the country have access to high-speed broadband.

Times and dates and places will be posted on the website on
Monday.

 

NB – the newsletter version of this post differs somewhat owing to my poor handwriting skills. 

 

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Election wish list for a digital economy

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Dear politicians,

You’re heading into an election cycle (actually, if I think
about it, you’re always in an election cycle) so here are some things we at
TUANZ would like to see in your policy portfolio.

They’re in no particular order and we’ve mentioned some of
them before but it’s worth getting them all in one list for you to peruse.

1: International cable made a priority

Let’s be blunt – there’s no capacity problem on the Southern
Cross cable, and as a user of international capacity New Zealand isn’t that big
a customer. But we’d like to see the next government offer a significant amount
of support for any new cable operator because more cables mean more choice and
more opportunity for the broader ICT industry.

We’d like to see New Zealand become a regional hub for
content and in order to do that we need to have more cables. NZ to Sydney, NZ
to LA, NZ to Japan, NZ to South Africa, anywhere and everywhere. That all costs
money and it’s the sort of “roads of future significance” spend that only a
government can drive.

Our potential in the digital economy can only be achieved if
we have the connections to the rest of the world and that means stepping up.
I’d be looking for at least $100m of commitment in one form or another to make
a second and third cables a reality.

2: Commerce Commission given back its role as regulator

This is essential. Stuffing about with our regulator means a
lack of investor confidence and that means we as an economy stall in the
market.

An independent regulator, working to a set of rules that we
all know about in advance is the only way to achieve investor confidence in the
sector. You mess with that role at your peril – customers don’t like it,
investors don’t like it and the participants in the industry don’t like it at
all. It’s poor practice and should be shunned.

3: ICT training emphasis increased – ICT courses added to
schedule of those we value

We need to encourage our youth to take up the ICT skills
we’ll need to build this digital economy. At the moment there is little
emphasis placed on any of the IT or telco related disciplines and that has to
change. Government needs to signal that it wants more computer science
students, but also designers, network managers, even cable layers and jointers.
We don’t have the resources in New Zealand today to roll out the UFB
efficiently, if Chorus’s costs are anything to go by, and part of that is
because of the lack of emphasis on this sector in the education market.

Government should make it easy for the kids to pick up these
skills and to realise that ICT is a viable career choice for them.

4: : Support for Pt England/Manaiakalani Trust deployment on
broad scale

All of which starts at a much earlier point in the education
system than we have today.

One Google software engineer discovered Vietnamese primary
school children learning the basics of coding at age nine. The story of
Vietnam’s move into ICT is a compelling one and while we’d probably struggle to
reach the level they have today, we have a tremendous opportunity to learn from
both the Vietnamese example and from our own Pt England Primary School.

As you know, Pt England equips its older children with
netbooks and ensures that all classes make use of these devices as an
integrated part of the curriculum. The results are astonishing, yet we still
have not rolled out a national programme to encourage this kind of thinking.

That is the role for the Ministry of Education and I’d like
to see the next government take the Pt England model and roll it out nationwide.

Don’t forget, Pt England is a Decile 1 school – its parents
are among some of the poorest in New Zealand, yet they realise the benefits of
these devices and can see the improvement in their children’s education. It’s
time we all got on board.

5: Government as the country’s largest buyer of ICT

No other sector buys as much technology as the government,
in all its forms. Why aren’t we encouraging small New Zealand businesses to bid
for contracts? Why isn’t there a clause in every government tender that says
New Zealand companies get priority? Everyone else favours their own products,
why are we so shy about it?

One.Govt is the government project to streamline the
tendering process, yet all too often I hear horror stories of local developers
being shut out of the process.

Take the IRD computer system as an example. The figure of
$1.5bn has been bandied about – an astonishing figure – but imagine what that
spend could do to the local software industry if it was spent on New Zealand
owned and operated companies. Wouldn’t that give us a kick start like nothing
we’ve ever seen? Start talking to the NZ Rise guys to find out how to encourage their members.

6: Content inquiry

It’s high time the government of the day realise the
elephant in the UFB room isn’t the price of copper but the lack of high
bandwidth services that consumers want.

Currently we have two or three relatively small players
offering content locally and that’s not enough to drive demand. We need to see
if there are any impediments to providing content online, and we need
government to get in behind this key driver for uptake.

6: UFB review

We need to understand whether this project is working as it
should, whether the right governance structure is in place and whether the
whole project is being gamed. Currently we face cost blow-outs, low uptake,
expensive and unpleasant installation processes and a raft of other issues that
limit both consumer and retail providers’ interest in the UFB.

It’s too important a project to be allowed to glide gently
off the rails like this – we need to make sure the UFB delivers on its
potential.

7: RBI review

Similarly, we cannot allow rural New Zealand to become a
backwater. It’s high time we started talking about RBI 2.0 and what that means.

Under today’s regime fully one quarter of the population
won’t ever get fibre to the home. Of all the countries in the world –  dependent as we are on the primary sector for
our income – we need to solve this problem. Cost is a major issue, naturally,
but we can’t rest on our laurels with a two-tier internet where I can get
100Mbit/s symmetrical but the backbone of the economy has to make do with a
peak speed of 5Mbit/s.

89: Regional economic development plan off back of UFB and
RBI

We need to encourage people to move to New Zealand and we
need to encourage more New Zealanders to live anywhere but Auckland.

I say this as a JAFA and as an import. I’m here in the city
of sails (don’t mention the sailing) because that’s where the work is, but for
most of us knowledge workers we could and should be based elsewhere.

The UFB and RBI should mean we can all work from Hamilton,
Whangarei, Whanganui, Invercargil or just about anywhere else we care to name.
Coromandel springs to mind. Let us dream of what might be seen in Johnsonville
and Geraldine, because we run the risk of becoming a giant version of the
smaller Pacific Island nations – one city and a collection of under-resourced
villages.

10: Reform of infrastructure consent process

To build this shiny future we need a shiny network and all
too often I hear about projects being delayed because of problems with the
consent process.

Roads are supposed to be utility corridors, yet all too
often the roads get dug up and re-laid without any thought given to UFB
deployment.

Cellphone towers are in desperate short supply in rural New
Zealand yet in urban centres deployment can be held up by local NIMBYs and
their unsupported science of fear.

We need to grow up, realise the benefits these technologies
bring, and make them a priority.

Ten items designed to raise our standard of living and to
ensure you get at least one more vote (mine) if not a few more besides.

What else would you like to see in a political party’s ICT
policy?

The political agenda

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So David
Cunliffe has taken the ICT portfolio for himself.

This is
quite significant – I can’t recall any other party leader paying this much
attention to the portfolio or the sector itself before.

Cunliffe of
course was Minister of Communications and IT during the previous Labour
government and so is very familiar with the industry, the regulation and the
potential of the sector.

All too
often in the past decade we’ve seen politicians pay lip-service to the idea of New
Zealand being a digital economy. All too often we’ve seen them utter pat
phrases about New Zealand’s potential and how we are standing on the cusp of a
new era.

TUANZ
strongly supports any move to promote New Zealand’s digital capabilities. We’ve
worked alongside organisations like the IITP and NZ Rise to promote New Zealand
companies and New Zealand innovation and we’d love to see our next government
get in behind as well.

We need to
encourage youth into the industry. We need to encourage investors to spend
their money on New Zealand ICT companies. We need to build the infrastructure
to deliver on those services.

ICT has huge
potential for the New Zealand economy and a renewed focus on the sector will be
very timely. If nothing else, Cunliffe’s decision to take on the portfolio
himself will bring the sector into sharp relief and hopefully it will make the
other parties sit up and pay attention.

If nothing
else, it’s put ICT firmly on the political agenda for the year ahead and that’s
great news.

 

It’s the connection, stupid

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Currently I’m sitting in a conference room in Hawaii waiting for the start of the APECTEL roundtable on cyber-security.

I’m here representing INTUG (the International Telecommunications User Group) of which TUANZ is a part (and in case Mr Oil is reading, they paid for the trip) and hopefully will learn something useful about both telco regulation and issues throughout our region.

Telecommunications will play a huge role in the development of countries throughout the region as we jostle to take up space in the digital economy – but in some countries the role is a lot more basic. Simple infrastructure is what’s needed – they just don’t have the pipes (physical or wireless) to connect the population either to each other or to the rest of the world.

Which brings me to the topic of the UFB. By now you’ll have seen the campaign we’re running to get the government to rethink its $600m tax on copper connections.

It’s important to me that we build the UFB but that we build it the right way. Setting it up as a cash cow for Chorus is not going to be in the best interests of competition or users in the foreseeable future and such backroom deals should have no place in the shiny new fibre world we’re building.

That’s not to say I think the UFB is a white elephant or is failing to deliver on its promise. Far from it – we’re very early in the project and deployment rates are on track or slightly ahead in most areas. Sure, uptake is still woeful but there’s a practical reason for that – most households won’t be connected until after 2016 so the ones who are able to connect today are at the leading edge of the adoption curve.

Picture the bell curve. We are still very much at the leading edge of that curve. Uptake rates in single figures aren’t at all surprising because the deployment is still in its infancy and the number of users who are willing to subject themselves to the torturous installation process are few and far between.

But in a year or so we’ll start to see that process get better as installers learn their trade (I can feel a column about training coming on as well) and as more customers find more things to do online with ultra fast broadband.

But two things have to happen to get to that point. Firstly, we need to actually have ultra fast broadband, not this piddling “it’s a bit quicker than copper” we have on offer today. Secondly, we need to have more content legally available online in order to satisfy customer needs.

Having a UFB that is capable of 1Gbit/s is tremendous. Cutting the entry level speed down to 30/10Mbit/s is quite woeful.

TUANZ backs Vodafone’s suggestion of increasing that base speed to 100/50 or more for the same price in order to really give users the speed bump that will jumpstart uptake. It gets users over the line far more pointedly than a 30/10 proposition does.

Content is another area entirely and that’s something we’d like to see government get involved in. Rights issues cloud the waters and nobody is really sure where the problem lies. It’s high time we sorted that out and got to the bottom of where the bottleneck is, what’s stopping uptake and what would help get a Netflix, Hulu or similar up and running in New Zealand.

Sure, we’re a small island nation at the bottom of the world but frankly if we let that stop us we’d be in big trouble. High time we start talking to content providers and see what could be done to bump us up the waiting list.

When colour TV arrived the selling point wasn’t that it’s the same price as a black and white TV but rather that the customer experience was better. Nothing’s changed – UFB’s selling point is that it’s better than copper, not that it’s priced at the same rate.

Axe the tax

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A coalition of Kiwi companies, industry associations and consumer advocate groups has today said no to government proposals to introduce what economists Covec say is a new tax of at least $600 million on Kiwi broadband customers.

In a discussion document issued last month, Communications & IT Minister Amy Adams proposed transferring decisions for the price of existing internet connections from the independent Commerce Commission to politicians in the Cabinet – and to charge users of the existing copper technology the same as those with access to the faster fibre technology.

According to a conservative analysis by Covec, the effect of the policy would be to transfer around $600 million from firms and households to one company, Chorus, which reported an after-tax profit of $171 million last year and increased the dividends paid to its shareholders.

The company’s share-price rose immediately after Ms Adams issued her discussion document on 7 August.

Firms and households would pay $600 million more than recommended by the Commerce Commission for existing internet services, even though more than 70% of households will not be using the new fibre network in 2020 – and 25% of households will never have access to it.

The Coalition for Fair Internet Pricing was founded by Consumer NZ, InternetNZ, and the Telecommunication Users Association of New Zealand (TUANZ) and is supported by CallPlus and Slingshot, the Federation of Maori Authorities, Greypower, Hautaki Trust, KiwiBlog, KLR Holdings, National Urban Maori Authorities, New Zealand Union of Students’ Associations, Orcon, Rural Women, Te Huarahi Tika Trust and the Unite Union.

A number of other organisations are strongly supportive of the coalition’s aims, including leading telecommunications companies and business groups, but have come under political pressure in recent days not to be part of today’s campaign launch.

The spokeswoman, Sue Chetwin, the Chief Executive of Consumer NZ, said the coalition was making two simple points:

“First, it is wrong for consumers to be forced to pay the same amount for older technology as for new technology. It’s like the Government saying people should pay the same for dial-up as for broadband, when broadband isn’t even available to them.

“Second, it is wrong for politicians around a Cabinet table to set prices for monopoly services rather than an independent body like the Commerce Commission. We haven’t seen that sort of thing since the 1970s and we are worried that is an attempt to tax consumers to subsidise Chorus.

“We call upon Ms Adams to indicate that she plans to reconsider her proposal.”

Ms Chetwin made clear that all members of the coalition support Ultra-Fast Broadbrand.

“However, under this funding proposal, there would be only one winner: shareholders of an already profitable monopoly. The losers would be every household, every small business, every big business, every farmer, every school and every student with broadband.”

Ms Chetwin said the new coalition would focus this week on completing submissions to Ms Adams’ consultation process and then running a comprehensive public campaign against the proposals.

Transfield

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Transfield is, apparently, responsible for building out only 10% of Chorus’s commitment to the UFB project, but entirely responsible for UltraFast Fibre’s work.

UFF is currently tracking ahead of the projected completion date and by all accounts is doing very well indeed with its deployment. I’ve heard none of the complaints about delays to connect up homes, astonishingly high failure rates or any of the rest of the noise associated with the Chorus build and although the Local Fibre Companies (LFCs) are reluctant to talk publicly about either costs or connection targets, both are said to be tracking well ahead of the averages reported by CFH.

I find the mix of businesses in the fibre world intriguing.

On the one hand we have a telco – Chorus – spun off from Telecom and in many respects the heir to the Telecom role of network provider of last resort. Chorus is responsible for the lion’s share of the UFB but also owns almost all the copper lines in the land and is uniquely conflicted as a result.

UFF, Enable and Northpower are all wholy-owned subsidiaries of the local power companies.

Chorus is listed on the stock market and must return money to its shareholders.

The LFCs are all owned by trusts and are more used to investing returns back into the networks they run.

Chorus claims its costs are around $3000 per connection – double what it expected and double international standards in such instances. The LFCs don’t report their figures but I’m told they’re a lot more in line with what you’d expect.

It puts me in mind of the TUANZ conference held many years ago in Napier. We had a guest speaker visit from Canada – Bill St Arnaud who, at the time, ran CANARIE, Canada’s advanced research network.
Bill was an affable chap who talked about MUSH networks (Municipal, University, School, Hospital), about building advanced networks and what students were doing with them as a result of having a 10Gbit/s wavelength all to themselves.

He also talked about who you get to build your networks and why choosing a telco is the worst mistake a country can make.

Canada gave each province a bunch of money to deploy these MUSH networks to connect state-owned organisations together. Some provinces hired companies that owned diggers. That’s all – they were just very good at digging trenches and putting the pipe or the duct or the cable or whatever you wanted in the hole. They weren’t interested in running networks, they weren’t interested in clipping the ticket on all the traffic that passed over those pipes, they were just interested in putting pipes in the ground.

Other provinces got in the experts – the telcos – who were interested in clipping the ticket for all those things, were interested in ongoing costs of raising capital, were interested in returns on investment to their shareholders and who ultimately gave the provinces a wavelength on existing fibre lines already in place.

The digger guys simply laid the fibre and got out of the way. The telco guys hired digger guys and got them to do the work, with a nice margin on top, of course.
Currently we have a situation where presumably CFH has paid Ultra Fast Fibre for its deployment. UFF has presumably paid Transfield for its work, Transfield has not paid its contractors and the contracts have not paid the sub-contractors who have stopped working.

The amount of money flowing down this particular waterfall is not inconsiderable but there’s a lot of money not making it to the guys doing the actual work.

Even if this model works with 100% efficiency, we’re losing a lot of money in overheads, margins and the such to each player along the way. Surely a better model would be for CFH to hire the contractors and subbies and just get them to dig in the network we want. Lighting and running it can be left to the LFCs and RSPs and we’ll save a bunch of money in the process. St Arnaud estimated that in Canada those areas that deployed using utility providers rather than telcos achieved higher uptake rates at a third of the cost because they just provided the service.

Chorus has launched its “Gigatown” initiative which I whole heartedly support. 1Gbit/s service would dramatically change the way SME businesses operate. My question is, if we can offer this as a service today, why are we still talking about 30Mbit/s download with 10Mbit/s upload and why are we still paying telcos to dig ditches?

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Gigatown

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Chorus has launched a promotion that will give one town in New
Zealand gigabit speeds on the Ultra Fast Broadband network.

One gigabit per second is fast. OECD rankings suggest that only
four countries in the world offer national 1Gbit/s plans – Turkey, Slovenia,
Sweden and Japan (this was in 2011 so there may be more by now) and that most
top out at about half that speed.

We’re talking about 1000Mbit/s. Today I get 15Mbit/s
download so to call it a step change is something of an understatement. My
upload speed is barely 1Mbit/s.

We tend to get complacent about the fantastic advances
technology makes each year. A doubling of capacity, a tripling of speed, these
numbers become run of the mill and users are blasé about them. But a thousand
fold increase in my upload speed would be startling to put it mildly, so good
on Chorus for trying this out.

The economic potential of offering such a service is
astonishing. Think what having such a speed would do to the way we think about
remote working or having to live in the main centres. Think about what access
to the world at those kinds of speeds would mean for start-up software
developers and to our migration patterns. Software companies should be lining
up for our cheap housing and staff with no fear of us being too removed from
the world.

Movie studios would look more to New Zealand for filming opportunities
than they do today – getting the rushes sent back to LA or New York or further
afield to the UK or Germany is a major problem and it’s not the international
leg so much as getting the footage out of Wellington and up to the Southern
Cross Cable.

But I have a question. Given this capability is clearly
available today, why are we talking about an entry level product of 30Mbit/s
download speed? Why are we talking about an upload speed barely ten times what
I get today?

Why aren’t we talking about an entry level plan of 100/100
followed swiftly by 250/250 and 500/500? Why aren’t we offering 1000/1000 at
launch?

Speeds like these would help encourage people to move to
fibre in a way that talking about 30/10 plans simply won’t.

The entry level price point is on par with copper and the
entry level speed is on par with copper so why on earth would I shift over?

No, the real lesson from Gigatown is that we should all have
that kind of capability and we should all have it sooner rather than later.
Only then will we see all those nice things in the video come to fruition.
Economic development, e-health initiatives, educational opportunities, rural
regeneration, population increase, regional development.

Suddenly, the entry level product is the barrier to uptake,
not the enabler. It’s time we revisited the UFB’s promise if we’re ever to
achieve the future depicted in the Gigatown promotion.