Blog – Page 28

Whither VDSL?

29/10/2012/2 Comments/in Uncategorized /by tuanzadmin

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.

Vodafone and TelstraClear

28/10/2012/in Uncategorized /by tuanzadmin

The Commerce
Commission is due to report back on Tuesday with its decision regarding the Vodafone
purchase of TelstraClear.

Should it go
ahead the takeover will redefine an industry that’s already undergone dramatic
upheaval over the past dozen years.

We started in
2000 with the Fletcher Inquiry into the telecommunications sector, which
recommended the creation of a stand-alone regulator to oversee the industry.
This came at the end of a decade’s worth of nonsense that came about as a
result of the government’s sale of Telecom lock stock and barrel as a monopoly.
Funny that – monopolies operate in their own best interests and expecting
Telecom to do any different would be like dropping a hungry timber wolf in a
cattery.

By the mid-2000s
it became apparent that the light handed regulatory approach was not going to
deliver anywhere near the kinds of results we needed. The decision to unbundle
the local loop – something most other countries had done many years before –
was delayed until it was all but irrelevant. Finally, the bicycle courier
debacle saw the government break cover and demand Telecom operationally
separate.

By the end
of the 2000s, that was also deemed to be a slow-moving train wreck. Telecom had
continued to act in its own best interests and the industry had suffered as a
result – although the Commerce Commission had actually used its powers to take
on issues like Telecom’s “loyalty” scheme and the sub-loop extension service
(SLES) problems which were designed to block competition from getting a leg up.
So we embarked on the biggest project of them all – roll out a fibre to the
home network that would either overbuild Telecom’s copper network or require
Telecom to structurally split in two to take part in the venture.

Telecom
chose the latter path – Chorus was born and we are starting to see the fibre
network deployment take shape, albeit very slowly at first.

Telecom has
a lot to do in the coming year. It has to compete while figuring out how to
finish off splitting away from Chorus. It has a new CEO and has to compete in
the nearest thing we’ve ever had to a level playing field.

On top of
that, we now have Vodafone making the leap from a mobile provider, with an ISP,
into a fully-fledged telco hopefully with a keenness for shaking up the market.

Here at
TUANZ we thought long and hard about the ramifications. On the one hand we have
a reduction in competition as our top three telcos become two. We have a
consolidation at that end of the market where all the power lies and we see 80%
of the market dominated by two telcos, telcos who have had a history of sitting
pretty alongside each other in the mobile space.

On the other
hand, Telstra was never going to allow TelstraClear to compete vigorously in
the New Zealand market. Quite why Telstra bought Clear Communication off BT is
something of a mystery – I put it down to Telecom’s purchase of AAPT and a
desire to keep Telecom on a short leash. Mess with us in Australia and we’ll
mess with you in New Zealand, was the warning.

AAPT turned
out to be something of a mutt with fleas and so Telstra did the bare minimum for
its fledgling Kiwi company. After the Auckland City Council refused to allow
the expansion of TelstraClear’s cable TV business in Auckland (looking at you, New
Zealand Herald for that particular nonsense) and the staggering Commerce Commission
decision not to unbundle in 2003, TelstraClear really had no business plan for
growth. Sure, it had a tremendous asset in the form of its fibre backhaul
network, but its decision not to peer locally, its shambolic cellphone network
deployment in Tauranga and multitude of brand names did nothing to build its
business locally.

Rumour has
it that TelstraClear approached Telstra about buying Vodafone New Zealand’s
business in order to grow swiftly. Telstra baulked at the asking price
(rumoured to be $3bn) and instead entertained a reverse deal that includes a
clause to keep Telstra out of the New Zealand market for some time to come.

The upside
to the deal, however, means we finally have a competitor that can take on
Telecom in the fixed line market in ways Telstra simply wouldn’t entertain.
Vodafone has very little business in the fixed line market. Sure, it bought iHug
and has a consumer presence, but in the all-important business market, it’s a
minnow. In order to really take on Telecom in its heartland, only Vodafone has
the scale and with TelstraClear’s assets (both network and people) it would
have the ability.

I’d expect
the Commerce Commission to come back with an agreement to allow the deal to
proceed, albeit with a variety of caveats regarding market monitoring. If there’s
any sign of a cosy duopoly forming, I’d expect the Commission to act swiftly,
but I have high hopes that won’t be needed. It’s up to Vodafone now to deliver
on the promise of the Clear network. If it does that, we should have a more
dynamic and interesting market. If not, the Commissioner will have to wield the
scalpel once again.

Guest post – Broadband: UK style

23/10/2012/6 Comments/in Uncategorized /by tuanzadmin

This article was contributed by Kerry Butters on behalf of Broadband Genie, the consumer advice site for finding the best UK broadband

Broadband
in the UK

When it comes to choosing a broadband provider in the UK, it
can seem a little daunting at first, with many options available. Whilst there
are special offers everywhere, if you change provider you also have to give
consideration to your specific needs. If you know exactly what you’re looking
for in a broadband deal, it makes it far easier to shop around for a service
tailored to your requirements.

Very often customers go with whatever is convenient. If your
ISP also provides your television channels and phone line, you can get a
package that is one payment per month, thus making it easy to understand
exactly what you’re paying for, with just one direct debit to pay. Just because
you are paying for all three in one go, it doesn’t necessarily mean you’re
getting the best offer.

If you don’t use the internet that often and your priority
when choosing a provider is cost, there are some great deals available.
Companies offering broadband from as little as £3.25 per month as an
introductory offer for the first 9/12 months. These offers tend to have speeds
of around 14Mbit/s to 16Mbit/s.

This doesn’t mean that you will necessarily have to watch
you’re downloading at the same time. Many providers giving these offers have
unlimited downloads as part of the package and as such, these offers are
certainly worth considering.

There are even companies that offer fibre optic broadband,
unlimited downloads, free calls at weekends and evenings and to users of the
same supplier with up to 30Mbit/s for £4.00 with free installation. Very good for
an 18 month contract.

However, as always it isn’t that easy for everyone. The UK
ranks pretty low in the European ranking when it comes to broadband. There are
still millions of homes across the country with low internet speeds and no
access to fibre optic broadband and whilst the government’s claims that 90% of
all UK homes will have superfast broadband
by 2015, experts, including some ministers, have already questioned the
viability of this. The government have a plan to invest £680 million over the
next three years and many believe this just isn’t enough to fulfil their
promises.

Another very important thing to bear in mind when choosing
your broadband supplier is that claims of “speeds up to” are just that. The
fact that a provider is claiming speeds up to in a certain area, doesn’t
necessarily mean your home will get that speed. If you’re considering changing
your provider for one that is advertising quicker speeds, it makes sense to do
your homework first and look into what users of that supplier in your area are
saying about it.

Internet Service Providers claims and user’s experiences are
often poles apart. The best thing to do is go on forums, see what people in
your neighbourhood are saying are the best suppliers, as they are often far
more reliable than the ISP’s themselves. Nevertheless, broadband in the UK is
regulated by Ofcom and this is something that they say they are addressing as
we speak.

If the government are to be believed though things aren’t looking too bleak for the future. The UK hopes to be a European leader in
broadband by 2020. If this is the case, then they are going to have to get a
move on very soon.

Welcome to the new look TUANZ website

22/10/2012/3 Comments/in Uncategorized /by tuanzadmin

Hopefully it’s not too scary-looking.

We’ve moved to a cloud solution for two reasons: firstly, we need to use telecommunications if we’re going to represent you in this arena and one of the big trends in the last year or so has been the move to the cloud. Secondly, the reason everyone is talking about the cloud is cost savings, and we’re very big on that round here.

Plus the functionality has increased dramatically over recent times – today, the site is hosted via Squarespace and as you can see it’s got at least as much capability as we used to have if not a wee bit more. You can Tweet or post these links to Facebook and when a new social media/content sharing idea rises up (as I’m sure it will) that’ll get added in as well.

From my side of the screen it’s got a bunch of new features that I’ll be making use of, including an iPad app that will allow me to manage the site from anywhere I can log on. I can see who’s reading what and which stories are generating the most interest. This makes the editor in me very glad indeed.

Once we’ve got the website bedded in, we’ll look to move other aspects of our business over to the web as well. We have a back-end database, we have an email mailing list and we hold events – all of these things can be outsourced to the cloud and we’ll be doing just that over the coming months.

I’m keen to make the TUANZ website the hub of telco discussion in New Zealand and to that end I’ll be posting more guest blogs than ever before. It’s important that we, the users, have a rounded, well supported view of the industry and so if you’ve got anything you want to say, don’t be shy – let me know and we’ll sort out a spot on the blog for you.

And on that note, if you do spot anything on the site that’s not working or looks weird, drop the webmaster a line. You’ll find him at: paul@tuanz.org.nz because that’s how we roll these days. Be kind – he’s new at all this.

WHERE TO FOR UNIVERSAL SERVICE – PART 2

31/08/2012/in Innovation, ISPs /by tuanzadmin

In Part 1 of this post (link) we look at the historical approach to universal service. Part 2 looks at the future: and in particular at rural broadband.

To its credit, the government has recognised that access to broadband in rural areas is a serious economic and social issue. The Rural Broadband Initiative (RBI) is the response: an industry-funded, government-led programme building faster broadband infrastructure in rural areas. When it is finished 86% of households outside the cities and most rural schools, health centres and public libraries will be able to access fast broadband, mostly within the next two years. Vodafone is building around 150 new sites and securing fibre to more of its towers, and Chorus is building 3,100 kms of new fibre.

The RBI was a big and welcome change in approach on how to to encourage telecommunications companies to provide services in hard to reach areas.

The TSO simply imposes the obligations on Telecom (and from 2001 to 2011 required other operators to pitch in to the costs). A similar model operates in Australia, where Telstra has the obligations and the other operators compensate it to the tune of around 50m each year (see the article on Universal Service Obligation here.

The RBI is a competitive subsidy model (the money actually comes from the industry itself through a levy), rewarding Chorus and Vodafone, who won the tender, for building networks and providing services in rural areas. The German government has done something similar, requiring bidders for new generation cellphone spectrum to commit to build their networks in rural areas before they are allowed to build them in urban areas (see that story here), implicitly accepting a lower sale price for the cellphone spectrum as the price of universal broadband coverage.

Not only is the RBI a better approach in terms of actually getting services rolled out in rural areas, but it sets a simple and clear standard for minimum broadband services which:

will reach 86% of rural customers, over half of whom will have access to multiple competitors and a choice of technology (copper or wireless)

will deliver a peak speed of at least 5 Mbps over wireless (a bit quicker than average fixed broadband services today) and 20 Mbps for copper-based services

*will be priced so that services cost the same in both urban and rural areas.

Four challenges for the review

First, there will be continued pressure from rural customers for better broadband services (see paras 164 to 167 of this Commerce Commission summary.

This could take the form of a minimum guaranteed broadband service that must be available to all New Zealanders. There was much debate around the RBI as to whether 5 Mbps was fast enough for those customers relying on fixed wireless services (although of course it is a whole lot better than the no broadband at all that many ruralcustomers faced before the RBI came along). The UN has defined broadband as a basic human right, and Finland in 2010 made a rule that all telecommunications operators were required to offer broadband access of at least 1 Mbps.

Competition over the RBI-funded infrastructure should mean that customers willgradually get more bang for their buck – in urban areas competition has meant growing datacaps with broadly static prices. Wireless services have smaller data caps than copper-based services reflecting the higher costs of data on wireless technologies. But new mobile technologies should allow faster wireless data speeds and bigger data caps in due course.

Second, the government’s review will need to consider updating the TSO requirements for the internet age.

Certainly free local calling is heavily utilised – accounting for 29% of all voice minutes in 2011 (see page 11), but if the Commission is right it is holding back competition.

For the growing number of customers who use mostly or only their mobiles,”free” local calling is rather expensive. Other elderly TSO requirements – like not charging more in rural areas than in urban areas, and ensuring Chorus does not shrink its network seem superflous given the developments of recent years.

What to do with the ineffective price cap on basic voice services is trickier. It does not seem to serve customers very well, although clearly it is helpful for the industry to be able to put up prices every year.

Third, the obligations could be extended beyond just Telecom. With Chorus, the network company, now split from Telecom, the retailer, it doesn’t obviously make sense that the TSO obligations should rest only on Telecom. If Telecom is required, say, to have a standard plan that offers free-local calling as an option, there is no obvious reason why this rule should not apply to other operators as well.

The fourth challenge is ensuring everyone can get decent broadband.

Even after the completion of phase 1 of the RBI there will be coverage and competition black spots. There is a phase 2 of the RBI ably explainedby the Commision in para 159 of this report to reach schools and other priority users that are not at present covered by the RBI or the government’s fibre network (the UFB).

Systematic, public, up-to-date data on remaining areas of trouble could also help – it seems like it would be an easy extension on the government’s broadband map to show people who do not have service at present. This would help operators to figure out the value of network extensions, sharing infrastructure where it makes sense in remote areas. Satellite solutions will work for many. Community self-build solutions like those from Wiz Wireless can also help in some parts of the country.

Over to you

So the ball lies fairly firmly in the government’s court. Its review is required to be completed by the end of 2013.

We wait to see the outcomes with interest. A bold answer would consign the outdated TSO requirements to the dustbin, and ensure a sensible alignment between the TSO and the RBI as we continue to work towards universal broadband.

Hayden Glass is a consultant specialising in telecommunications with the Sapere Research Group, one of Australasia’s largest expert services firms

Citizens and Video Watchers Arise!

27/08/2012/in Innovation, ISPs /by tuanzadmin

New Zealanders have long suffered due to a lack of legitimate online video options. Alert readers will recall that we have looked
at these issues in a blog post The Ins and Outs of Online Video, and the next step is to get some better data on how our options compare with more fortunatate isles.

We want to do this by creating a list of legitimate online video options and their key characteristics. If you are a user of online video options willing to share your knowledge with the world, feel free to contribute what you know, or correct what is there in thisspreadsheet.

We also want to gather information on how New Zealand compares. So if you are using the US iTunes, Hulu, Netflix, Lovefilm or some other major online international video service, please fill in the sheet that explains how it stacks up. We promise not to tell anyone if you are breaching their terms and conditions.

With your contributions the idea is that this table can become a trusted source of information, and TUANZ and others can use it in their ongoing lobbying on these issues.

Guest blog – Where to for universal service

22/08/2012/in Broadband, Innovation, ISPs /by tuanzadmin

Guest post from Hayden Glass from the Sapere Research Group.

And broadband for all

Now everyone has access to a telephone, the question is how to get everyone great broadband.

Next year, the government will review the rules about universal service, ie, the questions of what minimum level of telecommunications service should be guaranteed to everyone, and how best to make that happen.

The legislation requiring the review is quite specific about what to cover, including whether existing universal service rules are still needed, how they should be delivered on, and funding arrangements.

Successive governments have required Telecom to make basic voice services available to everyone. These historic requirements are now out of date, overtaken by competition and by technology (especially mobile). The real questions for the future are about broadband, as the government’s Rural Broadband Initiative (RBI) recognises.

Part 1 of this post looks at what the universal telecommunications services are, and how the requirements have fared over time.

Part 2 will consider the future, explain why the RBI is a big improvement, and looks at what remains to be done.

What is universal service

The universal service programme in New Zealand suffers under the moniker of the Telecommunications Service Obligation for Local Residential Telephone Service (TSO). Fundamentally its job was to ensure that everyone had access to a fixed-line telephone that they could afford. (There are also separate arrangements for a text relay service for the deaf, confusingly also called a TSO, that are not the subject of this post.)

The latest incarnation of the TSO is a deed (WARNING: PDF) agreed in December 2011 as part of the separation of Telecom and its network arm, Chorus. The TSO imposes four main requirements on Telecom.

* Never raise the price of basic fixed-line phone service for residential customers faster than the rate of inflation, unless Telecom can show its profitability is “unreasonably impaired”.
* Never charge more in rural areas than in urban areas for “basic residential service”, which in effect means Telecom’s standardHomeline service .
* Continue to offer fixed-line phone service to all customers who were connected in December 2001, and
* Provide free local calling as part of the basic phone service for residential customers. Via an exchange of letters with the government in 2000, Telecom was also required to provide slow-speed dialup services to most customers.

Chorus, the network company, has obligations to maintain its fixed network coverage to ensure that Telecom can continue to meet its obligations.

These obligations have changed only slightly since they were put in place on Telecom’s privatisation in 1989 despite radical changes in the industry in the meantime. The slow-speed dial-up data requirements were put in place in 2001, when Telecom was given the ability to bill its competitors for some of the alleged negative profit impacts of having to meet these obligations. The Commerce Commission checks each year whether the obligations have been met .

The 2001 requirement for the industry to compensate Telecom was never going to be a popular policy in the industry. It led to a verylong-running legal dispute eventually won by Vodafone, although as between Telecom and Vodafone the case had already been settled before the last court decision came out. Vodafone was essentially arguing that the Commission had not followed the law properly and as a result had substantially overstated the cost of the TSO obligations for Telecom. Soon after, the government announced it would get rid of the contribution system, particularly in light of evidence cited by the government that Telecom had not spent the money it had been given by Vodafone and others on rural network infrastructure in any case.

Universal service anyway

The TSO obligations have worked so far as they went, ie, the fixed-line network is as no smaller than it was in 1989, the price of basic fixed-line phone has gone up at almost exactly the rate of inflation, and free local calling remains part of Telecom’s Homeline package (as seen in the Commerce Commission’s helpful report).

But thanks to competition and technological change, these obligations are now chronically out of date.

* Ensuring access to a fixed-line telephone is no longer the problem. Just about everyone has access to a fixed line and a mobile phone, coverage continues to expand through competition, philanthropy (Vodafone’s community tower build programme), and the RBI, and local calls are cheaper and cheaper on prepay mobile plans with no minimum spend.

* The price cap on residential phone service was insufficiently tough in the first place. The Commerce Commission thinks that free local calling has retarded competition, and that New Zealand has one of the highest prices for standard residential service in the OECD. The price of standard residential phone services has risen even while prices for other phone services have collapsed. Local calling is only “free” for customers who pay the high monthly fee, which might be why the now-renamed Ministry of Economic Development calls it “charge-free local calling“.

In short, the existing TSO is a solution to a problem that no longer exists. The real issue now is broadband for everyone. As we shall see in Part 2.

Hayden Glass is a consultant specialising in telecommunications with the Sapere Research Group, one of Australasia’s largest expert services firms.