Last week on the 9th February, Ernie Newman, past CEO of TUANZ, posted a blog on his experience ordering UFB for his home office.  Below is what he wrote to explain his story which we repost as a Guest Blog* (You can see the original post here).

“Is UFB – a visionary, nation-building programme that taxpayers have funded – being undermined by the retail telecommunications companies? From my recent experience, yes – the moment a customer in a shop or call centre uses the “F” word – fibre – your typical telco sales person  scuttles off like a scared rabbit.

Last year I helped a client connect to the UFB and found the process cumbersome, with RSP staff not merely uninformed but outright resistant. I hoped this was a teething issue, but now it seems endemic.

In recent days I’ve been trying to get my home office upgraded from naked DSL (on the old WorldxChange network, more recently taken over by Vodafone) to fibre. A breeze, I thought – Chorus had mailed me to say that work in my street is complete and to start enjoying UFB I should get in touch with my service provider.

Last week I rang 0800 123456 to start the process. – I was about to leave Auckland at the time and decided I’d use the downtime in the car to organise the deal. Before joining the Southern at Tamaki I dialed and typed in my landline number, after which I was put in the queue.

Near Takanini I got a real person – Jonathan. He asked for my home number – never mind that I had already typed it in. I explained my request. Jonathan went quiet – he seemed quite stumped that someone was asking to be connected to fibre. He put me on hold. Eventually he came back and said he would need to pass me to the sales team. Ok – back on hold again,

Near Drury I was answered by a lady whose name I forget. Once again she asked me for my home phone number and once again I explained my request. Once again there was a silence in which it was clear that she was out of her depth with such a request. She put me on hold.

Coming up to the Bombays, a third Vodafone person answered – how can I help you? She had not had any handover from the two previous operators. For the fourth time I gave my landline number.

I must admit to getting a bit tetchy at that point. “I’m only trying to do my job”, she retorted – and within a second the call was disconnected. Coincidence?

But it gets worse.This morning I started again ringing the same call centre number. They eventually answered but the moment I mentioned the “F” word they couldn’t wait to transfer me to another department. Unfortunately this department had their phones on nightswitch despite being 10am on a weekday, so I was asked to leave a recorded message which I did.

Later this morning I got a call back.“Sorry but we don’t offer fibre in Whakatane” I was told. “What” – I said – “I have a letter from Chorus saying it is available. Are you serious that Vodafone does not offer it”

“Your account is not with Vodafone” I was told. “You are a customer of Vodafone Next Generation Services – and we don’t offer fibre in Whakatane.”  (Next Generation Services but nix fibre? Yeah right!)

“Well then,” I asked, “does Vodafone (parent company) offer fibre in Whakatane?” “I don’t know,” they said – “you’ll have to ask Vodafone.”

I gave up. I drove to my nearest Spark shop.Nice people. Yes they said – we can get fibre for you. But there’s a crunch. I first have to convert to Spark DSL which potentially means replacing my IP phones with PSTN ones and will take two weeks. Then and only then can the process start to get fibre to me – that will take up to 3 months.

Despite all that, I agreed. Until, that is, it became clear that the whole process is so complex that it is beyond the normal salespeople. I need to deal the branch manager, who was busy out the back .So I gave up.

My thesis is this:

• The reason UFB takeup is slow is that no matter which RSP you deal with the staff run like scared rabbits the moment the “F” word is mentioned

• The underlying cause might be incompetence, or woefully poor training

• However it is plausible that the RSPs, or a business partner, have a perverse incentive to keep customers on the copper rather than convert them to fibre – in which case that is really bad news for the consumer and for the taxpayer’s substantial investment. 

Whatever the reason, it seems that customers wanting to take advantage of the UFB for which they as taxpayers have picked up the tab, are being seriously frustrated.I would love to be proved wrong. Please somebody tell me if I am.”

*Guest Blogs do not necessarily reflect TUANZ official position but are posted to encourage debate and discussion on pertinent issues.

In 2010 a survey on business use of Ultra Fast Broadband (UFB) was conducted.  Earlier this year (2015) it was decided to survey the TUANZ membership once again and to invite the Greater East Tamaki Business Association (GETBA) to participate given the length of time UFB had been available in that area.  The survey was conducted online during the month of June 2015.

Over November, each week we will publish a post that covers off a key finding from the survey finishing up with our thoughts on the opportunities that we see arising from the survey results. We have also published the data to the Figure.NZ site and you can see the results here – note that at present that although the graph titles state that it is “TUANZ members”, the results include the GETBA results as well.   If you want to know more of the background and the response rate you can read that on our website here.

 

This week we look at the respondent’s view that SPEED is one of the key drivers to take a fibre service.  In the survey we asked a series of questions that attempted to understand the key drivers for taking a fibre service  In some ways it was unsurprising that the key underlying reason was the reliable speed of connectivity.

However when asked what speed broadband they would like to buy in future (n= 142), none of the respondents who already have fibre or UFB (n 70) = selected VDSL or 30 Mbps/10Mbps plans and 42% of that group would purchase plans of 1Gbps or more. Of those without fibre (n = 72), it was interesting to note a general preference for lower speed plans, with the exception of the 1 Gbps plan (selected by 13%), which has been heavily marketed through Gigatown and other campaigns.

Of those respondents who had taken up UFB or fibre at their head office or single site, the majority (45%) were on plans of 100 Mbps symmetric or less. Almost 30% were on 1Gbps symmetric plans or more (including those on dark fibre). This appears relative to the greater sample of SME respondents than corporate.  Of the more than 42% (n=92) on copper broadband, around 23% reported they were on a VDSL connection. The same number didn’t know what speed their fibre connection was.

There are indications that opportunities lie in improving broadband speeds at branch offices. Nearly 45% of respondents (n= 83) had branch offices and although this sample diminished further when asked about the type of broadband connection they had (n=65), just under half were still on copper.

The trend to uncapped plans was confirmed with around a third of respondents no longer tied to a fixed amount of data.

 

Other Drivers of uptake:

 

Price (n=85) again proved to be a challenging question to survey, especially as many broadband plans are still bundled with telephony. Accordingly caution should be exercised when considering these results. When asked what monthly fee they were paying for broadband now, 77% of respondents said they were paying under $200 per month. The median price paid was $109. Unsurprisingly, SMEs and non-fibre users were the predominant type of businesses to answer this question. When compared with the 2010 survey results, it would appear businesses continue to be price sensitive. The similarity of the monthly UFB access fees to those for ADSL (copper) services was considered of greatest importance (74%) in encouraging UFB uptake by non-fibre respondents.

Other – The UFB benefits which were ranked second and third most important after access fees in encouraging uptake by non-fibre businesses were improved productivity (76%) and remote working (65%) respectively. All respondents considered cloud, remote working and voice-over-IP to be the three ICT services they would most consider investing in to leverage the benefits of UFB. These were similar to the responses given in 2010. The benefits respondents were least aware of in 2015 were reduced power costs and supply chain improvements.

In 2010 a survey on business use of Ultra Fast Broadband (UFB) was conducted by TUANZ.  Earlier this year (2015) it was decided to survey the TUANZ membership once again and to invite the Greater East Tamaki Business Association (GETBA) to participate given the length of time UFB had been available in that area.  The survey was conducted online during the month of June 2015.

Over November, each week we will publish a post that covers off a key finding from the survey finishing up with our thoughts on the opportunities that we see arising from the survey results. We have also published the data to the Figure.NZ site and you can see the results here – note that at present that although the graph titles state that it is “TUANZ members”, the results include the GETBA results as well.   If you want to know more of the background and the response rate you can read that on our website here.

This week we look at the uptake amongst SME’s in the survey and conclude that they are yet to seize the opportunities available to them.

In 2010 around 64% of respondents said they already had at least one fibre service. This was not surprising given that fibre optic services had already been deployed in many CBD locations and the majority of respondents were corporates. For clarity on the difference – fibre laid before the UFB initiative was not built as part of an open access network available for all retail service providers to offer services over, and therefore more costly. It was largely made up of a series of bespoke, point-to-point connections from the exchange directly into the corporate office.

Back in 2010, of all respondents asked about their likelihood to connect to UFB within a year of it being available, 82% said they were “likely to”, “highly likely to” or “definitely will” connect. This could only be considered an indicator of future behaviour as no retail costs were provided then.

By 2015 49.5% of all respondents had actually taken up UFB or fibre at their head office or single site. More than 20% of those with UFB or fibre had pre-existing fibre and more than 65% were corporates.  Drilling down, the share of those who had not taken up UFB was 42.3% and of them, 60% were SME.

The message from several studies in recent years, that there are untapped productivity and efficiency gains available to SMEs with a strong internet presence, isn’t yet changing behaviour.  

Cloud applications, remote working and voice-over-IP were the areas most businesses said they would consider investing in to use UFB. This was in line with the feedback in 2010, although collaborative tools ranked more highly then. Improved productivity, remote working and improved video conferencing were the most well known benefits of UFB.

Less than half the total respondents answered questions about the need for further information. Interestingly, the information most sought after was simple, high level and readily available, such as performance guarantees, UFB rollout timeframes, and speeds and bandwidth.

Looking forward, the survey results suggest there remains a strong need for wholesale and retail service providers to improve awareness of UFB availability, especially among SMEs.

Yesterday we made a public release of a paper in which we outlined the key high level issues we thought should be discussed and debated as part of the current review of the Telecommunications Act – you can read it here. 
 
We’re very clear that our focus is on the outcomes for our members, and to help businesses make the most of the new digitally connected economy. And it’s that phrase “digitally connected” that has got me thinking and talking with TUANZ members over the last few months about how that lines up with the word “telecommunications” in the name of our organisation. 
 
The word itself is basically a 1930’s French word – being a combination of tele meaning ‘at a distance’ and communication. According to Google, the use of the word peaked in the last 90’s and has slowly dropped off since then. And you can probably understand that – what comes to mind when you think of the telecommunications? If you’re of my generation you probably first think of telephones and maybe even the old rotary dial phones! If you’re younger you may not even know what a rotary dial is. In fact you probably haven’t even really thought about how we ended up with the telecommunication services we have today – you just are used to being able to communicate through various digital technologies. And so why would you be interested in an organisation that is called the Telecommunications Users Association?
 
Well… I’ve been talking to people about that too. I’ve come to the conclusion that the word does encapsulate so much more than just telephones, circuits or infrastructure. It very much describes the modern digital connected world.  Many online businesses didn’t exist 10 years ago, or even 5 years ago. They use the power of the internet to reach out and communicate over distance to people who visit the business’ website and (hopefully) transact while there. These businesses wouldn’t exist if it wasn’t for telecommunications. TUANZ has a growing number of young entrepreneurs who are getting involved because they know that they couldn’t do what they do if it wasn’t for an organisation like ours, working to help businesses make the most of the opportunities presented by today’s digital economy.
 
In truth today’s digital environment is just the latest development in telecommunications – we’ve just added the internet to the ways we communicate over distance. For example, this was written using Google Docs, blogged using Squarespace, an online, browser based website builder that relies on being connected to the internet to work.   You might receive a message via SMS, or by an app on your smartphone while reading this, and you probably work in a business that in some way uses the internet to transact or communicate. All of these are examples of the use of telecommunications – so maybe it’s not quite time to retire the word yet.

Guest Blog* from Bill Bennett.  Bill blogs here.

Communications Minister Amy Adams says New Zealand’s government supported fibre network has hit the halfway point.

In a press release the minister says: “The UFB build is going from strength-to-strength, with fibre being rolled out to communities up and down the country. The project continues to be on budget and well ahead of schedule”.

There’s little question about the project being on budget that’s because Chorus shareholders have to find the lion’s share of the cost. The other network builders have to invest their own money too.

Well ahead of schedule sounds right. But that’s partly because the companies picked the low-hanging fruit first.

Anecdotally I hear the build in Auckland, which makes up more than a third of the total project, is running behind schedule. Meanwhile people living in apartments are a long way behind any schedule.

Going from strength-to-strength is debatable.

Cherry-pick

To date only one-in-eight of the people able to connect to fibre have signed-up. Given that the UFB builders cherry-picked the richest suburbs as the first to get fibre, this doesn’t bode well.

Also, as Chris Keall points out at the NBR: “…that number includes the schools that have received free connections, network management and free broadband from Crown company N4L”.

And then there are the widely reported congestion woes. Since March TrueNet, the broadband speed monitoring service, has been reporting on poor performance during the evening.

Streaming video peak time

This is the streaming video peak time. It turns out the networks can’t cope with thousands of consumers all watching Netflix at the same time.

Even the fibre-only MyRepublic service struggles. This suggests a need for further investment in backhaul and ISP provisioning.

You could argue congestion is a sign of New Zealand’s broadband network going from strength-to-strength. It means there’s a healthy demand for data services even if consumers aren’t in a hurry to switch to fibre.

Demand to grow?

Optimists assume fibre demand will grow as streaming video gathers momentum with consumers.

Radio New Zealand has followed another fibre story undermining the strength-to-strength message:
“Crown Fibre Holdings – which is in charge of the Government’s $2 billion UFB rollout – wanted to ensure service providers such as Spark and Vodafone had to offer battery backup.”

There’s a remarkable Nine-to-noon interview where Katherine Ryan questions Chris Bishop, a policy and programme manager at the Ministry of Business, Innovation and Employment.

Fibre battery backup

The man looks like either a liar or a fool as Ryan repeatedly asks why the ministry forced Crown Fibre Holdings to drop a requirement for ISPs to offer customer battery backup.

Time after time Bishop trots out an implausible line about “wanting to offer consumers a choice”. It doesn’t begin to address the issue.

Radio New Zealand had to get an official information request to find out about the ministry leaning on Crown Fibre and CFH’s response putting its objection to the ministry on the record is just as enlightening.

Ryan nails the key point when she notes that when this was happening suitable backup batteries cost around $300. If consumers thought they’d face that as an upfront cost, they wouldn’t sign for fibre.

Greater disclosure please

Craig Young from the Telecommunications Users Association of New Zealand (Tuanz) says the lobby group was working with the industry to try to ensure companies installing broadband were more upfront with customers about the need for batteries.

He says: “You probably don’t even know where to find a product disclosure code, for a product that’s being sold by Spark. You want to be told on the phone when you get this service that it won’t work when the power goes off, there should be a requirement on service providers to be a lot more upfront about these sorts of things.”

Batteries can now be bought for about $100 and Mr Young said telcos could upsell those to consumers.

Fibre, batteries, power cuts

The issue is tricky. You need battery backup because unlike copper telephone networks, fibre doesn’t work in a power cut. Radio NZ worries that means people can’t make emergency calls.

Yet, with mobile phone penetration now at well over 100 percent, few households would be cut-off in an emergency. Certainly not the kind of tech-savvy households in a hurry to buy fibre.

Except there are places like the recently built old people’s accommodation in Wellington that is fibre only. The residents have to sign for fibre accounts and, at first, couldn’t make regular phone calls.

Old school telephone on fibre

Spark came to the UFB project’s rescue selling what is effectively a virtual plain old-fashioned telephone service over a fibre connection product. Any ISP could offer a similar product, the technology was baked-in to the UFB design from day one, but the others have chosen not to invest in that area.

That still leaves the problem of fibre failing in a power cut, but then so does everything else. We’re dependent on electricity. After the Christchurch earthquakes the mobile carriers used portable generators to power cell sites. People still had to find ways to charge their mobile phones.

There are still whiffs of amateur hour about the UFB project. You might well ask why it took the government until the roll-out’s halfway point to address the access issues.

And there are still questions over the price ISPs have to pay Chorus to use the old copper network. Spark recently rekindled the copper tax debate pointing out that half the money a customer pays for broadband goes directly to Chorus.

While we’re on the subject of the copper tax some sources have reported the government has made heavy-handed threats of retaliation if that term ever surfaces again in public debate. Clearly it touched a nerve. And that’s something that wouldn’t have happened if the UFB network was genuinely going from strength-to-strength.

There’s is a lot that’s right about the UFB network. It’s a great idea. For the most part it’s been well executed. But let’s not delude ourselves. It’s not perfect, nor is it going from strength-to-strength. Not yet.

*Guest Blogs do not necessarily reflect TUANZ official position but are posted to encourage debate and discussion on pertinent issues.