It’s the connection, stupid

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

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.