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Whats next in “Fibre-Rei”?

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Last Wednesday night, Graham and Darren from Northpower shared the Northpower Fibre story at a TUANZ After 5 in Auckland.

It was a great night and I’m trying to convince them to come and share the story in Wellington soon (keep an eye on the after 5’s section of our website).

I’ve been following Northpower with interest for a number of years and it was great to see them pass such a major milestone – just in case you missed it 

Northpower have completed their UFB build!!!

Thats right, ahead of schedule and apparently under budget!!

Compared with what we usually hear about the UFB as a troubled project, this is quite simply amazing news and a fascinating story.

Personally I’m not surprised because Northpower is pretty special, not just because in many ways they are still a pretty traditional, community-owned electricity lines company but also because they have one of the most cohesive corporate cultures I have ever encountered.

When I first visited them with Ernie Newman 5 or 6 years ago, I was struck by how it didn’t matter whether you were talking to the Chairman of the board or one of their linesman you heard a completely consistent view of why they were building a local fibre network and who they were doing it for – the people of Whangarei in particular and the well being of Northland in general.

This attitude has already attracted investment and focus to Northland (examples being the early partnership with TelstrClear  and the extension of competitive fibre backhaul via FX Networks and the Tai Tokerau Network) and which may be strengthened soon by a Northland based landing for a competitive international fibre with the proposed Hawaiiki trans-pacific cable (watch that space for pending developments).

What they’ve achieved is remarkable on many fronts, when fibre became a political issue in the 2008 election, I don’t think too many of us would’ve picked the ‘Rei’ as NZ’s first fibre city! But when you hear Graham tell the story its easy to understand how they got there.

It was a ‘communications project’ planned by ‘power engineers’ using ‘IT project management tools!’ and a never say die attitude.

They had a genuine process of plan, build, refine, learn and modify, they developed unique hardware for their overhead build and even stuck the fibre jointers up the poles in cherry picker buckets all to speed up the deployment time and lower the cost per premises passed.

And they refined this process at least 4 or 5 times, I think their tight structure and locally focussed team were also huge assets in their success to date.

They’ve done a remarkably good job of taking key stakeholders and the community with them, from working with the council on consenting, developing and supporting local IT companies as retail partners and working with local businesses, schools and communities to ensure that Whangarei was truly fibre ready.

The proof is in the pudding so what are the results?, well they’re pretty impressive too, they currently have the highest UFB uptake rate of any LFC, approaching 70% in the earliest streets they connected, but the figure that blew me away was that since announcing the completion of the build and its subsequent publicity – the enquiry rate has increased by 400% !!!

Rohan McMahon from CFH summed this up by saying “you’ve turned the waiters into wanters!” and in the process I think they’ve shown the way forward for the UFB overall, people will watch the build with interest but it is only when they can assume UFB is available that they’ll seriously consider making a commitment.

But it gets even better, Northpower aren’t resting on their laurels just yet! ultimately they’d like to be able to offer fibre to all their electricity subscribers! (including Rural dwellers!) there’s a few wee challenges but if anyone is up for it – its these guys.

So if you want an awesome lifestyle plus NZ’s best broadband Whangarei is the place to be!

Fibre to the country

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On Friday I spent the day in Whangarei, visiting NorthPower and having a look at the UFB rollout in the city.

It’s nearly done.

When I say that, I mean the entire city will soon be completely fibred up. Every home and office, school and hospital, everything.

This is an extraordinary achievement, particularly when I look at the Chorus map for my home and see I’m not slated to even see a fibre network for two years or more. It really does mean Whangarei and other regional centres will have stolen a march on the big cities and, as Northpower FIbre CEO Darren Mason says, it gives people a reason to move out of the main centres.

Mason believes Whangarei can become an exemplar of what a fibre-rich city can truly be. Not just an offshoot of the big city but an alternative.

He says families will move to the regions if they can find work, can be assured of good schooling and that employers will find staff more willing to stay for the long term because they have what they need locally.

Whangarei is bustling along if my brief visit is anything to go by. The region’s attractiveness will only increase once the motorway goes through (you can forget the “holiday highway” nonsense – it’s a vital road link that should have been upgraded years ago) and as a place to do business you’d be hard pressed to better it.

This is one of the major advantages of a fibre deployment that runs faster in the regions than it does in the two main centres. Uptake is higher than in Auckland or Wellington (Enable in Christchurch is pushing 6%, Northpower close to 7% and Mason expects to see that hit double figures before too much longer) as residential and business customers feed off each other’s experiences.

We went out on a site visit to see a team in action. Northpower has pioneered a new approach to connecting properties to the network. Instead of digging a trench and putting all the equipment under ground, they put everything in a box on the pole outside the customer’s house. Overhead fibre lines are impossible to tell apart from the power lines and Northpower has designed and built a splitter box that sits on the pole making it both quick to deploy and easy to revisit should the need arise.

Each box serves four households (with another four splitters in place for any future unbundling move) and as a plug and play unit is so simple even I could connect each house, although I’m happy to say I wasn’t allowed to have a go.

The time to connect each property is reduced – on average it takes a couple of hours but the record is just over an hour from the time the team of two arrived on site to fully connected to the house. Mason says the advantage is twofold – a faster deployment and a cheaper one. Much cheaper than digging trenches and laying cable and much less invasive.

I wonder why Chorus doesn’t do this where it’s able – given its cost blowout (the last news story I saw quoted a figure close to $300m) surely this is a viable alternative?

Northpower does trench where it needs to but where it doesn’t the savings are tremendous.

So what’s next for Whangarei and Northpower? Mason would like to see the company deploy fibre further into the surrounding areas, but one thing is holding them up – access.

Access is the 900lb gorilla in the room when it comes to fibre deployment. Costs balloon out of all proportion when the lawyers get involved and working out access rights to drive ways, right of ways and multi-dwelling units makes it almost uneconomic to deploy fibre without a government level investment.

Much better to change the rules to allow fibre deployments along existing utility corridors and to give the network companies the right to connect customers up by default. Opt out if you must but most people adopt the line of least resistance and we would see a much faster, cheaper deployment if we turned the rules around.

Mason has volunteered Whangarei as a test bed. Try it out in Northland, he suggests, and if it works roll it out nationwide. If not, no harm done.

I like that idea. I think we should change the rules and make it easier to deploy networks without having to pay lawyers a fortune to say it’s all OK, and if it works in Northland we should move swiftly to do it for the rest of New Zealand because that would mean phase two of the UFB could be really quite powerful – fibre to the country.

Northpower sees no reason why a combination of cost savings through using overhead lines and having access to properties guaranteed shouldn’t lead to us become a Giga-country, and that’s something TUANZ wholeheartedly supports.

Imagine that – every home and property in the land connected to a fibre network in much the way they are connected today via the power lines.

Now that’s something worth changing the law for.

Overbuilding networks is not on

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Let’s talk about overbuilding of networks.

Several years ago I visited the telco regulator in Hong
Kong. His biggest challenge was keeping out of the way of telcos, because over
there the market really does rule the roost. Why? Because with six or seven
copper networks, three or four fibre networks, six or seven 3G networks and at
least four proposed LTE networks, there was plenty of competition at the most
basic level.

Overbuilding is good.

However, as he said to me at the time, that’s fine once you’ve
got build out to every customer. Prior to that, overbuild is a waste of time
and resources.

New Zealand is not in that situation. We don’t have a
ubiquitous network built out to cover every building or every customer. We don’t
have competition at the lowest level, and indeed the government’s decision to
fund what are, in effect, four regional monopolies would suggest there’s little
chance we’ll ever have the population to support multiple networks overbuilding
each other. With only four million customers (in a variety of guises) the costs
far outweigh the benefits.

Except that we are already overbuilding.

In central Auckland I have my pick of fibre providers for
business grade, point to point fibre. There’s FX Networks, TelstraClear fibre
(now owned by Vodafone), Vector and of course Chorus to name the first four
that come to mind.

In Wellington there’s CityLink as well, plus there are any
number of other providers.

They’re typically not offering the same kind of fibre
service that the Ultra Fast Broadband (UFB) project will build. It’s very fast,
it’s uncontended (that is, it isn’t shared in the way the UFB’s G-PON network
will be shared) and it’s expensive as a result.

For most CBD dwellers (I’m thinking businesses here, not
residential) the move to UFB will be a cost-reduction move that means more
contention for a lesser charge. They’ll figure out what that looks like in
terms of their own risk profiles and everyone will get along.

However, there are pockets of fibre deployment that are
already in service and which Chorus and the LFCs should be taking into
consideration as they build out the UFB.

Nelson, for example, has had The Loop for around a decade
now, and at the launch of the Chorus UFB deployment the mayors of both Tasman
and Nelson were at great pains to ensure everyone knew about it. It certainly
came as something of a surprise to the Minister whose speech revolved around
bringing the future to a corner of the South Island. We’ve got the future
already, Minister, they told her.

The explanation from Crown Fibre and Chorus at that point
was that the UFB requirements wouldn’t be met by the fibre network in Nelson
but that hopefully the UFB pricing would help reduce the cost of The Loop’s
fibre to its customers as well. Competition is good and healthy, but there’s no
overbuilding going on, I was told.

The Loop tells me its prices are already lower than the UFB
prices, and that yes in fact overbuild is going on.

Inspire.Net is another ISP that’s been laying fibre for many
years in the lower North Island. Because it’s not a national provider,
Inspire.Net wasn’t considered for the UFB or RBI deployments, but it already
has a large tract of the country fibred up and operating today.

Surely there won’t be overbuilding going on there, right?

Sadly, that’s not the case. UFB fibre is being deployed in
Palmerston North right over the top of existing Inspire.Net fibre and alongside
TelstraClear/Vodafone fibre. The UFB and RBI fibre is required to be deployed
to schools in and around the country so they’ve gone so far as to put a pit
outside a school which already has fibre delivered by one of the existing
operators. This despite Chorus telling an audience in Whanganui that fibre won’t
be deployed to the farms because the cost of putting a pit in and breaking out
the fibre is just too expensive, despite promising just that a year ago.

The UFB project is supposed to provide fibre to 75% of the
population. Chorus has won the lion’s share of the project and is claiming to
be overspending to the tune of around $400m. Something’s got to give, and
apparently that pressure means the government will run over the top of the
Commerce Commission decisions around copper pricing so as to make sure Chorus
doesn’t lose any more cash.

I have an idea. How about we not overbuild existing
networks. How about instead of trying to squash these smaller players we
require the UFB fibre network companies to work with existing fibre operators
and so avoid spending money to deliver a second or even third fibre network to
these places where existing services already operate.

Instead, why not lease capacity from these existing network
operators? Why not work with the other network providers, instead of
overbuilding them – at least until we have full coverage.

Chorus, UltraFast, Northpower and Enable could then get on
with building fibre to new parts of the country, places where there is no fibre
today and where new customers will be able to connect up. It will cost less to
deploy and we’ll save Chorus its $400m, or a goodly chunk of it, without having
to favour one operator over another.

Once we have the whole country covered we certainly can look
at overbuilding. In the long run I’d be more than happy for
infrastructure-based competition to take off. But publicly-funded network
deployments should not be used as a way of quashing competition and certainly
not at the expense of operators who have already put in the long hours and hard
yards delivering the service. I don’t want my money being spent on that – quite
the opposite.