Rural New Zealand wants gigabit equality

Federated Farmers and TUANZ believe it is essential the next Government delivers better connectivity to rural New Zealand, and is keen to work with them to make that happen.

 “We are encouraged by the National Party’s further commitment of $150million, if they’re re-elected, and hope to see a similar commitment from our next Government announced this Saturday” says Anders Crofoot, Federated Farmers Telecommunications Spokesperson.

 “Federated Farmers and TUANZ support a Gigabit Agenda for Rural New Zealand that doesn’t leave our productive sector behind.  We need to talk about gigabit speeds, where farmers can eventually get their gigabytes as fast as the townies do.

 “National’s $100million contestable fund is a great start to deliver gigabit speed where it matters. Rural ISP’s such as Uber Group,, Farmside etcetera are the foot soldiers of rural broadband/connectivity.  With no assistance from government to date, it’ll be exciting to see what they can do if they get some backing.

“If we don’t address the gigabit gap, the digital divide will be worse in 10 years time than it was when the Rural Broadband Initiative was introduced

 If we don’t address the gigabit gap, the digital divide will be worse in 10 years time than it was when the Rural Broadband Initiative was introduced.  Rural broadband needs to be for everyone, not just rural schools and towns, and it doesn’t need to cost an arm and a leg to get it.

“I am one of many who have found alternate ways to get my farm on the grid, through radio receivers and solar power, proof that you don’t need a multimillion dollar network to build your own wireless, but it shouldn’t be this hard.

— Anders Crofoot

 “To date schemes to get rural broadband and cell service have not been ambitious enough. We’d like to make an ambitious suggestion that the fund should be used to pilot rural broadband solutions that have the potential to deliver gigabit speeds to New Zealand’s farms within 10 years.

 “If we are going to make a real impact we need to think outside the box and understand that the technology requirements for rural are not the same as they are for urban.  Similar to the days when phone lines were slow to be delivered to farms, farmers are more than willing to do their part to make this happen.  All we need is for the big boys to play ball!

 “Rural New Zealand is the engine room of our economy, and if we are to double our exports by 2025, $35.2 billion in 2013, we need to empower farmers to operate their business efficiently and effectively.

“This is not just a story about farming businesses either; it’s also about the social wellbeing of rural communities. We implore the next government to match their urban and rural aspirations, bringing gigabit equality over the next decade.”

— Anders Crofoot



The high cost of rural broadband

Watching the Australian NBN project implode in a shower of nonsensical, politically-motivated decisions (and indeed non-decisions) has been breath-taking in both its cost and its impact.

Instead of a fibre to the home project, the NBN will now be a mix of fibre to the home for very few, fibre to the node (aka the cabinetisation programme Telecom New Zealand ran in the early 2000s) and fixed wireless services for rural Australia.

If it sounds familiar it’s because in many regards it now mirrors the New Zealand UFB and RBI projects. Over here we have a fibre to the home project for 75% of the population and a blended fibre, copper, fixed wireless model for most of the rest. Those in hard-to-reach places will still have to put up with a satellite service, as indeed will their Aussie counterparts.

Australia’s communications minister, Malcolm Turnbull, says one of the biggest problems in rural Australia has been the overwhelming demand for broadband.

Speaking at the Comms Day  summit in Sydney yesterday, Turnbull says there was a “material underestimation of likely demand” in the fixed wireless areas.

“So instead of an assumed takeup rate of 22-25%, the work done so far by the strategic review team has modelled demand in the satellite footprint to be between 50-63%, and 38-51% in the fixed wireless footprint,” says Turnbull. But even those figures turned out to be low.

“Taken together, the company’s modelling shows that demand in the non-fixed-line footprint was underestimated by two to three times – instead of the forecast 230,000 connections, actual take-up would result in 440,00 to 620,000 connections.”

That’s a remarkable under-estimation of demand. Speaking to rural customers and would-be users (those that can’t get anything at all worth speaking of), I’d say the same level of demand exists in rural New Zealand.

Forget 5% average uptake as we have in UFB areas, rural New Zealand is clamouring for a decent service.

So how do our figures for take-up compare?

Sadly, we don’t have any. The minister of communications releases detail around how many kilometres of fibre have been laid and how many cellphone towers constructed, but not a word is said about usage.

I’ve not found any customers who are using the service, so I can’t tell you even anecdotally about uptake rates.

However, yesterday I was on a Google Hangout chat with John Butt from TrueNet, the company that measures broadband performance around the country.

John tells me he has 400 probes in action at any one time, measuring usage from all sectors of the industry. In total he has around 1200 testers willing to take part, which gives a good spread across providers and technologies. He has DSL probes with customers of most ISPs, UFB probes, cable probes and while most are in urban areas, he has some in rural New Zealand.

He has only two testers using the fixed-wireless RBI service and one of those is moving to DSL.

Given the extraordinary level of demand from rural customers and the ever-increasing availability of RBI service, why are there so few?

The answer may well lie in the price. Vodafone promised it would offer pricing that was comparable with urban prices and one way it has – the price itself. I can get a plan from Vodafone for either fixed or fixed wireless service for about $95 a month.

On the urban service, customers get voice, ADSL2+ broadband, a free MySky box and free calling to five New Zealand phone numbers.

On the rural service, you’d get voice, fixed wireless broadband and free national calling (a nice touch since local calling in rural New Zealand is quite limited). You’ll also have to pay an installation fee as a truck-roll is required – either $99 or $199 depending on your situation, but for that you’ll also have to sign a two-year contract. If you want it without a two-year contract, it’s $699 or $849.

Broadly speaking they’re not too far part. You can get a discount off each if you have your mobile with Vodafone but generally speaking, they’re comparable.

Except for the data. The urban service includes 150GB of data while the rural service has only one tenth of that – 15GB.

There are other plans, but they follow the same pattern. On DSL you get up to half a terabyte of data, on fixed-wireless you can have up to 30GB of data before the over-bundle charges kick in.

Try running your rural business on that, let alone running your household as well.

We need to not only provide the infrastructure, we need to provide a decent service, or face having a rural New Zealand that is left behind, much like Australia will be.

Of course there are other providers, not just Vodafone, but as the lead retail provider on the RBI it’s to Vodafone most RBI customers will turn.

Overbuilding networks is not on

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.