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.

The year ahead

Looking ahead, this year is going to be quite a busy one in terms of telecommunications, so I hope you all had a good rest of the new year break.

Normally I head off to the Coromandel to a secret location where I pitch a tent, make do without running water or electricity and where my phone (and everyone else’s) simply fails to find a signal.

This is fantastic because it means I am completely cut off from my normal life and rest is guaranteed. We kayak, we swim, we eat well, and while the kids can run around all night if they want, I go to bed and rise with the sun.

It’s a chance to switch off, to renew my batteries (as it were) and to do something completely removed from my normal existence and I love it.

But if I had to live like that every day, I’d go nuts. Running water and electricity are pretty key, but as the owners of the farm where I stay have pointed out, the need for decent telecommunications is critical.

They have a 15 year old son who can’t call his friends, can’t play games, can’t do any homework, can’t read newspapers or go online in any way shape or form for the entire time he’s at home. The exchange is too far away for DSL to work well and besides, the cabinet is full. There’s no cellphone signal from any provider and oddly not a single wireless ISP operates on the north eastern side of the Coromandel. Why? I have no idea.

This summer has been the last straw for him and he’s declared that as soon as he’s able he’ll be off to the city or at least to an internet café that can let him connect to the world.

It’s not just him – all of rural New Zealand faces this challenge and we urbanites face it with them. If we lose the rural communities we lose so much of what makes New Zealand unique. It’s not just a cultural thing, it’s the basis for our entire economy as well. Boost our farmers’ productivity by a couple of percent and we’ll all be better off.  Reduce their ability to compete (as we’re surely doing for those that don’t have access) and the inverse will also be true.

Rural broadband must be a key priority for the year ahead. However, the key component of delivering such connectivity – spectrum – is already being sorely tested.

Both Vodafone and Telecom are fighting over the remaining pair of 5MHz spectrum in the 700MHz range and, if the rumours are to be believed, are already bidding more for that pair than both bid for the 15MHz blocks they’ve already bought. Why? Because the government has decreed that the remaining block must be sold off and neither company can afford to allow the other to win, hence the price war.

This is ridiculous.

Both companies already have more than enough 700MHz spectrum and neither particularly wanted to bid for the last block.

Both companies have plenty of spectrum in the sub-1000MHz range that can be re-purposed for future network technologies and which could be readily deployed in rural New Zealand but because of the government’s greed and short-sightedness (there’s really no other way to look at it), they’re forced to spend money on a piece of paper instead of on rural cellsites.

The Commerce Commission has to grant permission for the winner to have so much spectrum so I have high hopes it’ll do the right thing and refuse to give the go-ahead.  All three telcos will be relieved if that’s the outcome – Telecom, 2Degrees and Vodafone – because the alternative is one player wins the 4G battle but at such a huge cost.

Which brings us to the question of government and the upcoming election. I’m told the likely date is November but it’s up to the Prime Minister to decide, which means it could be earlier if he sees an advantage to going sooner rather than later.

And there may well be an advantage in that. Currently Labour have yet to announce many of its policies and are lagging behind in the polls. The Greens have always had a strong ICT policy (its views on cellphones and cellsites notwithstanding) and the other minor parties are starting to display a keen interest, possibly as a result of the Chorus debacle.

And then there’s Kim Dot Com and the Internet Party.

Putting aside personality for a moment, I’ve long wondered why we don’t have a tech-focused party. MMP lends itself to such issue-led parties and I’m surprised we haven’t seen more of them. The Greens are a perfect example: why not ICT as well?

The question of course making the numbers will be determined by the policies of the Internet Party and we have yet to see those, but I am heartened by any party that raises the profile of ICT issues and if nothing else, the other politicians will have to improve their understanding of ICT to compete and that’s no bad thing.

The final issue on the table must be our lack of international connectivity. I have high hopes that 2014 will see an end to this idea that we are fine and that another cable isn’t needed. One of the various projects has to get off the ground this year and I hope it will see us connected to the US rather than Australia. If we’re to build an ICT industry in New Zealand to rival dairy farming we need to have that connection to the US – anything less will see us become an offshoot of Australia and we might as well give up our sovereignty at that point and become a second Tasmania.

What are the other issues you’d like to see on the agenda this year? You’ll note I haven’t included Chorus and there’s a reason for that. The problem and the resolution lie within Chorus itself and it’s up to the company now to figure out how to complete its contractual obligations. If it can’t, then no doubt we’ll talk more but for now the ball is firmly in Chorus’s court and I trust there it will remain until the company comes to its senses.

Wanganui – city of the future

Last weekend I went to
Tech Ex 2013 in Wanganui to talk broadband and other matters.

Tech Ex is organised
by the Wanganui District Council – Marianne Archibald, to be more exact, who
also happens to be on the TUANZ board – and aims to showcase the best of
broadband and technology to the region.

We had a very
interesting discussion about why broadband is necessary in modern life. I say
discussion – pretty much we all agreed on all points (and as the saying goes,
if you didn’t agree we certainly couldn’t explain it to you). The demand for
broadband is so great in the region that Inspire Net is working with some of
the locals to put up fixed-wireless masts all over the region. Tex Matthews,
head of the Rural Community Board, showed us what it looks like and by crikey
they’re doing a good job of it.

The countryside around
Wanganui is incredibly steep and the bits where the masts would go are
typically quite inaccessible, yet somehow they get solar panels, battery packs,
concrete, cables and all the rest up to these points and built. It’s all
community labour, on some farmer’s land and the farmer then typically becomes
the tech support for that site.

Connecting power can
mean running a lead to the wrong property (involving a complicated arbitrage
system run by someone called Jim Beam, or so I’m told) but getting the fibre up
to the mast itself is a genuine “number eight” solution.

Tex had a fishing rod
with a lot of heavy duty line for sea fishing. Keen to upgrade both rod and
reel, he fashioned some kind of probe for the end of the line, poked it into
the conduit, hooked up the hose and flushed the line through the pipe. He then
pulls the fibre through and bingo, fibre to the farm.

My hat is off to them.
The rural community of Wanganui is doing the job the hard way but doing it
well. We need to support them in these efforts and show off their good work to
other communities around the country.

We also heard from
rural broadband specialist Jonathan Brewer (I’m pretty sure he’ll kill me if I
call him a guru) who talked about cognitive radio and the potential benefits to
remote areas of deploying this kind of technology.

It was fascinating
stuff. By using the “white space” of radio spectrum (basically the bits where
spectrum isn’t being used because of interference or access issues), Jon says
we could increase coverage and capacity without having to spend a fortune on
new spectrum rights.

I’ve linked to Jon’s
for more detail, but it sounds like something we should absolutely
be championing in New Zealand. It’s an emerging standard at this stage but
there are some big names behind it, including Google, so we should expect to
see some hardware in the not too distant future.

All told it was a
great weekend. There’s a high level of demand, a lot of interest in the issues
that might prevent deployment and a keenness to get things done.

Because of the
horrendous storm the day before, Wanganui was in clean-up mode and
unfortunately numbers were down somewhat on last year’s event. That’s no
reflection of the topics or the interest, more about the weather and having to
sacrifice a weekend to sorting out the roof I suspect.