New Zealand’s difficult copper v fibre conflict

While Fibre is the future, it isn’t here yet. It’ll take another six or seven years to reach everyone. Telcos and ISPs could do far more with the copper already in the ground, but that may undermine the case for fibre.

When it arrives, the government sponsored UFB fibre network will deliver download speeds of 100 Mbps and upload at 50 Mbps. The cost is little higher than today’s ADSL broadband plans. Fibre is a compelling product at a decent price.

If everything goes to schedule the last residential suburb will get UFB some time in 2019. At that point the network will reach 75% of New Zealanders. Separate networks will connect rural New Zealand to the internet.

Why wait?

Business districts, schools and health centres are a priority, that means suburban homes – and the country’s many micro businesses are last in line. Some will wait seven years to get a fibre connection. That’s too long to wait for fast broadband.

And too long to wait when you consider fibre-like speeds are potentially available for many copper customers today thanks to VDSL technology.

ISPs selling UFB offer two speeds. Alongside the headline, premium 100 Mbps speeds they also offer 30 Mbps plans. VDSL can realistically offer 50 Mbps to most customers on the copper network. Alcatel-Lucent uses VDSL2 vectoring to do this in Belgium. In other words, engineers can squeeze UFB levels of performance out of the existing technology.

Not about the technology

So why aren’t we doing this in New Zealand? The simple answer is there are ISPs offering VDSL, but wholesale copper prices are regulated. ISPs have to pay Chorus a premium to deliver VDSL over the copper network. One could argue that premium is an artificial barrier erected to make fibre pricing look more attractive to users.

The argument against this premium is that VDSL is like a gateway drug to fibre. People will get hooked on VDSL’s higher speeds and will jump to the new network when it passes their gate.

The flip-side argument says VDSL is so good, customers will see no need to switch from it to fibre when the UFB network arrives. In this way it undermines the entire business case for a fibre network.

There’s a lot in this. There aren’t that many practical fibre applications at the moment for small businesses and residential users. Some observers worry the industry will have difficulty persuading customers to trade in their slower ADSL connections for fibre, let alone trade in VDSL. Slow sales of residential fibre accounts to date underline this fear.

Carrots and sticks…

If the premium charged for VDSL is simply to steer consumers towards fibre, why not change the regulations so that the premium only applies once fibre passes a customer’s gate? This would have the added advantage of sending a clear signal about intentions.

If the premium isn’t about influencing customer behaviour, why have it at all? The Commerce Commission can make sure Chorus isn’t out-of-pocket by adjusting unbundled copper local loop (UCLL) unbundled bitstream access (UBA) prices accordingly.

And if the market has to rigged to make fibre an attractive proposition for consumers, doesn’t that suggest there’s something wrong with the model in the first place? I’d love to hear your thoughts on this.

9 thoughts on “New Zealand’s difficult copper v fibre conflict

  1. “When it arrives, the government sponsored UFB fibre network will deliver download speeds of 100 Mbps and upload at 50 Mbps”

    It should read “will deliver downloads speeds of *up to* 100 Mbps”.

    Initial consumers connected to UFB offerings are finding out the hard way that ISPs are still not geared towards delivering this kind of experiences. Also the way the UFB network is configured means more users = less bandwidth for each one.

    Read sbiddle’s Ultra Fast Broadband (UFB) for Dummies at http://www.geekzone.co.nz/sbiddle/8252 and you will see there’s a lot that is hidden behind the promises of 100/50…

    • That’s a good point. ISP’s advertise 100Mbps, a lot of the literature mentions those speeds, but it’s the theoretical maximums for wireless data or anything else – you’ll not see them often. I suspect the same applies to the 50Mbps promised on VDSL.

  2. Like Mauricio (who doesn’t mention it), I already have 100 Mbps down (but only 10 up) via the cable TV network.

    Most overseas sites don’t go any faster, and I didn’t upgrade to 100 Mbps until it became the cheapest way to get the GBs I was already using anyway at 15 Mbps.

    I do get pretty much the full 100 Mbps on downloads from Apple (OS X and iOS system updates and developer stuff, iTunes apps and movies), youtube (sometimes), and on torrents. You need to be accessing either something cached locally in NZ or else use a lot of parallel streams.

    Businesses or schools with lots of users tend to do this naturally.

    UFB is available TODAY for houses on streets 50m east of me, 80m west of me, and 120m north of me. But not on my street, and it seems it may never be. It seems that they quite deliberately are not putting UFB on streets that already have cable.

    This strikes me as very anti-competitive. Some UFB ISPS are offering 1 TB/month for $200 which would cost over $1500 on TelstraClear cable. We often go over 300 GB now.

    I’m very tempted to talk to my neighbors, offer to pay their internet connection, and run a WIFI link to their house. (I’ve run a 70 Mbps 1200m WIFI link to supply internet to a friend already for the last six years, with zero problems http://hoult.org/bruce/merakinet.jpg)

    • My cynical side says Crown Fibre and others settled in 100Mbps because it’s a nice round number and easier to market.

      There’s no cable where I live, but the Chorus maps show UFB will come within 50m of my house in one direction and about 70m in the other – I can’t see any logical reason why my road segment isn’t included.

  3. The problem Bruce is that while TelstraClear national backbone is very good, other ISPs offering UFB now don’t seem to have the same. Also, unlike TelstraClear, it seems most plans by other ISPs are “managed” and speeds even on national sites or local caches don’t get even close to what we achieve on cable modem (HFC) networks.

    • And that’s the problem. It’s so hard to tell until you sign up and it’s too late.

      I’m not at all worried by the issues Steve Biddle raises. What he describes doesn’t seem that different to the coax architecture in effect … you’re sharing gobs of local bandwidth with your neighbours. That usually works fine.

      The bigger question is as you say the national and international capacity the ISP has. And you just don’t know unless and until actual users report back.

      I certainly would never ever get any “unlimited’ plan. That’s a recipe for poor service. I don’t even like stupidly large amounts such as a TB for a fixed price. The ISP has no incentive to actually deliver reasonable on-demand performance.

      Instead of paying $200 for 1 TB I’d rather pay something like $100 for the first 100 GB and 20c a GB after that. If you used 600 GB the ISP would get the same either way, but they’d have an incentive to make it easy for you to use more.

  4. VDSL isn’t an attractive option for many residential customers who are often trying to find the most data for the least amount of $$.

    “that means suburban homes – and the country’s many micro businesses are last in line. Some will wait seven years to get a fibre connection. That’s too long to wait for fast broadband.”

    This is true, and it’s a shame Chorus is not investing any further in getting the last legs out of their copper network with the VDSL upgrade.

  5. Pingback: Chorus pricing highlights copper-fibre conflict | Bill Bennett

  6. Pingback: Three reasons government shouldn’t price discriminate against copper networks | Bill Bennett

Comments are closed.