Fibre uptake past 20% in Christchurch suburbs

Enable Networks reports it is connecting about 600 customers a month to the Christchurch fibre network. The company says it has a total of 6,100 customers already connected — making a total uptake of 11 percent across the city. That’s a little better than the national average.

Three Christchurch suburbs now have more than 20 percent of premises connected to the network. Rolleston tops the list with 24 percent connected, Burnside is on 22 and Addington has 20 percent.

These numbers are good. In fact, sign-up rates are improving at a fast clip across the entire country. This underlines the wisdom of extending the UFB network beyond the 75 percent of the population into smaller towns.

Meanwhile, the fibre roll-out is paying off in terms of overall speeds. The latest Akamai State of the Internet report notes New Zealand saw a huge 21 percent quarter-on-quarter rise in average fixed connection speed, taking it up to 6.8Mbps. The year-on-year headline speed is up 47 percent.

New Zealand’s average peak fixed connection speed climbed 31 percent in the quarter to 31.8Mbps. That’s a 52 percent year-on-year increase.

NZ telcos wince as they foot rural bill

One of the National Party’s election promises was to extend the government’s Ultrafast Broadband network. Originally the plan was to spend $1.5 billion to cover 75 percent of the population living in cities and towns. Now the government aims to spend another $150 million to $200 million reaching an extra 200,000 people for a total of 80 percent of the population.

It’s a good idea and solves the problem of connecting people living in medium-sized places not reached by the earlier UFB plan or the Rural Broadband Initiative.

Updated: Previously this section wrongly said the government would extend the Telecommunications Development Levy for three years to pay for the UFB extension. The government is using its Future Investment Fund — from asset sales — to build out the UFB. The Telecommunications Development Levy is paying $50 million to fix rural mobile black spots and $100 million for the contestable fund. Thanks to Chris O’Connell for pointing this out. 

Although the name suggests otherwise, the TDL is effectively an extra tax on telecommunications companies. They collectively pay $50 million a year into a fund to pay for the RBI. It replaces an earlier levy collected to compensate Telecom NZ (now Spark) for maintaining a universal telephone network reaching rural customers that would have been commercially unprofitable to serve.

The Commerce Commission gets to decide how much each telco pays into the levy based on calculations about their relative market share. Chorus, which isn’t a retail telco, also pays into the fund.

In some ways the fund is an unfair imposition on telcos. New Zealand’s carriers have faced falling revenues in recent years as competition bites. The effect of earlier government imposed regulations also eat into their margins.

At the same time, New Zealand’s telcos are losing revenues to giant multinationals like Google and Apple. These companies offer so-called over-the-top services that let people make calls or send messages bypassing traditional carrier networks.

There are a number of ironies here. While Google and Apple make a lot of money in New Zealand, they barely pay any taxes. Like many multinationals they claim their local sales are actually made elsewhere — usually Ireland. Meanwhile, New Zealand’s telcos do all their business here and have little opportunity to transfer sales to more favourable tax regimes.

So, in effect,we tax telcos twice while the competitors who are eating their lunch are barely taxed at all.

One proposal would be to compel companies like Google and Apple to contribute to the TDL. There’s a good case to make for this although because they don’t charge for telecommunications services, as such, it would be difficult to fix a fair sum.

It’s worth keeping in mind that should Google or Apple be taxed on New Zealand sales to the same extent as the telcos the extra revenue would be greater than the amount raised by the TDL.

New Zealand’s government doesn’t have the clout to unilaterally change the way large multinationals shuffle money between countries to avoid taxes. If they paid up we could afford to extend the UFB network and pay for other essential services. That’s not going to happen, but it might be an idea to put some of our best brains on to finding ways to squeeze them for TDL contributions.

NZ broadband beats Australia again

More evidence that New Zealand’s broadband is accelerating past Australia’s network. Local web performance measuring company TrueNet compared the speed of downloading Australian and New Zealand websites from PCs in Australia and New Zealand.

Comparing Australian and New Zealand web page download speeds

Comparing Australian and New Zealand web page download speeds

The results are conclusive. They show New Zealanders can now download Australian web pages faster than people on the other side of the Tasman Sea. TrueNet says: “Results from any NZ probe are likely to be much better than from one in Australia.”

TrueNet puts New Zealand’s better performance down to the nationwide network of fibre-fed road side cabinets. New Zealand completed its network  in 2011 while Australia has only recently begun testing cabinets.

Now New Zealand is moving to the next generation with a fibre to the premises network that promises to further increase the speed performance.

A story I wrote for PC Magazine last month found New Zealand has an average download speed of 21 Mbps compared with 16 Mbps in Australia. That’s a huge difference, enough to make a noticeable difference in practice.