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Chris Keall has the Vodafone overseas roaming story at the New Zealand Herald: Vodafone NZ increases global roaming cost from $5 to $7 a day. (The story is behind the pay wall).

A $2 price rise for overseas roaming doesn’t seem much until you realise it’s a 40 percent price increase at a time when inflation is close to zero. Few other service providers could get away with a 40 percent price hike.

That said, no-one can argue that New Zealand mobile phone margins are excessive.

Less than a beer

Nor could you argue that $7 a day for overseas roaming is not reasonable. If you can afford to travel overseas and you want to stay in touch, it costs less than a glass of beer. For many readers, it remains the best option and is far better than the bad old days of bill shock.

Vodafone’s first line of justification for the price rise borders on the ridiculous. Keall writes:

The spokeswoman said, “Vodafone launched Daily Roaming over five years ago and since then have made numerous improvements to the service, including expanding it from 23 destinations to now over 100. Included in the latest round of new destinations are Vietnam and Cambodia, which are hugely popular with Kiwis.

Chris Keall, NZ Herald, June 4, 2019

Vodafone benefits

The fact that there are more destinations may benefit customers. It benefits Vodafone more.

By giving the company a lot more opportunities to bill that $7 a day charge, it means much more revenue. It also improves internal costs by spreading the costs of administering overseas roaming charges across many more sales.

Let’s put it another way: imagine if New World said it was charging more for milk because it was stocking it in more supermarkets.

Vodafone has a much better argument when it says mobile data use is now running at three times the rate when the roaming service was first introduced. However, the cost of delivering a gigabyte of mobile data has fallen over time.

There’s a bit of snark about Vodafone’s customers not having to buy bundles… that’s how roaming works with Spark. And talk about one fixed price across markets where the costs are different. Well yes, but again, keeping the price structure simple is also of benefit to Vodafone.

Overseas roaming is revenue

Whatever the public justification, the increase is also about increasing revenue at a time when there’s little obvious growth. It’s also about improving margins. Both of these are fair enough, Vodafone is not a charity, yet for some reason, the company doesn’t feel able to say so.

The bigger concern for Vodafone customers could be that this is not the only price increase. Six months ago Vodafone jacked up broadband prices. There could be more in the pipeline.

Vodafone can’t go too far. As the Commerce Commission points out, New Zealand’s telecommunications market is competitive. If you don’t like Vodafone’s roaming price increases you can go elsewhere. The international equivalent of buying a prepaid Sim card in the first dairy as you leave the airport is also still an option.

2degrees launched New Zealand’s third mobile network almost ten years ago in August 2009. Today it accounts for roughly one in five mobile connections.

Last week 2degrees reported a modest net profit of $19.6 million on revenue of $805 million.

The company says a highlight of the year was a nine percent increase in contract mobile customers. A six percent drop in prepay customers went some way to offsetting that. It says many of these closed accounts when 2degrees switched off its 2G mobile network.

Still a minnow

It remains a minnow compared to Spark and Vodafone. The two big mobile companies each have around 2.5 million connections, while 2degrees trails with 1.4 million. Spark has almost 700,000 fixed-line broadband connections compared with 87,000 for 2degrees.

Spark’s annual revenue is in the region of $3.5 billion, while Vodafone’s is $2 billion.

2degrees plays an important role in New Zealand’s mobile sector. It makes the market more competitive. Before the company started, New Zealanders paid well over international average prices for mobile phone services.

Today the Commerce Commission reports “New Zealand mobile plan prices are well below the OECD average”. It says:

The price of a New Zealand entry-level mobile plan giving 30 calls and 500MB of data at $16 per month was 36 percent below the OECD average and well below Australia.

Higher use plans showed big price decreases and are well below the OECD averages.

Commerce Commission Annual Telecommunications Monitoring Report 2018

The report goes on to say NZ higher use plans are still more expensive than in Australia.

The flip side of this good news for consumers is that 2degrees has eaten into Spark and Vodafone profit margins. A clear sign of competitive pressure.

Some success

While 2degrees has been a success on some levels, it has yet to break through in the fixed-line and broadband markets.

It is the number five broadband service provider. 2degrees has about five percent of the market compared with Spark’s 43 percent and Vodafone’s 26 percent. Vocus, 13 percent, is also much bigger.

New Zealand broadband market share by connections

Another measure of the relative size of New Zealand telcos is the size of their contribution to the Telecommunications Development Levy. This is an annual tax on the industry. The government uses it pay for providing services to deaf and hearing-impaired people. Some of the money subsidises broadband for rural areas and upgrading the 111 emergency service.

2degrees pays the fourth highest contribution behind Spark, Vodafone and Chorus.

Telecommunications Development Levy

One of the biggest problems facing 2degrees is access to investment capital. It doesn’t have Spark’s deep pockets.

When the government auctioned 4G mobile spectrum in 2013, 2degrees didn’t buy its full allocation even though the price was deliberately kept low.

The challenge for 2degrees will be to find the money for further investment. To put this in perspective; Each of those first blocks of 4G spectrum went for $22 million apiece. That’s more than a year’s profit for 2degrees.

EQT Infrastructure’s A$3.3 billion takeover bid for Vocus Communications could see a new owner for the New Zealand business.

Vocus Group New Zealand includes the Orcon, Slingshot and CallPlus brands along with other assets. It is the third largest telco behind Spark and Vodafone.

The potential buyer, EQT Infrastructure, is a Swedish private equity investor.

Vocus commands good price

EQT’s bid, which became public on Monday, put a 35 percent premium on Vocus Communications’ trading price at the time.

Insiders say the bid is likely to succeed. Although there are other potential bidders waiting in the wings should EQT’s offer fall through. Either way, Vocus is likely to find a new owner soon.

The EQT bid comes only days after Infratil and Brookfield’s successful bid for Vodafone New Zealand. It suggests other telco sector mergers and acquisitions could be on the way.

This is not the first time investors have attempted to buy Vocus Communications. In 2017, private equity firms Kohlberg Kravis Roberts and Affinity Equity Partners, made a bid for the company. That was later withdrawn.

According to the Australian Financial Review, the key to renewed interest in the business is Vocus’s fibre assets.

Fibre infrastructure

Infrastructure is an increasingly popular investment class. The returns are relatively high and, in many cases, it faces little direct competition. Fibre assets of particular interest to infrastructure investors at present, they feel that its owners don’t always maximise its value.

The Australian Financial Review goes on to report it’s likely the buy will sell Vocus Communications’s retail business.

Presumably, this would also include Vocus’s New Zealand retail brands.

Vocus has New Zealand local fibre assets. It picked them up from the former FX Networks business now wrapped into the Vocus Group.

One interesting angle is that after 2022 regulated UFB wholesale prices will be based on network asset values. If fibre becomes a sought after asset for investors, that could put pressure on the regulated price.

New Zealand’s media enjoyed a day where computer, or maybe cyber, hacking made the headlines.

Here’s the RNZ take:

National Party ‘Budget leak’: Treasury ‘deliberately hacked’ — RNZ website

There is a lot to unpack in the story. You can find that elsewhere. One thing that needs clarification is what is meant by the word ‘hacking’.

Hacking is a term that’s meaning changes depending on who uses it.

Hacking once meant one thing…

It means one thing to old school computer programmers — kids note that’s what people who wrote computer software were called before the job description was upgraded to developer.

For those people a hacker can be someone who cuts a piece of code.

It can mean someone who writes good code or it can mean someone who writes bodged code. I never quite caught the nuance there but definitely heard it used both ways in different contexts.

You may argue, but for most people this meaning of hacker is now archaic.

… it then meant another thing

It means another thing to people who work in and around computer security. Most of the time they take care not to use the word hacker. I assume that’s a least in part because there can be slightly glamorous connotations.

Or it could be they are lanugage pedants who don’t want to get in a fitght.

Many modern computer security folk prefer terms like bad actor, which makes me think of Tom Cruise.

Or maybe they talk about attackers. At one industry event, some high flying US security experts kept referring to hostiles.

Whatever. The key here is that in some security and enterprise system circles the word hacker can, but doesn’t always, refer to a person who manages to breach a system’s perimeter security and get inside.

Once again there are nuances.

Media see hacker another way

For the more excitable parts of the media, a hacker is someone who wears a balaclava while using a computer. They might also wear military fatigues.

You don’t often get to see the computer, but if you do, it’s often an old fashioned-looking computer, never a tablet or a phone, which seems odd to me, but there you go.

Another feature of this kind of hacker is they ofter work with green, text-based screens. What they do may be advanced and scary, but their computer hardware seems to come from the cold war era. More Trabant than Tesla.

Much of the media and the general public think of hackers as people who do bad things with computers. It’s not just newspapers, radio and TV journalists. When you see computer crime in movies or TV shows, the bad guys are hackers.

Far be it for me to cast aspersions on my colleagues, but there is something a tad click-baity about hacker.

As an aside, I’ve written before about how the word cyber now seems to be related to hacker. In a nutshell when something computery is good, the prefix is computer. When it’s bad the prefix is cyber.

See, “Cyber” is a bad thing…

Which explains why the great unwashed now understands the term hacker in this context.

Guilty your honour

I’ve found myself using the term, most likely incorrectly in your eyes, on TV and radio precisely because it is a shortcut to explaining things to the audience.

You might only have 120 seconds to explain something complicated. If you spend that qualifying terms defining the attack like a crusty old classics academic deconstructing Ancient Greek texts you’ve lost the audience.

It’s all Greek to them anyway.

Treasury hack

So, was this week’s Treasury Hack actually a hacking attack or was it something else? It appears that someone found some data that was stored on a web page or series of pages that had not yet been made public.

You can, I sometimes do, stumble over things like this by accident.

Now that’s not necessary hacking as we know it in 2019. It might well have been described as hacking in 1999.

You can sometimes get to these pages using spiders. This is something Google does every day. No-one thinks of that as hacking.

Dozens, even hundreds of pages on this site are spidered every day. This can include deleted pages, draft posts and posts that will never formally see the light of day,

Hostiles everywhere

If I look at the weblogs there are also thousands of probs every day where people — let’s call them hostiles, after all, it starts with an H — are looking for ways to compromise my security.

Some are easy to spot as they are calling URLs that don’t exist on my site, but might exist on some sites and can contain known vulnerabilities.

I just checked. This site, that’s little old me, had 1486 let’s say, dubious, calls in the last 24 hours.

If I’m getting that. And trust me, there is no information on here worth stealing, then a government system like Treasury will be getting an order of magnitude more probes. At least.

Another aside: There might not be anything worth stealing, but it could be worth gaining access to launch a bot attack or other mischief.

Is that hacking? Not in the sense computer professionals and geeks use the term. But it is in the sense that the media use the term and the sense the general public has come to understand the word.

You don’t have to like seeing the word used this way, but you don’t have any control over it. Those people speak a different language to you. They know what it means to them.

Navigating the Huawei story is one of the toughest jobs in technology journalism at the moment.

There are many facts and statements, lots of suppositions swirling around, but no smoking guns, no hard evidence of wrong doing. 

Huawei may have a case to answer, but that question is almost submerged now.

A lot of damage is already done, not just to Huawei but to supply chains as well. I can’t ever remember seeing a company taken down like this before.

One danger is that it could have created a precedent. Who might be next?