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Benoit Felten on the UFB fibre upgrade

In late 2021 New Zealand’s fibre wholesale companies boosted standard speeds on their networks from 100mbps to 300mbps. In this guest post, Paris-based analyst Benoit Felton puts the move into perspective:

As an international analyst of all things broadband, I use few examples more frequently than New Zealand when discussing decisive and effective policy. I have followed the development of the structural separation plans and the fibre rollout. To see New Zealand in the top tier of every international assessment of broadband quality is thrilling.

In September, Chorus announced plans to upgrade its wholesale 100 Mbps fibre connection three-fold, at no cost to retailers. This may seem like a surprising move – few businesses upgrade their customers for free. Yet it’s an adjustment to the evolution of broadband usage in New Zealand.

Over the last few years, there have been several fundamental shifts in broadband usage. Because they were gradual, they went largely unseen. Covid prevention policies acted as a catalyst and boosted these emerging trends. They are now here to stay.

The changes fall into three areas:

Working from home

Even after Covid restrictions are fully lifted, organisations will continue to rely on people working from home, at least as a part-time measure. The main consequence for customers is that their broadband connection at home has become an absolute necessity, something they rely on to earn a living.

High speeds, low latency and stability are vital for a majority of users. They no longer simply for a small group of early adopters.

Online learning

Similarly, while aspects of home schooling will disappear as restrictions lift, online learning is here to stay.

Lockdowns have taught schools, teachers, and education authorities that better online resources at home could improve education. This means interaction (between students, teachers or external contributors), video consumption, and cloud-based resources. These uses are similar to what people need to work from home. School related uses may now happen concurrently to parents’ work from home needs, meaning that a single user’s needs no longer determine the broadband requirement.

Video communication

Video-communication has become an everyday tool. During the lockdown, many people who had never made a video-call, particularly among the older segments of the population, learned to use it and realised how important and easy it was. Video-communication usage skyrocketed during lockdown and is still at its highest post-lockdown in many countries.

From a broadband service point of view, these fundamental changes have several consequences worth noting:

  • Broadband usage has gone up across the board. Users that could be considered casual pre-Covid now have similar usage patterns as heavy users. Users are more frequently saturating their connection and feeling its limitations.
  • The perceived quality of broadband is no longer solely about download speeds but also about upload speeds. As more users focus on real-time video services and cloud workspaces, the upload performance becomes a vital component of a decent broadband solution.
  • Availability and stability are becoming critical aspects of a good broadband connection. Users are more mature and understand that just because a broadband service performs well at one point in time doesn’t mean it will perform well all the time, particularly at peak viewing hours in the evening.

Fibre has few direct competitors

As an outsider looking in, it’s hard to understand why consumers would accept alternatives to fibre where it is available. Few other technology solutions can boast speeds at or above 300 Mbps consistently, and all are constrained either by limitations of the technology, lack of maturity or economics:

  • Satellite solutions such as the ones launched by Space X (Starlink) or planned by Telesat and OneWeb can deliver speeds around 100 Mbps downstream. Yet they are heavily constrained with upload speeds (around 15Mbps). At the moment, this technology comes with a heavy price tag.
  • 4G fixed wireless solutions to the home struggle to deliver download speeds above 70Mbps with the Commerce Commission reporting the average being only 32.7 Mbps. Elsewhere in the world, fixed wireless is deployed where fibre is not available, not as a competing solution. The main reason is that from a performance perspective it cannot compete with fibre to the home, on speed or stability. It’s no mystery therefore that New Zealand providers are not meeting their fixed wireless targets.
  • 5G fixed wireless access can theoretically deliver higher speeds, but over much shorter distances which means, to enhance the customer experience, many more base stations than currently exist are needed. There are concerns in the industry that there may not be a strong economic case for deploying so many, and currently no one has demonstrated its success. Japanese company Rakuten is rumoured to be the most advanced in deploying such a dense fixed wireless network, but the complicated overall financial situation of the company makes it hard to assess any success in this respect. Pushing for 5G FWA deployment when open access fibre is available to 87 percent of New Zealand seems absurd.

Leverage gigabit broadband

New Zealand should leverage its gigabit head start. Fibre to the home not only delivers the speeds needed by the evolution in usage, it’s also the simplest medium to do so. It is already largely deployed, needing only a home installation to be ready. It allows for open access competition under the structural separation regime in place in New Zealand and it has plenty of space for future upgrades in speeds, not only 1 Gbps, but way beyond: most fibre company networks are already 10 Gbps-ready in New Zealand and 25 Gbps is just a technical upgrade away.

Chorus’ free fibre upgrade is a savvy response to the evolution in usage we have seen since the pandemic. The choices made by government a decade ago made this possible. This upgrade furthers that.  In ten years, New Zealand has joined the best in the world. It offers fast and affordable broadband to its citizens. This new step up in performance will only reinforce that leadership position.

Felton refers to Chorus here. Since September the other fibre wholesale companies have rolled out similar speed upgrades

17 thoughts on “Benoit Felten on the UFB fibre upgrade

  1. It surely wasn’t as nobel: Wireless broadband was eating their lunch and the wholesale price was increased just before, wasn’t it… At least that is what my retailer wrote me..

  2. And they were so eager in the process that they, by mistake, put a whole load of customers from 1 Gbit/sec back to 300 MBit/sec… Took me two months to get a reaction and two more weeks to get it fixed.. Offcourse no refund etc.

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