Fibre networks in New Zealand

Fibre is the dominant way New Zealanders connect to the world.

The technology uses light travelling through strands of glass. It is faster, offers greater bandwidth and is more reliable than the electrical signals used in the copper network it replaces.

The regulated Ultra-Fast Broadband network passes 87 percent of households, mainly in urban areas. The most recent estimates say between 77 and 78 percent of those able to connect to fibre have done so.

New Zealand has a wholesale-only model. The largest fibre company is Chorus, with the remainder of the network operated by three local fibre companies.

The four companies operating fibre networks cannot sell direct and must offer equal terms to all retailers. This has led to a competitive market.

There are around 90 retail service providers. The top three broadband retailers account for around 75 percent of the market.

How UFB works

UFB connections in New Zealand use GPON (Gigabit Passive Optical Network) technology.

Each district has a central exchange which manages fibre connections.

Fibres run from the district exchange to local roadside cabinets. Here a device known as a passive splitter divides each incoming fibre into 24 or 32 short-run fibres which connect to individual customer premises.

At the premises, a ONT (Optical Network Terminal) owned by the fibre company converts the light signals delivered by the fibre into electrical signals that can be used by a router.

Multiple layers

Networks come in multiple layers. The important ones for UFB are layers 1, 2 and 3.

Layer 1 is the passive layer. It refers to the physical strands of glass fibre and the infrastructure such as ducts and overhead lines.

Layer 2 is the active layer. This is the electronics that light the fibre and manage data traffic. This is the part of the network controlled by fibre companies.

Internet service providers (ISPs), sometimes called retail service providers (RSPs) operate at layer 3. They look after your IP address and route your data to the wider internet.

When it set up the UFB network, the government decided fibre companies would sell layer 2 services. It left open an option for layer 1 services at a later date.

This hasn’t happened because the economics are not practical. If retail service providers were to sell layer 1, they would get the fibre linking the customer to the node, but would be responsible for the hardware at each end of the line.

Fibre speeds

ISPs sell broadband plans differentiated by speed. Almost all modern plans include unlimited data. The slowest speeds are comparable with fixed wireless broadband.

The majority of fibre customers subscribe to plans that operate at 500 Mbps. There are lower plan options for users on tight budgets and Fibre Max premium plans running at an underlying speed of 1 Gbps.

Fibre is able to support much higher speeds. There are now Hyperfibre plans that offer 2 Gbps, 4 Gbps or 8 Gbps.

Changing fibre speed is simply a matter of changing the electronics. For speeds of up to 1 Gbps this can be done remotely. Customers switching to Hyperfibre need an upgraded ONT.

Coverage

The UFB network covers 87 percent of homes, mainly in urban areas. There are plans to extend the network further into rural areas.

While some nations are aiming for 100 percent fibre coverage, New Zealand’s physical geography and the dispersed population make that uneconomic. Realistically fibre could reach 95 percent of homes.

Fibre companies have the resources to fund part of the $2 to $3 billion required, which means new sources of funding are needed and this will likely require government involvement.

Local internet companies are building small fibre networks in some rural areas. They can have community involvement in the projects. These networks are not part of the UFB and are not necessarily open to other service providers.

Comparing fibre with fixed wireless and satellite

Fibre connections offer close to unlimited bandwidth. UFB is run as a congestion-free network. Fixed wireless and satellite broadband rely on radio, which means connections share bandwidth.

During busy periods, the amount of bandwidth available for each connection can drop dramatically. This can lead to a poorer experience when viewing streaming video or taking part in video calls.

Fibre also has low latency compared with radio-based communications, which is important for real-time voice or video conversations and for gaming.

Fibre future

Hyperfibre connections run at 8 Gbps. While that meets the need of today’s most demanding applications, other uses may emerge. There is almost unlimited potential for fibre speeds to increase without the need for major engineering.

While New Zealand’s large-scale fibre build programme has finished, incremental extensions of the network are likely, especially when building or other developments change the network economics.

Beyond that, networks face diminishing returns because increased distance between potential customers means cost per connection rises in more remote areas.

How mobile networks fit alongside fibre.