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telecommunications

Fibre network done, now transformation

Writing at the Spinoff, consultant Rohan MacMahon worries about the impact of New Zealand’s recently finished fibre network.

He says: “New Zealand leaves Australia for dust on internet speeds and our children are practically born using fibre, but major challenges lie ahead.

MacMahon does was part of the Crown Fibre Holdings team that oversaw the UFB network build. (CFH is now Crown Infrastructure Partners).

MacMahon’s point is that despite New Zealand’s broadband network being the envy of other nations, we’re not doing enough with it.

Or at least not yet.

Transformation missing in action?

The nub of his argument is: “UFB was supposed to be about transformation, not just watching Netflix in 4K or admiring the result of your internet speed test.”

It would be wrong to say that has been no transformation. Although the transformation we have seen is not what MacMahon has in mind.

UFB transformed the telecommunications and entertainment sectors. This was always part of the plan. Both sectors have seen unprecedented disruption.

Sky and Vodafone are different beasts now we have a fibre network. TVNZ is getting there. The change at what used to be called Telecom is more dramatic. Telecom is now Spark and Chorus. Spark now competes with Sky in entertainment.

None of the UFB architects anticipated Netflix, Lightbox, Sky Now or Disney’s foray in streaming video.

Competition

Most of all, the telecommunications sector is far more competitive. UFB flattened the playing field. This has had knock-on effects.

Competition means people and businesses now spend less on telecommunications. They get far better services in return. Even customer support has improved.

We have faster broadband and unlimited data plans. Today, cost is less of a barrier to trying new things.

There’s no hidden charge for going over your data cap if you want to move data to the cloud. Likewise using video-conferencing won’t bust your cap. We can experiment without fear of a cost blow out.

Abundant data

Abundant data and reliable fast broadband make a difference.

There’s a clear projectivity gain, although it is hard to put a dollar value on it. At a guess, the financial benefits already outstrip the cost of building the network.

Sure, none of this is transformational for the public, but it is a huge benefit.

The problem with words like transformation is we look for it in the wrong places. We expect obvious, observable cause and effect when often the changes is more subtle, maybe too subtle to see.

Cause and effect

It’s not an ideal comparison, but no one anticipated the emergence of fish and chips when entrepreneurs built Britain’s rail network.

Railways made fast fish delivery to inland towns possible. Overnight ordinary people had access to better1 and cheaper food.

Railways ran to a timetable. Which spawned a need for clocks and watches so people could meet trains on time. Before long people realised they could commute to work and live further from city centres.

None of this was thought about when the railways were built.

We didn’t anticipate online media and advertising or streaming when the internet first appeared.

Hidden transformation

It’s possible the transformational effects of fibre are already happening. We can’t see them yet. Or maybe the network has to hit a critical mass before transformation kicks in. Either way, we’re going to get more than “Netflix in 4K”.

MacMahon’s other point is a bigger concern.

He says: “We also have a stubborn problem with digital inclusion. A lot of Kiwis don’t use the internet much or at all, particularly those who are older, rural, Māori, Pasifika, on low incomes, or have disabilities. In the 2018 census, 211,000 households (13 percent) stated they do not have internet access at home.

“It’s clear that lack of access to broadband is a diminishing issue. The main challenges are now affordability of broadband, motivation to use the internet, trust (for example in e-commerce) and skills. The government is still working on building a comprehensive blueprint to close the digital divide. In the meantime, many of the current initiatives are underfunded and sub-scale.”

Challenges

Yes. Big challenges indeed.

The cost of broadband has fallen in relative terms since the UFB project started. So has the cost of a device needed to access the network. This helps, but not enough.

When I wear my optimistic hat, I think we’re onto these challenges. There are useful initiatives. I know it concerns Kris Faafoi, the communications minister. If anyone can find a solution, he will.

In my darker moments I fear the problem is harder than we, as a nation, imagine. It may not even be about money.

The problems Spark encountered helping customers watch the Rugby World Cup show the digital divide is not just about the financial haves and have nots. There’s a skills gap and an information gap. Bridging all three is the challenge.

As an aside, I know only the first stage of the fibre network is done. Any other headline would have been too long. This isn’t the Daily Mail online. 


  1. Trust me, fish and chips was a diet upgrade at the time ↩︎

By Bill Bennett

Not actually a geek, more a chronicler of geekdom. Still mainly a journalist, sometimes a blogger.

21 replies on “Fibre network done, now transformation”

I’d like to say “fixing poverty will solve the problems “ but we know that’s harder than finding the gaps and dealing with them. So yes, let’s find the biggest, most glaring gaps and keep closing until we can’t find any more.

The glaring gap is the hole in the coverage. At 100% coverage and by Metcalfe’s Law we’d have the greatest value in increased performance and reduced cost due to simplification of assumptions about delivery of digital products and services.

We’re told a lot about costs, but not about savings and benefits that don’t accrue to the operator. The public good, how good is it when it, fibre doesn’t reach 16% of the population?

As for satellite and cellular, as anyone from rural areas will tell you, if it were any good the townies would be the first to get it. It’s at best a gateway from freespace to fibre. Direct access to fibre is a foundational requirement for participation in the society and economy of New Zealand. You don’t have to use it, but it has to be ready to be used everywhere.

With $16T, that’s T with a T, trillions of bonds with negative returns in the world, financing low but certain returns off nationally averaged fibre connectivity, with competition at the active layer doesn’t seem beyond even the spreadsheet limited. It may be our limits are about size of the profit not the existence of a reasonable risk related return.

If we can find out the value to the public good, the cost will look very minor and can include expenditure from a number of public and private purses with patience and an understanding of compound interest.

The unfortunate performance of our neighbours cannot be invoked to excuse the shortfalls of the current fibre network in New Zealand. We need to provide the example, and we can, of the value of doing it universally as a non-partisan passive infrastructure national strategic project.

The tin-eared braying about those with fibre now getting 10Gbs and those without fibre getting nothing is rubbing salt in the wounds of many. Truly, “For to everyone who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away. — Matthew 25:29, RSV.

We got POTS and electricity further than fibre and it was more expensive. How many people get their Mbs from copper that we were able to deploy so much more widely?

There are many calls on the public purse, but fibre is one that has performed and if its operators can’t make it universal and profitable, then the collective must make it universal. This foundational tool will serve so many needs, to delay its connection to all is almost wilfully neglectful.

The fibre network is not done.

There is no Comcom price for wholesale fibre. The price remains controlled by the contracts with CIP until 2022.

All of the language was on speed not universal access. Ufb largely solved contention at the access layer – making things work that should already have worked (you bear few complaints about Skype freezing now) rather than enabled new business models

I’m not sure what the argument is for forcing everybody to use the Internet. Sure it’s of benefit to companies and government agencies as they can decrease the use of more costly channels like counter services and contact centres. But there should be an aspect of consumer choice not compulsion, and we should also be asking if people want to use the Internet.

Agree absolutely, with perhaps some minor utility exemptions like meter reading and management channels for energy consumption and local generation. Civil defence, health, elder care and first responders should also have comms available as broadly and as resiliently as possible for reliable in home service delivery.

The household need only make as much use of the UBI (Universal Basic Internet) availability for their personal use as they judge sufficient.

And the utility of the network will be decided at the edges, not by central government funded views on the worthiness of digital pastimes.

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