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A green data centre industry would unlock new infrastructure and create jobs.

Writing at the New Zealand Herald, Warehouse founder Sir Stephen Tindall makes the case for building a clean, green data centre hub in this country: The green, high tech opportunity NZ can’t afford to miss.

He says:

New Zealand has the opportunity to develop a green data centre industry that serves not only New Zealand government and corporate clients, but could position our country as the leading provider of green data centres to the Asia-Pacific region, much like Scandinavia has done for Europe.

As a global industry, data centre companies and users are leading the way towards carbon neutrality by investing in building new, modern centres that run on green energy. With our country’s high percentage of renewable energy sources, we are perfectly positioned to take advantage of this explosively growing industry.

Tindall is right. We are well placed to do this. Most of our energy is renewable. We have the skills needed to make this work.

We are much better placed to build data centres than a decade ago when Tindall was one of a team of entrepreneurs behind Pacific Fibre. That was an abandoned attempt to build a submarine cable between New Zealand and the West Coast of the USA. Tindall’s thinking was ahead of the game. Now there are four cables connecting New Zealand to the world.

Tindall makes a strong green case for New Zealand pushing further into data centres. It would be good for jobs too.

But there’s another argument for investing in New Zealand data centres. The term isn’t fashionable anymore, but there was a time when our leaders often talked about making New Zealand the Switzerland of the South Pacific. We are, in relative terms, a neutral player in international politics, not a threat to anyone. At the same time we have a mature political and legal system.

Data centres and cloud computing hubs are subject to the laws of the countries they are located in. Our laws are benign. We are not a totalitarian state, nor do we have a worrying state security apparatus demanding to snoop on other people’s data. We can leverage these aspects. New Zealand has a strong brand as clean and green, it also has a growing reputation for probity and values.

 

Sky TV outside broadcast camera

After months of speculation Sky says it will enter the broadband market next year. The move is one of the industry’s worst kept secrets.

Sky says it will start by targeting its existing TV customers. Then it will focus on homes that are fibre-ready but not yet connected.

In a media statement, chief executive Martin Stewart says: “We want to provide the best possible sport and entertainment experience to New Zealanders. A high-quality, high-speed broadband service built specifically for entertainment helps us do that.

Rumours about Sky’s entry into telecommunications have swirled around the sector for months.

Make that re-entry. The Vodafone merger turned down by the Commerce Commission would have got it there earlier.

And that wasn’t the only attempt. In 2006 Sky took a look at buying ihug. It asked for an exclusive due diligence period. Ihug refused, opened the process and sold to Vodafone for $41 million.

Analysis: Slow moving Sky

Sky entering the broadband market is welcome. The company has much to offer and understands how to deal with customers.

That said, next year is ages away in internet years. Everything internet moves faster than other industries.

By 2021 Spark will have 5G towers1. Most likely, it will sell fixed wireless as an alternative to the fibre services Sky aims to sell. Vodafone may have extended its network and its fixed wireless offering.

It is also possible next generation satellite broadband services will be available2.

Fibre is a better broadband experience that fixed wireless or satellite. Yet not all customers know that. ISPs will carpet bomb marketing for the alternatives.

Stuff Fibre, the missed opportunity

Likewise, New Zealand’s broadband landscape could look quite different. Last week Vocus picked up the 20,000 or so Stuff Fibre customers. A wave of consolidation is long overdue.

The acquisition is not enough to move the market share dial.

Even so, a larger base gives Vocus more scope for economies of scale. And more customers to crosssell energy and other products to. It gives Vocus momentum.

Sky is short of cash. Buying Stuff Fibre may not have been easy for the company. Yet, Stuff Fibre would have been a good fit for Sky; a better fit than for Vocus.

And anyway, Vocus is not awash in loose change either. If the hard-up Australian-owned telco could cut a deal, Sky could have found a way.

Reasons to buy Stuff Fibre

Buying Stuff Fibre would have done three things. First, Sky would enter the market with a crash and a roar, wrong-footing rivals. Never underestimate the value of shock and awe in a competitive consumer market.

It could also have brought the expertise needed to kick-start Sky’s plans.

The third reason Stuff Fibre would have been a good buy for Sky is that, Stuff is also a media company.3 They share some characteristics. While the Stuff Fibre customer proposition is different to Sky’s, it’s not so different.

A virtual ISP

It is not well known outside the sector, but Stuff Fibre is, in effect, a virtual ISP. Stuff looks after the brand, sells subscriptions and counts the money. Meanwhile, in the background, a company called Devoli handles the technical side.

This is an ideal model for Stuff with a well-known brand and few in-house technical skills. The Virgin brand does something similar overseas.

The virtual ISP model would almost certain work as well for Sky. Maybe it still will.

Tick-tock

Every day that ticks by is another wasted day for a would-be ISP. By this time next year about two-thirds of all people who can connect to fibre will be using it. Of the rest, some will have chosen fixed wireless broadband. Others may choose never to buy broadband.

Other ISPs will have picked almost all the low-hanging fruit by the time Sky gets its act together.

Sky’s second strategy is to “focus on homes that are fibre-ready but not yet connected.”

Take away the two-thirds of home that will be connected by 2021. Take away the people who don’t want or can’t afford broadband. Then take away the fixed wireless broadband users. However you cut the numbers, that does not leave much of an addressable market.

More intense competition

Which can only mean that Sky will need to woo customers away from other ISPs. It still has sports right, it still commands a lot of entertainment programming.

The company says it will use these to pull in customers. Maybe.

The obvious case to look at here is Spark. Spark’s Spark Sport and its Rugby World Cup streaming have been high profile. Nothing draws in New Zealand customers more than the promise of seeing the All Black in action.

Now here’s the bad news for Sky: Spark’s fibre broadband market share fell during the last year. That’s the time it was giving away RWC streaming to new customers.

This tells you that Sky has a mountain to climb. It never looked easy, but Sky has to put its foot on the gas. It won’t get a second chance.


  1. The South Island trial run doesn’t matter in the big picture ↩︎
  2. Cheaper perhaps, but unlikely to be as cheap as fibre ↩︎
  3. Media triva fans might recognise the two companies share common roots. Both stem from Wellington Newspapers in the 1980s. ↩︎

At The Conversation Massey University lecturer Victoria Plekhanova writes: Google and Facebook pay way less tax in New Zealand than in Australia – and we’re paying the price.

She says:

While the internet has created new opportunities for media and audiences alike, those opportunities have come at a price. Traditional media organisations now compete with giant digital platforms, not only for the attention of readers, but also for the advertising revenue that was once their lifeblood.

Adding insult to injury, the digital platforms compete for audiences’ attention partly by distributing the news content that was first created and published by those now-struggling media organisations.

This not only damages the media and public discourse, it is harmful to taxpayers.

Plekhanova says Google paid A$426.5 million in Australian digital service tax in 2018. That’s 66.5 times the amount of tax paid in New Zealand: “Given the New Zealand economy is about a seventh the size of Australia’s, this is an extremely wide disparity”.

There are also rules forcing Google and Facebook to compensate publishers when they piggyback off their original content.

The idea of a digital service tax isn’t that unusual. Other countries have a similar tax.

All of this makes sense. We let the overseas media giants freeload here. Part of their income depends on services that have been provided by taxpayers. Some of that income even comes direct from government agencies which buys advertising on the two social media giants.

It amounts to a net transfer from the New Zealand taxpayer’s pocket to social media investors: some of the richest people in the world.

Ideally the OECD would deal with this problem. But that’s been a long time coming and the money continues to flow in one direction only.

Plekhanova comes unstuck when suggesting taxing or charging tech giants will help local media survive. The damage was done ages ago. Survival depends on more than taxing the giants and anyway, up to a point the main local media outlets depend on the tech giants to reach their audience.

So, yes, let’s tax Google and Facebook like countries tax extractive industries. And, at least, stop pour government money into their coffers. But let’s not kid ourselves this is going to fix our media problems.

 

Tech is perhaps five years away from actual deployment, we’re told

At the Register: Record-breaking Aussie boffins send 44.2 terabits a second screaming down 75km of fiber from single chip. The news from Monash University shows there is still plenty of headroom for fibre broadband.

Katyanna Quach writes:

Australian scientists say they have broken data communications speed records by shifting 44.2 terabits per second over 75km of glass fibre from a single optical chip.

The five-by-nine millimetre prototype gizmo is described as a micro-comb in a paper detailing its workings, published in Nature Communications on Friday. Light shone into the micro-comb is looped around a ring to produce 80 beams at various infrared wavelengths. Each beam carries a stream of data.

Elsewhere the report says the technology is perhaps five years away from deployment. It’s possible it could be used on New Zealand’s Ultrafast Broaband network, although we may have to rethink what we mean by ‘ultrafast’ in this context.

At the time of writing Chorus is rolling out Hyperfibre, which boosts broadband speeds on the UFB network to 4 Gbps and will later extend to 8 Gbps. These speeds seemed unattainable and abstract a decade ago with the UFB network first started operating.

So 44.2 Tbps may seem exotic now, but could be everywhere in time for the next but one Rugby World Cup.

Measuring Broadband New Zealand Report May 2020

Demand was off the scale. Yet New Zealand’s fibre and copper broadband networks almost never skipped a beat during the 20200 Covid-19 lockdown.

Both technologies did well enough to earn a tick from the Commerce Commission

To no-one’s surprise, fixed wireless broadband did not fare as well. It was never going to.

The Commerce Commission uses UK-based SamKnows to track broadband performance. The Measuring Broadband New Zealand Autumn Report, May 2020 shows there was no significant decrease in download speeds on fibre or copper networks.

Fixed wireless speed drops

SamKnows reports average fixed wireless download speeds fell by around 25 percent.

There is a simple reason for the difference between the technologies. On a fibre network a customer has a direct line from their connection point back to the local roadside cabinet. In effect the same happens with copper.

Fixed wireless broadband users share their connection with others. That means speeds drop at busy times. During the lockdown the networks were busy for a lot more time than would otherwise be normal.

Latency

On a similar note, the report found fibre responsiveness consistently outperformed all other technologies. Fibre latency came in at under 20ms 90 percent of the time. This is important for applications like Zoom video calls and makes a huge difference to the online gaming experience.

The report says:

“Fixed Wireless connections will be more likely to experience issues with latency-sensitive applications such as online gaming or video calls.
”

SamKnows reports that games hosted in New Zealand had lower latency than games hosted overseas.

Fibre to the max

Telecommunications commissioner Dr Stephen Gale says: “Chorus and other providers reported record levels of online activity. But despite that increase, the latest report from our independent testing partner, SamKnows, shows that copper and Fibre 100 plans continued to perform well, with average download speeds unaffected.

“We’re pleased to see that Fibre Max speeds have again increased, but there is still a significant variation of results on these plans. We are working with the industry to understand the causes of this, which involves looking at hardware and the performance of individual networks.”

The report, published by the Commerce Commission, notes the average download speed of Fibre Max plans, that is gigabit wholesale fibre, increased by around 50Mbps since the earlier report. The jump is down to improved performance by a single service provider.