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Rural mobile closing the gap thanks to RCG

New Zealand’s rural mobile users face slower download speeds than people in towns. In almost every case the rural mobile experience is worse.

Although the gap between rural and urban has closed, it could open again as carriers roll out 5G networks.

Opensignal’s May 2021 mobile network experience report puts the improvement down to government-led initiatives.

Both the updates to the Rural Broadband Initiative and the Mobile Black Spot Fund have played a role.

Rural Connectivity Group kudos

Above all, credit must go to the Rural Connectivity Group. This is a joint venture between Spark, Vodafone and 2degrees set up to deliver rural network upgrades.

The three companies had government funding and invested their own money to build additional cell sites in areas needing extra coverage.

To date there have been 200 new RCG towers. Eventually there will be more than 500. If it seems like only yesterday there were 100 RCG towers, that’s because it happened less than a year ago.

RCG carriers share spectrum and resources. The towers are open access, other carriers can use them.

RCG delivering

Opensignal’s analysis shows the programme is already delivering results. There is more to come as further towers are added to the network.

To measure mobile network performance Opensignal collects data from handsets. The business is UK-based and produces similar research in a number of countries.

UK-based Opensignal says the gap between rural and urban mobile experiences is closing.

In its May 2021 report Opensignal says while disparities between rural and urban mobile remain rural mobile is improving.

Time connected to 4G

It reached this conclusion by looking at the proportion of time users spend connected to 4G networks.

In recent months this figure has increased at a faster rate for rural users than those in urban areas. Although rural comes from a far lower base, it is catching up.

Opensignal takes a competitive view of performance. It also zooms in on applications like video and mobile gaming. Yet the interesting angle is how the urban – rural mobile gap is closing.

It ranks the three carriers against each other. If you’re wondering about Skinny, that’s a Spark brand with customers using the Spark network.

2degrees shows the greatest improvement, Vodafone the least.

Customers on the Vodafone network saw the gap between urban and rural time on 4G networks fall 4.8 percent. For Spark users the drop was 5.8 percent. At 2degrees it fell 7 percent.

Closing the gap

Opensignal says before the Covid lockdown 4G availability for rural users was close to 25 percent behind urban levels. Now it sits at around 17 to 18 percent behind.

The report goes on to compare the mobile experience with different types of use. It says only 2degrees urban customers enjoy an excellent video experience. The company’s rural customers do better than Vodafone’s urban customers.

Meanwhile the mobile games experience is underwhelming everywhere. The three carriers deliver a ‘fair’ gaming experience in urban areas. This drops to ‘poor’ outside the towns and cities.

Opensignal scores for rural download and upload speeds are a long way behind urban speeds. Spark is fastest overall. Its urban customers can download at an average of 41.9Mbps. In rural New Zealand, 2degrees’ customers get less than half that speed: 20.2Mbps.

5G can close or open rural mobile gap

The report concludes that if carriers use 5G on lower frequency bands in rural areas, the performance gap with urban mobile would close.

Eventually carriers will be able to use a range of frequencies for 5G.

The distance a mobile signal covers changes depending on the frequency. Lower frequencies travel further, higher frequencies cover a small area. There’s more bandwidth the higher you go up the spectrum.

Alternatively, if they focus on adding high capacity in urban areas, the mobile digital divide will widen.

To date Vodafone has concentrated on building 5G in urban areas. That’s where it sees the greatest demand, not necessarily the greatest need.

Spark started its 5G build in small South Island towns. Now it is building capacity in the main centres.

If the government wants to narrow the rural mobile experience gap, it may need to impose usage conditions on 5G spectrum in future auctions.

How satellite broadband can hurt New Zealand ISPs

New Zealanders will soon have new, affordable satellite broadband services to choose from.

At the time of writing, there’s no clear threat to urban broadband service providers. It could be another story outside the cities and towns.

The further you are from established networks, the better satellite looks. 1

Satellite is not new

Satellite broadband has been available here for years. In the past it has been a last resort for people who can’t get a decent connection any other way.

Established services are expensive and need specialist equipment. They’re not easy to use. Even lining up a dish can be troublesome.

When you get a connection, it is slow by today’s broadband standards and has terrible latency.

Geosynchronous

Earlier satellites use something called a geosynchronous equatorial orbit or GEO. Geosynchronous means they stay in the same position above the earth’s surface.

As the other part of the name suggests, they orbit close to the equator.

For New Zealand users this means your dish need to be able to see the skies to the north. A GEO isn’t much help if you are south of high hills or buildings.

GEO satellites have to orbit at a great height. Which means they are a long way from a dish. Their signals may travel at the speed of light, but lone distances mean they have high latency.

In comparison, GEOs have a huge footprint.

Dig the new breed

The new wave satellites are LEOs. They fly in a low earth orbit. This reduces latency.

LEOs offer much more bandwidth than GEOs. The broadband experience is closer to, say, that offered by fixed wireless.

A satellite company can cover a lot of territory with one or two GEO satellites. LEOs have a smaller footprint.

To make LEOs useful, the companies running them need to have large numbers. You need enough so that customers are always covered as they fly past.

Coming soon

At least three companies plan LEO networks that can deliver broadband in New Zealand.

One, Starlink, has published a New Zealand price list and is taking orders. The others include Oneweb, which aims to start services later this year.

Amazon has Project Kuiper which is well behind its rivals, but brings the clout of a tech giant. And don’t underestimate the connection with Amazon Web Services.

Both the European Union and the State Grid Corporation of China plan LEO networks. These may not offer services here.

It starts with Starlink

The most advanced is Starlink. It has 1300 satellites at the time of writing. The company has permission to increase that to 4400. That is around 50 percent more than the total number of satellites currently in our skies.

Starlink plans to charge NZ$160 a month for an uncapped broadband plan. Customers have to buy the company’s earthbound hardware to use the network. That’s an upfront cost of more than NZ$900.

According to Starlink, customers can expect speeds of between 50Mbps and 150Mbps. Let’s take it as read that most users will be closer to the bottom of that range.

There will be times when there is no satellite coverage. Which ruins activities like streaming TV, especially live sports.

Competitive pricing

Given that uncapped fibre max plans cost around $100 a month, Starlink looks expensive. The proposed charge is high compared with fixed wireless broadband.

If you are a rural user beyond the reach of the mainstream broadband networks, NZ$160 is a bargain. The hardware cost is nothing compared to having fibre connected to a remote property.

While Starlink does not pose an immediate threat to mainstream ISPs, it will be a headache for the innovative Wisps who string local networks up and down remote valleys in rural areas.

The threat

Customers in these hard to connect rural areas will be the first targets for LEOs. One way or another, they will upset the Wisps’ business model.

Small local service providers have a get out. They may be able to set up as resellers of satellite services. They have limited, but concrete, options to add value. Margins will be low, but that’s often the way in the telecommunications sector.

Fixing the fixed wireless lottery

Another group of potential early satellite customers are those people on RBI fixed wireless broadband towers who don’t have good coverage.

Rural fixed wireless broadband is a lottery. If you’re on a non-congested tower and you can see the antennae from your property, then the chances are you get decent speeds.

If you are further away, or your tower is congested, fixed wireless speeds can be lousy. For many of these people, in particular, those who need broadband for work, that NZ$160 a month 50mbps uncapped satellite plan looks like a bargain.

Diluting RBI

It will take a time for those RBI customers to wake up to the charms of satellite broadband, but once word gets out, you can expect an exodus from poor quality fixed wireless connections.

Spark and Vodafone will be the most affected. Losing large numbers of fixed wireless customers can change the economics of operating rural towers.

It also changes the value of the spectrum used to serve these customers. They may be able to put those frequencies to better use elsewhere. It’s not inconceivable that one of the big telcos partners with a satellite company to retain customers if their mobile phone business is valuable.

Moving targets

While the costs and performance stay at NZ$160 a month for 50–150Mbps, satellite won’t make huge inroads in places where there is fibre. Nor is it enticing compared with the better fixed wireless connections.

Yet nothing is fixed. Starlink has said it plans to double speeds over time and to drop rates. And who knows what could happen if there are three competing LEO networks?

A 300Mbps connection for NZ$160 a month starts to look good against the better performing RBI wireless service.

If the price drops to, say, NZ$100 a month, then the satellite companies could eat into Spark, Vodafone and 2degrees fixed wireless profits.

Price war

We know the carriers have room to lower their costs. Look at the annual results for the carriers and you’ll see fixed wireless has reasonable margins.

It’s possible New Zealand carriers could find themselves in a price war with global scale satellite ISPs.

That could, over time, have a knock-on effect that reaches into the fibre broadband sector. Paying $100 a month for an uncapped fibre max connection looks good value against today’s fixed wireless plans. This might not always be the case.

A lot has to happen before satellite broadband has any local impact, let alone affect prices for terrestrial services.

The most likely outcome is that satellite will alter the economics of rural broadband and not change much in our towns. Yet, it will add a further layer of competitive pressure.


  1. Satellite is an excellent fallback option for people using other forms of broadband. ↩︎

Fibre Max now one in six Chorus connections

Chorus added 7,000 gigabit or Fibre Max connections during the third quarter of its 2021 financial year. Fibre Max is the name the Commerce Commission prefers over gigabit.

The company’s latest connections update says the company now has 143,000 Fibre Max connections. That’s 17 percent of the 831,000 total customers connected to fibre.

Meanwhile the number of fibre connections running at speeds of 50Mbps or less continues to fall. It now make up less than 10 percent of the total.

Fibre uptake across the Chorus network climbed from 63 to 64 percent during the quarter. In UFB1 areas uptake is now 68 percent.

UFB uptake edges up

The number of premises in the Chorus footprint who are now using fibre is 64 percent of those who can. The uptake number ticked up one percent in the quarter. This continues to rise every quarter, although the pace of increase has slowed.

Chorus now faces more intense competition from fixed wireless broadband providers. Vodafone introduced a $40 plan with 60GB of data for light users during the quarter.

Meanwhile 2degrees has started promoting its own fixed wireless service. It offers customers 300GB of data each month for $55.

For now 2degrees has limited fixed wireless capacity. The company says it expects to double its capacity over the coming year,

In round numbers about one-in-four of those switching from copper is moving to fixed wireless.

Fibre max sees data continues to climb

The average customer on the Chorus network used 416Gb of data in March. That’s up from 390GB in December.

Fibre customers now chew through an average of 491GB each month. Copper customers are using 241GB.

Choice reduced as phone market narrows

Last week LG said it will get out of the mobile phone business.

When the company’s phone business peaked in 2013 LG was the third largest player.

It’s doubtful anyone in New Zealand will miss LG. The brand had been close to invisible in this country for the last five years.

State of the mobile phone market see less choice

LG’s departure is a good time to step back and take a fresh look at the shape of the phone industry in 2021.

It may look healthy on the surface. Up-to-a-point the phone market appears competitive.

Yet the phone sector is less vibrant than you might think. Phone buyers have less choice than at any time in the last 20 years.

A two horse race

Two companies; Apple and Samsung dominate the mobile phone market. No-one else comes close.

Another two companies might like to think of themselves as challenger brands. But that’s unrealistic.

If you follow the phone market you may have heard of BBK and Xiaomi. Take it as read that more than nine out of ten potential buyers in New Zealand would not be able to name them.

Chinese phone makers

BBK and Xiaomi are Chinese phone makers.

You won’t find Xiaomi in Spark, Vodafone or 2degrees stores. The phones sell here through stores like PB Technology.

Even seasoned phone fans struggle to recognise BBK. It is the Chinese company behind the Oppo phone brand. BBK is an entire stable of brands including OnePlus, Vivo and a handful of names we don’t see in New Zealand.

A cloud over Huawei

China’s best known phone brand is Huawei.

Until 18 months ago it was the world’s third top phone maker.

At that time Huawei was almost on a par with Apple and Samsung. It sold more phones than Apple, albeit cheaper mass market models.

Huawei’s technology and phones were ahead of its other rivals. It’s broad range of phones gave users more choice whatever their budget.

Banned means less choice

Then the US government banned American technology companies from selling to Huawei.

Among other things, that means Huawei phones can no longer use Google services. The company’s home grown alternatives are a pale imitation of the orignal.

Now there is a cloud over Huawei. Its phones continue to sell in China, elsewhere it is out of serious contention. They are no longer a wise choice.

There’s no hint the US government will take similar action against BBK or Xiaomi. Yet we can’t rule it out.

It’s an Apple and Samsung world

In recent years Apple and Samsung accounted for four out of five phone handsets sold in New Zealand.

Their success with premium models mean they take an even larger share of the money spent on phones.

Apple invented the modern mobile phone when it released the first iPhone in 2007. It remains the most important phone maker. That’s not about to change. We’ve seen 14 years of headlines claiming there are iPhone killers, nothing has come close.

More important, Apple has the best customers. They are loyal and prepared to pay for a quality product.

Apple may sell fewer phones than Samsung, but it is the only phone maker making healthy profits. This fuels product development. There’s a virtuous circle that means the company can stay ahead of rivals.

Samsung the scale player

Samsung may make more profit selling phone components to Apple than it makes from its own hardware.

The company survives in the phone business because it has unmatched scale. Samsung’s margins are smaller than Apple’s. To a degree that is offset by selling more units.

Samsung is a large, sprawling business with many parts. Its economics can be complex. Yet there is more going on beneath the surface than might be obvious at first sight.

Earlier this year Spark announced it would be working with Samsung to build 5G networks. Its handset business gave it a clear leg-up in telecommunications infrastructure. And the brand recognition helps.

Choice beyond the big four

Any discussion about the phone market generates questions about other brands. Where are Nokia and Google’s Pixel phones in this picture? Sony and Lenovo (Motorola) remain active. Another company, Transsion, makes less powerful phones for countries in the developing world.

The simple answer is they all have a tiny market share. Taken as a group they don’t account for more than a few percent of total sales.

Yes, they make decent hardware. Yes, Nokia offers the best Android experience. But in market terms, none of these other players are important.

Not that competitive

While the market appears competitive from a customer’s perspective, that’s not the reality.

Chances are when you next choose a phone, you’ll be looking at no more than three possible phone makers. Less if you feel locked into iOS or Android.

Any of the names mentioned above, other than Apple, may decide it can no longer thrive in this market at any point.

From a consumer point of view, Samsung looks as unassailable as Apple. Yet it may decide there are better margins to chase elsewhere. There may be better uses for its capital expenditure.

This can change overnight. Apple disrupted the phone market with the iPhone in 2007. A similar disruption could do the same. Yet, it doesn’t feel as if there is anything out there likely to have the effect.

Tutela’s March 2021 mobile snapshot: Everyone’s a winner

Spark tied with 2degrees for first place, out of three, for Excellent Consistent Quality in the latest mobile snapshotVodafone has the fastest data speeds, 2degrees has the most responsive network.

In other words everyone comes away with a prize from the Tutela’s March 2021 New Zealand Mobile Experience Snapshot. Even when they don’t, there’s not much separating the three mobile carriers.

Take the consistent quality measurements. Tutela measures the performance of the networks in places where all three offer coverage. Excellent Consistent Quality is where users have a network experience suitable for 1080p video streaming, real-time mobile gaming or HD video calling.

Spark and 2degrees hit the standard more than 80 percent of the time, while Vodafone hits the standard 77.2 percent of the time. Vodafone was slowest in last year’s mobile experience report.

That’s not far behind. In practice casual users moving around New Zealand might not notice any difference. Although the variation will matter a lot for people living in those pockets where Vodafone doesn’t hit the standard.

Tutela New Zealand Consistent Quality March 2021

While the absolute numbers on the download and upload speed tests show more variation. Once again, it’s unlikely everyday users will notice much. Unless you are running a speed test app, you might struggle to notice the difference between Vodafone’s 26.9 Mbps download and 2degree’s 21.8 Mbps. The gap between Spark on 19.7 Mbps and 2degrees would be even harder to spot.

That’s not to say these kinds of comparisons are meaningless. They serve to keep carriers on their toes and highlight potential problems. And if the difference between Vodafone’s average of 26.9Mbps and Spark’s 19.7Mbps is important for your applications, then these results are helpful.

Tutela New Zealand Mobile Speeds March 2021

Tutela found 2degrees has the lowest latency – that’s usually the time taken for a signal to travel there and back. In this case the researchers compare the median one-way journey time. There’s not much in it, 2degrees is on 23.2ms while Vodafone is 24.6ms. Spark is 29.4ms. Again, most people will not notice the difference.

Unless you have specialist needs, there is nothing in the Tutela data to make you switch from one carrier to another. No single carrier has a significant lead over its rivals. This may change as 5G networks roll out. If you do have specialist needs, it’s worth downloading the full report as this includes performance broken down region by region.