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Infratil is among the few companies able to unlock Vodafone New Zealand’s value. There is untapped potential. It may not be immediately obvious to other potential buyers.

That potential didn’t excite enough interest when the company was taken on the road after the Sky TV merger failed. Presumably, buyers looked in the wrong direction.

Most people see Infratil as an infrastructure company. It is that.

Infratil hold TrustPower key

Infratil also owns a little over half of electricity retailer TrustPower. This is the key to unlocking Vodafone’s value.

TrustPower isn’t any electricity retailer. It is also New Zealand’s fourth largest internet service provider.

Number four doesn’t mean big. Last year’s Commerce Commission monitoring report said TrustPower has a five percent market share of broadband connections.

That’s small. Even when added to Vodafone’s 26 percent, the two don’t get close to Spark. That company still has more than 40 percent of all connections.

Small but potent

If Vodafone plus TrustPower doesn’t alter the broadband balance of power, what is disruptive here?

The answer is Trustpower has found how to make more profit from connections. It sells bundles combining broadband and power in a single bill.

Buying Vodafone opens the door to a million Vodafone customers. Many of these will also buy electricity.

It turns out broadband and electricity are a potent mix. They may go together better than, say, broadband and pay TV.

Would you like fries with that?

TrustPower isn’t the only company to find value in the “would you like fries with that?” broadband and power proposition. Vocus acquired a small electricity retail business. It has been selling power to its customers.

Electricity and broadband have worked for TrustPower.

Both services need investment in billing systems. Billing is a large cost for both electricity and broadband retailers. Putting two services on a single bill trims costs. It increases margins by more than you might imagine. A few dollars per month times thousands of customers soon adds up.

Remember Vodafone has struggled in the past with billing.

There are other efficiencies. You don’t, for example, need to run separate call centres for power and broadband customers.

Golden handcuffs

These cost savings are nothing compared with the value Trustpower gets from having customers buy both services at once.

Customers who buy more complex bundles of services are less likely to go elsewhere. TrustPower cuts churn every time a power customer signs up for broadband. This also works the other way around.

A million Vodafone customers have already proved they are creditworthy. There is probably enough data to know which customers are difficult to deal with. It may even be easy to identify homeowners or lead tenants, the people most likely to buy electricity.

Asymmetric information

There’s another aspect to TrustPower’s offer.

You’ll notice TrustPower’s advertising splashes the headline price of broadband. Usually this is so much a month less than other high profile broadband retailers. In some cases, the first months are discounted. A normal rate kicks in a few months into a 24-month contract.

TrustPower sweetens deals by offering Samsung flat screen TVs or other inducements.

It’s easy for consumers to comparison shop for broadband. There aren’t many speed and data options.

Selling photons and electrons

It’s harder to comparison shop for power Both are low margin products. Both are competitive markets. It is often easier to make more profit selling electrons than photons.

Vodafone and TrustPower under a single umbrella means more market power. That’s not helpful when it comes to inputs, companies buy broadband at regulated prices from wholesalers like Chorus and Enable. It is helpful when muscling to the front of a queue with partners.

We haven’t even mentioned TrustPower’s earlier bid to establish a mobile virtual network operator business. If nothing else, the company’s executives would have looked closer at the economics of selling mobile. This is Vodafone’s core business.

Infratil invests in infrastructure

Vodafone was due to float next year. The parent company, the UK-based Vodafone Group, wants to get as much of its New Zealand investment out of the country. It plans to invest in places like India where there is more long-term potential.

One challenge Vodafone faces and would otherwise continue to face is finding funds to invest in 5G. Doing the job properly would cost the thick end of a billion dollars over the next decade. Infratil can cover the spend.

Sure, Vodafone has other attractions. It won’t all be about cross-pollination with TrustPower. Yet the million-plus creditworthy mobile customers who might be persuaded to switch electricity retailer, are an important part of the company’s value.

fibre optic

Chorus says the average connection speed across its network has now passed 100Mbps. This is ten times the average connection speed eight years ago. 

Last month also saw the busiest day yet on the company’s network: total usage hit 1.815Tbps. The previous record was 1.792Tbps.

Chorus network strategy manager Kurt Rodgers says 71 percent of the company’s fibre customers are now on 100Mbps. A further 44,000, around three percent of the 1.5 million connections on the Chorus network, are now on 1Gbps plans. This is up 22 percent on the previous quarter. 

High speed plans

Most of the rise in average connection speed comes down to the popularity of high speed plans.

One feature of New Zealand’s regulated fibre broadband is the narrow spread of price between slower and faster plans. In Singapore, a 1Gbps plan costs many time the price of a 100Mbps plan. Here the difference is closer to 25 percent.

Another reason to opt for faster plans is that many of today’s plans are uncapped. There’s less point in buying one of the fastest plans if the extra speed means you download your data allowance in a few days.

Improving speed isn’t all at the top end. Rodgers says awareness of VDSL (Very-high-bit-rate digital subscriber line) technology, which boosts speeds on copper connections, is also on the rise.

At the same time, VDSL speeds have increased in recent years. Before switching to fibre I had a VDSL connection. When I first started it ran at around 18Mbps. This later climbed to 35Mbps or thereabouts. By the time fibre was laid in my street, the VDSL connection was giving me 70Mbps.

He says, “Dunedin has the highest average connection speed at 361Mbps, largely due to the high volume of gig connections”. This will be, in part, because of the earlier Gigatown promotion. This saw the city connected to faster fibre ahead of the rest of the country. 

“Coming in second is Wellington, at an average of 116Mbps, followed closely by Auckland at 111Mbps,” he says.

Will get faster than 100Mbps

“With more and more consumers choosing gigabit plans and our recent announcement that we will start trialling 10Gbps in mid-March, we can only expect average speeds to continue to grow,” Rodgers says.

Chorus says fibre users now average 315GB per month. Most of this is down to the rise in streaming video. This is reflected in time-of-day statistics, which show average throughput on the network now peaks at around 8.30pm in the evening.

You may be right if you think you’re not ready for or don’t need 10Gbps residential broadband. For now, it’s a niche product for a niche market.

Yet it won’t be long before it is mainstream.

Next month, New Zealanders will be able to test the world’s fastest residential broadband. From mid-March, 30 volunteers will get early access to 10Gbps on the Chorus fibre network.

It’s not the world’s first residential 10Gbps service. Singapore already has 10Gbps. Yet Chorus is early to the technology.

Now is the time for 10Gbps

There are good reasons to start testing now.

First, New Zealand’s UFB fibre infrastructure is ready for faster services. That was the plan from the outset. Moving to 10Gbps means new equipment at either end of the fibre. It’s an upgrade.

Second, it’s good to be ahead of the demand curve. When UFB was first dreamed up, planners expected one in five people who could get fibre to take it up by 2020.

Today, roughly half the people who can connect to fibre do. That number is set to increase as we get closer to the Rugby World Cup.

There are reasons why uptake is greater than expected. Netflix and Lightbox are the usual suspects. But that’s immaterial. The point is fibre growth has been well ahead of predicted demand curves. The same could be true for 10Gbps.

Prestige

Another, less tangible, reason to get cracking with 10Gbps is prestige.
New Zealand would be among only a handful of countries to offer the service. It’s a testament to our network and planners that we get there early.

On a more practical level, Chorus managed to announce its service ahead of competitors. It faces a form of competition from ISPs who want to unbundle fibre. Offering a faster 10Gbps service was one way an unbundler might have differentiated. That’s no longer an option.

Likewise, 10Gbps puts clear blue water between UFB fibre and fixed wireless broadband. When 5G arrives, it, in theory, could offer wireless data speeds that match today’s best UFB speeds.

On paper the 5G specification could see 10Gbps fixed wireless services. That is years off. Apart from anything else, it needs more spectrum than is available to cellular companies either now or after the next round of auctions.

Get ready for 10Gbps

A more subtle point is that having 10Gbps now encourages customers to prepare for faster broadband.

As things stand few homes can make full use of the speed. Devices operating at 10Gbps are scarce. The line speed is much faster than home wi-fi networks. You can buy network storage devices that run at 10Gbps, but slower speeds are more common.

Even among the homes that have wired networks, many can’t handle 10Gbps at the moment. The most popular residential Ethernet routers offer 1Gbps.

That’s why Chorus is being picky about who can take part in its test run.
Chorus is looking for 30 volunteers. Candidates need to already have a 1Gbps plan with one of the partner RSPs.

Chorus is a wholesale broadband provider. That means it can only serve 10Gbps broadband through one of its retail partners. Kordia, 2degrees, Trustpower and Stuff Fibre are among the first to sign up. Others will follow.

Test pilots have to live in one of three Chorus exchange areas. That’s Johnsonville in Wellington, Avondale and Birkenhead in Auckland.
Another must-have is a device with a 10Gbps port. Trialists will need to agree to provide feedback on the service.

Big (home) data

The trial is most suitable for people who work with large data files, say movies or high-quality audio. It may also be useful for homes with some high-end gamers or use other demanding applications.

The Chorus 10Gbps trial is a collaborative project. It will use Nokia’s XGS-PON (passive optical network) fibre technology.

Chorus chief customer officer, Ed Hyde says 10Gbps underpins New Zealand’s digital future. He says it will “continue our decade long commitment to innovation and keeping New Zealand’s broadband infrastructure at the cutting edge.”

If the trial is a success, Chorus aims to roll out the service nationwide. You can take that as read. It may not be everywhere this year, but it’s coming.

While Bill Bennett edits The Download magazine and a weekly newsletter for Chorus, this post is an independent opinion.

Everyone knows fibre is the best way to get broadband. It’s reliable and can deliver gigabit speeds. Soon it will be able to go even faster.

After 100 years on top, copper is on the way out for most people. But not for everyone. At least not yet.

There is still life in copper broadband. Scientists and engineers have squeezed every last electron of performance from wire-based data transfer to the point where, with the right conditions, copper can deliver fibre-like speeds.

For the most part, the right conditions means living no more than about 1.5 kilometres from a roadside cabinet or exchange.

VDSL interim until fibre arrives

This is good news because the second phase of New Zealand’s government supported UltraFast Broadband roll-out will not be complete until 2022.

People in areas at the back of the queue will have to make do with copper broadband for now. Fixed wireless broadband is also an option.

Those people in areas not yet scheduled for fibre will wait still longer. Eventually fibre will reach beyond 87 percent of the population, but not soon enough to keep everyone happy.

Chorus, Nokia crank up VDSL speeds

Relief is on the way. Chorus and Nokia are working on the latest version of VDSL2 vectoring which could see copper broadband users get speeds as high as 130 Mbps.

Vectoring uses noise-cancelling technology to remove the crosstalk interference found when many signals share the same copper connection. If that sounds too technical a description, focus on this: Vectoring means higher speed.

You’ll need to be close to a cabinet to get maximum speed. The further you are from the cabinet the slower it gets.

Existing VDSL2 users living next to a cabinet should see speeds of around 80 mbps. One kilometre away from the cabinet the speed drops to around 25 to 30 mbps. By the time you are two kilometres away, the speed is down to around 20 mbps, maybe a fraction lower.

The ratios are likely to be similar when vectoring is applied. So expect around 130 mbps near the cabinet and roughly 30 mbps two kilometres away.

Fibre-like speeds

This isn’t bad. When fibre first went on sale in New Zealand customers were offered 30 mbps plans.

To put the speed in context, Netflix recommends 5 mbps for HD television streaming and 25 mbps for ultra high-definition.

In other words, get ready to enjoy Spark’s streaming coverage of next year’s Rugby World Cup or Premier League football. If that’s not your thing, there are plenty of other streaming TV options.

VDSL fine in practice

Until recently I was getting around 50 to 60 mbps on a non-upgraded VDSL2 copper connection. I live around 700 metres from the nearest cabinet. This gives you some idea of the potential.

Chorus head of Network Technology Martin Sharrock says getting the fastest possible broadband experience to customers is a priority.

He says: “Vectoring has improved average VDSL downstream speeds by over 40 percent and upstream speeds by over 30 percent. This is especially important for rural New Zealand where fibre to the home has not yet been planned.”

Federico Guillén, president of Nokia Fixed Networks, said: “Nokia’s copper solution with vectoring technology compliments Chorus’ fibre roll-out and provides another way to deliver significantly higher speeds that enhance the way customers experience digital content.”

And then there is wireless

As mentioned earlier, fixed wireless broadband is an option for people in areas not served by fibre. Some wireless towers are full, they’re not open to accept more customers. This is the case in my Auckland suburb where fibre is an option.

While fixed wireless broadband can, in theory, deliver speeds faster than VDSL with vectoring to people further away from a cabinet, the speed tends to vary depending on how many others are using the same bandwidth at the same time. It will probably slow down at peak TV viewing times.

If you’re not on fibre, it’s worth investigating both technologies. You can find out if a copper VDSL2 connection is available at your address from the Chorus broadband checker. To get a bigger picture of all your broadband options use InternetNZ’s excellent National Broadband Map.

D-Link’s NZ$600 Covr attempts to help home users fill Wi-Fi blackspots. I say attempts because the results are hit and miss. Most of the time it misses.

The kit first arrived at Castle Bennett in May. I tried and failed to make it work at the time. This week I tried it again and got it to work. Yet, as we shall see, it disappointed.

In the last few days I’ve been busy revisiting and retesting all the routers and related kit that I have to hand.

Wi-Fi the bottleneck

Chorus installed my fibre this week. I’ve a gigabit line. So for the first time Wi-Fi is my speed bottle neck. There’s a slew of products which, on paper, promise Wi-Fi speeds greater than 1 Gbps. None of them come close.

More about that in another post. Let’s get back to Covr.

During testing it worked as expected for a fleeting moment. The system was unable to create a stable network for more than 20 minutes at a time. When it did manage to work, the performance was erratic and poor.

Covr is an unwelcome reminder of the bad old days of home networking.

If you were there you’ll know what I mean. In those days a new piece of software could make a network grind to a halt. At times it felt like a sneeze could put a home network out of action for hours.

D-Link Covr home wireless mesh network nodes

Covr is a mesh network

D-Link’s Covr is an example of something known as a mesh network. This is a way of spreading Wi-Fi signals over a larger area than a single wireless router might cover. In effect you have three connected wireless routers, but to the user they look and act like a single router.

Mesh networks are common in offices, campuses and large buildings.

You might want a mesh network if you have a large home or the house is laid out in a way that means the Wi-Fi isn’t strong enough in places where you want it. Say you’ve had fibre installed next to your TV at one end of the house and a kid’s bedroom at the other end gets a poor Wi-Fi signal.

There are other consumer mesh network products on the market. Most seem to suffer from similar flaws. This suggests to me this is because the technology isn’t quite ready for everyday users.

If Apple hadn’t lost interest in home networking, mesh technology would be ripe for that company’s attention. Apple has a knack for packaging unpolished technologies in a consumer friendly ready-to-use format.

Not so simple

In the Covr box are three wireless access points. One is the main unit. D-link calls them nodes.

Each node has a power supply. And that means it needs a power socket. The power cables are about a metre long, so you’re restricted to putting nodes near power outlets. There is a rival home network technology that uses power outlets. You might want to consider that instead of Covr.

The box also holds a single Ethernet cable and, for the aesthetically minded, alternative colour fascia plates for the access points. Presumably this is to make sure your nodes don’t clash with the curtains. I find this silly because even if you change the cover the nodes still stand out.

There’s also a sheet of paper optimistically labelled Simple Setup Guide. You can work through this, or you can download an iOS or Android app that walks you through the process.

As we shall see, the app didn’t work for me. Which meant I had to return to the paper instructions.

Covr app

The app tells you to connect the main node to a power supply and to turn off your modem. You then connect the access point to the modem with the Ethernet cable and switch everything on. Once everything is running, you are then asked to log into the Covr wireless router from your phone.

In my case this simply did not happen. The iPhone could find the router, but it couldn’t log on. Nor could my small iPad Pro or my other iPad Pro. I then tried to do this all over again with an Android phone. Once more, there was nothing. Four attempts with four devices didn’t work. Not a sausage.

When I first tried Covr I gave up in frustration at this point. This time around I attempted to manually log-in to the router from a desktop Mac. It worked. I managed to get into the web-based control panel.

Part of the panel shows a map of the network. If one of the connections, and this includes the connection from the main node to the internet, is broken it shows up in red. At this point things appeared to be running fine. The next task is to configure the secondary nodes.

Secondary nodes

In some ways configuring secondary nodes is clever. As already mentioned, you have to find an extra power socket to do this. Given the master node needs to connect to a modem which needs to connect to the fibre ONT and all three need a power supply, you need four power points to configure Covr. I had to use a distribution board. There are other cables here, so it is a rats’ nest.

Once you have power, you then connect the secondary node to the main one using the Ethernet cable. After a few minutes the light changes colour. When it turns white, you’re configured.

At this point you can unplug, move the secondary node to a Wi-Fi blackspot and connect it by wireless back to the mothership. The light flashes orange then glows white when you can connect. You may need to move it about for a while until it turns white. Let’s hope all your Wi-Fi blackspots are in easy reach of a power socket.

A working wireless mesh?

At this point I had a working wireless mesh. Well almost. None of the mobile devices would connect. But I did have strong signals around the house and all the PCs in the house were able to connect.

After about 20 minutes of a working mesh network, the main Covr node lost its internet connection. I should point out that nothing had moved, there were no external events, no visible triggers.

Next the secondary nodes dropped off the mesh network. I spent an hour troubleshooting, but nothing I did changed things.

Eventually I decided to reboot everything and start once more from scratch. It took about an hour to get back to the same point with a working mesh. About an hour later it all fell apart again.

This was the pattern all day. Actually I’m not sure about that. I gave up the third time the network collapse. Life is too short. In the end I packed the Covr bits and pieces back in the box. It’s not for me.

Covr performance issues

During the brief interludes while things were humming, I tested the internet connection speed from the iMac. It was getting around 150 mbps up and down. This is less than half the usual connection speed through the main UFB modem and wireless router. Typically the iMac ‘sees’ 350 to 420 mbps. So the price of filling in Wi-Fi blackspot is a much slower connection.

It turns out poor performance is by design. Mesh networks in offices and factories have a separate channel to manage traffic between nodes. Covr uses the same Wi-Fi bandwidth that connects devices to the access points. In other words it shares the connection with your devices. This explains why we only saw half the usual connection speed.

I can’t recommend D-link’s Covr. It seems half-finished. There was a firmware update that I installed before testing, so the software is up-to-date.

Of course, you might have a different experience. The fact that none of the devices, other than the computer, would connect is a deal-breaker. For me the slow network speed is also a problem. I’d prefer to spend the NZ$600 asking price on a better quality wireless router and learn to live with any Wi-Fi black spots.