Fast Chorus van

New Commerce Commission rules mean Chorus must keep its copper network congestion free.

The Commission says it doesn’t want service quality to fall as traffic volumes grow.

It says links between Chorus dslams and the first upstream data switch must not go higher than 95 percent of capacity for more than five minutes.

Chorus must now report when parts of its network approach full capacity. It must also tell ISPs about its plans to improve capacity as lines approach 80 percent capacity.

Aim is certainty

The aim is to give retail ISPs certainty buying unbundled bitstream access (UBA) from Chorus.

There is an exception for around 19,000 lines in remote areas. These are not covered until it is clear what happens to them in the next phase of the government’s Rural Broadband Initiative.

The ruling underlines the continued importance of UBA. This is despite the government supported UFB fibre network. In a few years UFB will reach more than 80 percent of the population.

UBA services on the copper network are the main way people not yet connected to fibre buy broadband. For people outside UFB areas, it will remain an important option for years to come.

Deregulate option

Once the fibre network is complete there is an option to deregulate the copper network where the two overlap.

Telecommunications commissioner Dr Stephen Gale says: “We are confident that the new standard will not lead to inefficient investment, even if copper is deregulated in UFB areas”.

Meanwhile, the Commerce Commission decided not to change the rules for VDSL connections. It says this is already covered by existing rules. What’s more, there’s a danger forcing Chorus’s hand on VDSL could limit the uptake of newer alternatives.

This week’s ruling dates back almost three years to complaints from Telecom NZ — now Spark. Spark argued changes proposed by Chorus would breach UBA standards. Chorus dropped the proposal, but the Commerce Commission launched a review of UBA standards anyway.

Chorus van

Chorus did better than expected during in its first-half. The network operator saw net profit rise to $66 million up from $33 million a year earlier.

Revenues and profits lifted thanks to an increase in the regulated copper price. At the same time fixed wireless broadband made inroads into Chorus’ connection numbers.

Revenue is up 10 percent at $529 million. Earnings before interest, tax, depreciation and amortisation or EBITDA is up 22 percent.

Copper-bottomed

Chorus says the improvements are down to increases in the regulated copper price, a changed capitalisation approach and managing expenses.

Things started looking up for Chorus when the Commerce Commission revisited the price telcos pay to use its copper network.

The copper price increase has been a mixed blessing for Chorus. While it has boosted profits, it caused friction with retail telcos.

Spark discontent

Spark has been the most vocal. The company has made statements criticising the copper network. Among other things it had described it as unreliable. Spark has also moved to find alternatives.

Early in 2016 Spark’s Skinny subsidary launched a low-cost fixed wireless service.

Spark now pushes fixed wireless as an alternative to the UFB fibre network Chorus is building .

Fibre by any other name

Vodafone is confrontational. Yet it also offers fixed wireless services along with its own network now known as FibreX. FibreX has a limited geographic reach. A large slice is in the Enable Networks fibre area in Christchurch.

Fixed wireless broadband and rival fibre companies winning Chorus copper network customers meant a 2.8 percent drop in fixed line connections. Chorus now has 1.68 million. The company also saw a one percent fall in broadband connections to 1.21 million.

Meanwhile fibre broadband connections climbed 38 percent to 231,000.

Wireless works… for some

Outgoing chief executive Mark Ratcliffe says wireless works for some customers with low data usage and poor fixed-line broadband coverage.

He defended the copper network. “We’re confident that our fixed line network offers the rock solid reliability and consistent performance needed for both broadband and voice services.

“We continue to invest in our copper network and, on average, a customer with a copper broadband connection is likely to only experience a fault on our part of the network roughly once every five years. Even then the downtime is typically less than a day”, he says.

Chorus is now close to two-thirds of the way through its initial UFB fibre network build. It also won a big slice of business for the next wave of the government-supported fibre network. This will push fibre into smaller regional towns.

Challenge for new Chorus boss

With copper prices resolved, fixed wireless is a challenge for incoming CEO Kate McKenzie.

Spark says it can serve 100,000 customers on its 4G wireless network. Yet there are signs it is near capacity in some areas.

If it had gone ahead, the Vodafone-Sky merger could have helped Chorus. High-definition television chews huge amounts of bandwidth.

Many houses view more than one video streams at a time. This kind of data-hungry use needs a fibre network. Vodafone’s FibreX footprint is small. A surge in online HD TV viewing would pull customers to the Chorus fibre network.

The irony is that there is talk of Spark cutting a deal with Netflix. That could trigger a similar Chorus-pleasing uptick in data use. And in turn, pull connections from wireless back to fibre.

Disclosure: Bill Bennett writes and edits The Download magazine for Chorus. 

Rural VDSL2

Communications Day reports BT is testing a long-reach version of VDSL2 in rural areas. The story first appeared at ISP Review.

Long-reach VDSL2 could be ideal for those parts of New Zealand falling between the urban UFB fibre-based network and the fixed wireless broadband delivered by Rural Broadband Initiative towers.

At the moment the government is looking at tenders from companies aiming to reach some of these areas through the second phase of its UFB project.

Extending copper into the wop wops with VDSL2

VDSL2 already extends the broadband capacity of New Zealand’s copper phone networks, especially in places where fibre is not yet available. Typically customers with VDSL connections enjoy fibre-like speeds over copper.

The problem with conventional VDSL is that its performance drops off over distance. If you live near an exchange or a fibre-fed roadside cabinet you might see speeds in excess of 40Mbps. By the time you are a kilometre from the connection point that speed might drop to half the maximum.

The long-reach VDSL2 on trial in the UK gets around that. Communications Day quotes BT saying it “should deliver more than twice the data speeds of existing broadband networks over a distance of up to 2km.”

“LR-VDSL exploits existing features currently defined in ITU-T Recommendations G.993.2 and G.993.5 to enable fibre-to-the-cabinet VDSL2 lines with a D-side length in excess of 1.25km (0.5mm diameter copper) to be uplifted to give a higher downstream rate,”

long_reach_vdsl2_fttc_performance_prediction

BT say proof of concept trial in April showed that a copper line delivering 9Mbps could be “uplifted” to 24Mbps with the technology.

It seems VDSL2 isn’t suitable for all copper lines, but BT says the technology in the long-reach version could manage 40Mbps down and 10Mbps up over a distance of up to 2 kilometres.

Chorus’ cabinet network already extends to most settlements throughout New Zealand, even small places. If the reach of each cabinet can be extended using long-reach VSDL2 there will be few communities not served by decent broadband services delivered over copper.

Many people reading this will already stopped using and paying for a telephone landline. Few people under 40 have a landline at home.

Naked broadband plans, internet connections without traditional phone lines, are growing fast.

Spark New Zealand is realistic enough to understand landline are a legacy product. You can buy a Spark naked broadband plan for $20 less than those with a bundled landline.

If you buy internet elsewhere, but still want a landline, Spark has plans starting at $53.50 a month.

Money

That’s money down the drain if everyone in your house has a mobile or you can make broadband voice over IP calls.

Until a few years ago most of Spark’s revenue came from landline phone services. They now account for less than half and their share of the total declines every year.

Not only are landlines costly, at times they are annoying. In many homes, the only time the old school landline rings is when a telesales person, or worse a robot, calls. These calls are rarely welcome.

Sure, you can get sales call on a mobile, but callers often pay more to make cell call. This means mobile calling campaigns are often better targeted.

Free local calls

Forget the landline promise of free local calls. For a start, they’re not free. They are unmetered. It’s not the same thing.

You’d have to spend a lot of time chatting on a mobile to rack up $53.50 in local charges. And anyway, many mobile plans include unlimited voice calls for little more.

Despite the cost and the hassle of dealing with unwanted calls, there are reasons why you may want to hang-on to that landline. At least for now.

Reasons to keep the landline

  • Old folk. Many older New Zealanders grew up with landlines. They are unwilling to change the habits of a lifetime. You can’t force your mother, granddad or an older business client to switch — although it wouldn’t hurt to try.
  • Young folk. Everyone can use a traditional phone, even children who don’t yet have a mobile. This may seem unimportant until a child needs to make an emergency call when an adult can’t.
  • Power outages The copper phone network has its own power supply. It works fine even where the electricty lines to your home are down. You may live in an area where there are frequent blackouts. Of course many modern phone handsets, especially the wireless ones, don’t work without power. You’ll need to keep an old style phone somewhere in case.
  • Poor mobile reception. New Zealand’s mobile networks are good, but not perfect. There are black spots. Some homes are either marginal or don’t have great coverage throughout the building. If that’s you, then you’re going to need that landline for a while yet.
  • Emergencies When disaster strikes mobile networks are often congested. So long as the landlines are unbroken, the network should work, so you should be able to make calls.
  • You live in the wop wops. Despite the Rural Broadband Initiative and more mobile towers there are still places beyond cellular reach. Satellite phones are an option, but are expensive and tempermental in poor weather. Old copper phone lines laid decades ago often reach these remote places.
  • Long calls. A cellphone is good for short calls. For long sessions, say an interview that takes over an hour, it can be more comfortable to use a conventional handset or headset. And if you make frequent long, local calls, then you might squeeze the value from unmetered local calling.
  • Bad VoIP Many who drop tradition landline phone services run into problems. There are great VoIP services and there are awful ones. Some sold by ISPs are disappointing, many third-party VoIP products are worse. Geeks might not struggle to sort the wheat from the chaff but for everyday users it can be daunting.
  • Business needs. Mobiles are great and do most things. Likewise VoIP services over a broadband connection. Yet you might have good reason to hang on to your existing PBX, Centrex or other technology. At least for now. If what you have works and you’re happy with costs, don’t feel pressured to move. There’s plenty of time. The government has yet to announced a date to close the copper network.

copper

Portugal Telecom says it will start closing copper switches next year. By 2020 the nation’s copper network will be history.

The telco says being fibre-only will help it sell services in a competitive telecommunications market.

Analyst Benoit Felten notes removing copper means Portugal Telecom will no longer have the cost overheads of running two networks in parallel.

Copper: In New Zealand it’s complicated

Removing copper is more complicated in New Zealand. Even so it is still a good idea.

It will lower costs and simplify the telecommunications market. Pulling out copper will reduce regulatory tensions. It will take the political heat out of the market and force service providers to focus on future technologies. It will spur further innovation.

A decision is overdue.

There are barriers:

Regional New Zealand needs copper for years to come

The first stage of New Zealand’s nationwide urban UFB fibre roll-out finishes in 2020. It will reach the 75 percent of the population living in cities and larger towns. Stage two will take the total to around 80 percent of New Zealanders.

Some customers not covered by UFB will be able to get fixed wireless broadband from the Rural Broadband Initiative. Vodafone is building new RBI towers outside of the main population areas. Most are now built. More towers are on the way. The RBI can be extended.

At first RBI customers found performance unsatisfactory. That was when the fixed wireless broadband service used 3G cellular technology.

With 4G cellular, rural users are getting fibre-like speeds. I spoke to one farmer buying fixed wireless from Spark who had 80 Mbps. That’s good by any standard.

Fixed wireless is now possible on other cellular towers. It is also available in cities thanks to Skinny Broadband. Other fixed wireless services will start soon. Expect competition. There are also specialist providers servicing rural markets with other innovative wireless products.

There may be further UFB and RBI extensions later. For now around 10 percent of the nation falls into the gap between the two programmes. All things being equal, copper could serve these customers well into next decade. Their copper lines will have to remain intact for now. But swapping them out is possible.

Chorus owns the copper network

Chorus still owns the nationwide copper network. That’s not a problem in the areas where Chorus also owns the new UFB fibre network. In those areas Chorus has a clear financial incentive to move customers to fibre.

In places where other fibre companies — that’s Northpower, UFF and Enable — operate, the Chorus copper network competes with fibre. It remains a lucrative source of revenue for the company.

Over time that revenue will drop as users switch, but for now it is important.

Should the government decides to close the copper network in these areas, Chorus may have a case for compensation. That could lead to drawn-out negotiations or even litigation.

Either way, it is a problem that needs solving before closing the copper network.

Dramatic change in the cost of supporting copper lines

The cost of maintaining the copper network is averaged across urban and rural areas. It’s not a huge figure, nor is it negligable.

On the whole, maintaining copper networks is cheaper in towns than in rural areas. As more and more inexpensive-to-support urban customers drop off the copper net, the maintenance cost of each remaining copper line will rise.

If this doesn’t make sense. Think of what happens when there is one last copper customer in a street or on a cabinet loop.

As some point, supporting the remaining copper customers will be prohibitive.

Opportunities in closing copper network early

On the positive side, this last barrier is also an opportunity. It gives government and the telecommunications industry an incentive to modernise connections for those users left in the gap between UFB and RBI.

Number crunchers can revisit their models and provide details. My guess is that with the way cellular technology is evolving, wireless broadband services providers will soon offer most users in that gap a superior, cost-effective alternative to copper.

By the time any change comes we’ll be looking at 5G mobile. This promises gigabit wireless connection speeds and thousands of simultaeous connections. It means users will have fast broadband links that are cheaper to install than fibre and cheaper to maintain than copper.

The attraction of providing those customers with 5G broadband will be so tempting, carriers will want to invest in towers serving any sizable community. It would help if regulators could ease the burden by allowing or even regulating for shared access to cellular towers in the same way this already works with the RBI.

Sooner or later all the users in the gap between UFB and RBI will come into the fast broadband, post-copper fold. Ten years would be a pessimistic deadline. Setting a date to drop copper networks in the cities will bring that day forward.

In his post, Felten mentions unbundled copper exchanges where ISPs have DSLAMs. This also applies in New Zealand, but by the time copper is removed from our cities those unbundled ISPs will have recovered the cost of any investment and, in theory, at least, will have moved most of their business to fibre.

One network good, two networks not so good

Putting an end date on the copper network will focus minds on what’s needed to make this work best for everyone. It will also give telecommunications investors something they often ask for: certainty.

Knowing, say, ten years out, Chorus will rip out copper in a suburb or town will help everyone plan. It’s inevitable anyway, so let’s admit that now and move on.

If the government had moved sooner to name a copper shutdown date, it could have avoided much of the fuss over the so-called copper tax.

Asking telcos and consumers to pay a dollar or two over the odds (from their point of view) for access doesn’t sound so bad when everyone knows it is for a limited time only.

Until government names the copper shut-down date, there will always be market tensions. The regulatory framework will look muddled and investors will face higher than necessary risks.

It’s time to get on with the job. Set a date to pull out the copper.