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Download 2.0 – Enable move sees Christchurch join 300mbps party

Enable Christchurch

More New Zealanders will get a fast fibre upgrade as Enable joins Chorus in moving base speeds to 300mbps. 

Christchurch users to get fibre speed bump

Enable, the fibre company serving Christchurch, is following Chorus and upgrading customers to 300mbps. The company says the upgrades could start on December 1 although that depends on retail service providers.

The upgrade could affect up to 90,000 homes in the Enable fibre area. That’s the number that are currently on 100 or 200mbps plans.

Customers on upgraded plans will be able to upload data at 100mbps.

Enable Chief Executive, Johnathan Eele says his company’s customers use around 500GB of data each month. That’s a rise of 33 percent from a year ago.

In August Chorus announced it would replace 100mbps lines with 300mbps lines at no additional cost to customers. The company is still working through the process with retail service providers but expects some upgrades to happen before Christmas.

The move will help shore-up fibre’s competitive position against fixed wireless broadband and low earth orbit satellite services in areas where the technologies compete.

Fewer telco complaints in early 2021

A report from the Telecommunications Dispute Resolution service says it received fewer customer complaints and enquiries in the first half of 2021 compared with a year earlier.

The number of complaints was down 24 percent to 935. Almost all these cases (98 percent) were resolved or closed directly after initial assistance from the TDR. The remainder either went to facilitation and mediation or required the organisation to make a decision.

Pace, sophistication of cyber attacks increasing

The National Cyber Security Centre’s annual Cyber Threat Report says the number of serious online attacks continues to grow. At the same time the NCSC reports the attacks are growing in frequency and sophistication.

It says there were 404 incidents affecting nationally significant organisations in the last year. That’s a 15 percent increase year-on-year.

NCSC points out its focus is on New Zealand’s larger organisations. This means its numbers represent a small fraction of the total number of incidents.

The growth is in line with overseas trends.

NCSC Director Lisa Fong says: “It is becoming increasingly difficult to distinguish between state and criminal actors, particularly in cases where we are able to intervene early, but also because the line between state and criminal is becoming increasingly indistinct.

“State actors sometimes work alongside or provide havens for criminal groups, and we are increasingly seeing criminal groups now using capabilities once only used by sophisticated state actors.”

Worldwide cloud revenue surging thanks to pandemic

Gartner reports worldwide cloud revenue will reach US$474 billion in 2022 up from $408 billion this year.

The company says the Covid pandemic and booming digital services put the cloud at the centre of digital experiences.

Milind Govekar, a Gartner vice-president says:“The adoption and interest in public cloud continues unabated as organisations pursue a cloud first policy for onboarding new workloads.

“Cloud has enabled new digital experiences such as mobile payment systems where banks have invested in startups, energy companies using cloud to improve their customers’ retail experiences or car companies launching new personalisation services for customer’s safety and infotainment.”

UFB uptake hits two-thirds milestone

In its latest quarterly broadband update Crown Infrastructure Partners reports UFB uptake is now 66 percent. The fibre network now covers 327 towns and cities. The average speed of UFB services is now 277mbps.

CIP says the UFB programme is now 98 percent complete with 85 percent of New Zealanders now able to connect to fibre.

In other news

The Commerce Commission has given Eroad’s acquisition of Coretex the green light. Both companies sell software for fleet managers to know more about vehicles and meet statutory requirements.

A Reseller News story from Rob O’Neill says the partnership between Spark and Auckland based managed services company IT360 has helped the smaller company extend its reach beyond the North Shore and Waitakere areas.

Catalyst Cloud has appointed Doug Dixon as its new CEO. Dixon joins Catalyst Cloud from the ANZ where he was practice lead for services and integration. He has previously worked in technology roles for Kordia and ACC.


 

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NZ broadband faces competitive reset

Low Earth orbit satellites, 5G and a fibre speed bump are set to reboot broadband competition.

It’s a decade since the first customers connected to Ultrafast broadband. At that time fibre looked the likely Kiwi broadband future.

Fibre dominates today. Yet it is not the only option.

Mobile phone companies offer fixed wireless products that compete on price with fibre.

As 5G rolls out and more spectrum becomes available, it will close on fibre performance.

Meanwhile LEOs now beam satellite broadband into homes from above the clouds.

Intense rivalry

The rivalry between service providers is intense. That means customers get a great deal. None of the broadband options are expensive. Even the ritziest products are cheap compared to the prices we paid a generation ago.

This has implications for the industry. As Vodafone CEO Jason Paris told me a couple of years ago, the industry has competed away all its margins.

Mobile companies like Vodafone have a ready made response. They can deliver fixed wireless broadband using their mobile networks.

They have more control over prices and margins that way. There’s no wholesale payment.

Technologies compete

Competition between fibre and fixed wireless is as intense as service provider competition.

Chorus, a fibre company responded in two ways. Enable, Northpower and UFF have the option to do the same.

High end customers can buy 4Gbps or 8Gbps Hyperfibre connections.

These are speeds that no other technology can offer for now. Fixed wireless speed depends on spectrum availability and there isn’t enough for gigabit speeds today.

Chorus doesn’t expect many customers to buy Hyperfibre. Its importance is more symbolic. Hyperfibre tells the market there is plenty of headroom. If you like, this works in the same way as Mercedes, Alfa Romeo and Ferrari’s investment in Formula One racing sells motor cars1.

Speed bump

By the end of the year Chorus wholesale customers will be able to upgrade 100mbps fibre lines to 300mbps at no extra cost.

It’s a pincer movement on fixed wireless from two ends of the market. In effect the message is: “You want high performance? You need Hyperfibre. You want better performance than fixed wireless can offer at roughly the same price? We have that too.”

Chorus’ offer is to all its retail service providers. It is not allowed to play favourites. Chorus has to offer everything to everyone, even if they choose not to take it.

It will be interesting to see if Vodafone, Spark and 2degrees take up the offer. If they don’t, they risk loosing customers to other ISPs. If they do, they risk customers churning from high margin fixed wireless to fibre.

It came from the sky

Meanwhile fixed wireless broadband faces a challenge from the skies. Low Earth orbit satellite broadband costs about twice the price of fixed wireless. It appears to offer better performance.

That doesn’t tell the whole story. Many fixed wireless customers get great speeds. Rural customers who live further from towers, often don’t. For them satellite is a bargain.

LEO satellite broadband is in its infancy. Performance will improve and, likely, prices will drop over time.

Fibre speed bumps and LEOs threaten fixed wireless. It has a get out of jail card. 5G promises to boost performance and reliability while reducing operator costs.

Competition will put pressure on prices. Price has always been where telcos go first.

Yet there is less room for sharpening the pencil than in the past. And that’s where this gets exciting. For broadband players to get ahead, they will need to come up with fresh ideas and innovations.


  1. We’re going to need a new metaphor as we move beyond the internal combustion engine era. ↩︎

Covid-19 shows UFB a wise investment

New Zealand’s broadband has performed well during the Covid–19 lockdown.

Our networks have been pushed well beyond expectation. For the most part, they have not been found wanting.

That’s the good news. The bad news is that too many New Zealanders are still on the wrong side of the digital divide.

Digital divides

Make that digital divides. There is more than one.

Not every household can manage the cost of a fast broadband connection or afford the devices needed to make it sing and dance.

That problem is structural, social and economic. It is beyond the remit of our telcos.

No-one can sensibly argue that New Zealand’s broadband is overpriced. It’s cheap by international standards. More so when you consider the size and distribution of our population.

Competitive

Broadband competition is so tight that telcos only make the flimsiest of margins each month. Some argue, with justification that the market is too competitive. There’s little room for them to sharpen the pencil.

One obvious fix for this is to ensure people have more money to spend on necessities like broadband. That’s not going to happen overnight the way things are now.

The other approach is to subside services for less well off customers. That’s largely down to politics.

Some great initiatives are in place to do this. We need to make sure they are taken up and, if they are not enough to meet needs, then ensure there is more money invested here.

Investment

Yes, invested is the right word. Homes with broadband have better access to education, but they also can access government services.

It is cheaper for government organisations to communicate digitally than to do so in person or by moving little packets of paper around the country.

Other households are on the wrong side of the digital divide simply because happen to be in the wrong place.

A link too far

They may be beyond the reach of fibre. If they have copper they could be too far from a cabinet for VDSL.

They may be in a RBI fixed wireless area but the local tower is full. They may be some distance from an RBI tower where performance is woeful.

We need to fix this and fix it fast. The clock is ticking. Children can’t leave their education for years. Working from home will remain important. Fast broadband is not a luxury, it is the digital equivalent of daily bread.

Fibre further

The fibre network needs to reach further into the bush.

Yes, it is expensive to connect remote homes to the network, the alternative is to accept second class citizens in our own country.

The only way to fix this is with government money. We paid for the original UFB network with a soft loan. To extend the network requires cash. It would take too long for a loan to pay back at current prices.1

Return on investment

The good news is that state investment in broadband pays a decent return.

If the idea of state control bothers you2, we don’t have to go down the Soviet route. There are plenty of opportunities to work hand in hand with local telecommunications entrepreneurs. This seems to be the preferred approach of New Zealand’s two main political parties.

There’s a point where the big telcos lose interest in extending broadband networks. That’s understandable. They are money-making businesses, not charities.

Wisps (wireless internet service providers) do a great job and they understand local needs and conditions. There should be more soft loans and subsidies to help them push broadband further up the remote valleys.

Good work

Hats off to all the service providers, not just the Wisps. They are a credit to the industry and to the nation. Spark, Chorus, Vodafone, Enable, Northpower and UFF have all reported on their performance. The smaller players may make less noise but their efforts are also appreciated.

In some cases the performance has been astounding.

On Friday Chorus reported the average fibre customer now gets through almost 500GB of data a month. The actual figure is 495GB. That’s up 30 percent of pre-lockdown consumption in February.

When you add in the customers on the copper network, the nationwide average drops to 406GB, an increase of 36 percent on pre-lockdown use. Clearly the old copper network is enjoying a new lease of life, even if in the long term it is on the way out.

It says the average speed on its network is also up to 150Mbps. That’s because more people have switched to higher speed fibre plans. Gigabit broadband is especially popular today and hyper fibre is on the way.

Fibre is king

At the time of writing around 80 percent of the country can connect to the fibre network. That will rise to 85 percent by the end of 2022.

The fibre uptake level before lockdown began was somewhere between 50 and 60 percent. So in very round numbers, almost half of New Zealand now has fibre.

All fibre companies report an increase in demand and there is a post lockdown level 4 backlog of orders to work through.

That’s huge vote of confidence for the decade-old UFB programme. It was originally started with around $1.5 billion of government money in the form of a soft loan3.

Late last year I interviewed Sir John Key and Steven Joyce who were the two ministers responsible for the original plan. Both said then that, in hindsight, the UFB was the best investment a government has made in recent times. That was before the pandemic. Today, that investment looks even better.


  1. Either that, or we accept that more remote fibre customers pay a premium to cover the higher cost of getting a service. This goes against the grain of the one-price-for-everyone approach of UFB, but it would speed things up. ↩︎
  2. There are people who would prefer a return to state-owned and operated telecommunications. That would require a political earthquake. If the Covid–19 pandemic doesn’t change this, there’s little prospect of it happening. ↩︎
  3. A small fraction was set aside for schools broadband, leaving about $1.35 billion for fibre. ↩︎

Fibre regulation: Commerce Commission looks past 2022

A Commerce Commission paper released this week reveals likely future fibre network regulation.

The paper is a blueprint for how the industry will work once the UFB roll-out completes in 2022.

There are no surprises.

It is a response to last year’s Telecommunications Act. The Act requires the commission to set up utility-style fibre network regulation.

Competitive market

Among other things the Act aims to make sure there’s a competitive market. That’s hard when fibre networks are monopolies. It also aims to stop fibre companies making excessive profits.

The proposed regulations treat Chorus much like an electricity lines company. It faces price-quality and information disclosure regulation. Chorus will get revenue caps and quality standards.

Enable Networks, Northpower and Ultrafast Fibre, will only be subject to information disclosure. At least at first. The Commerce Commission may impose the other rules on these companies later.

Telecommunications commissioner Dr Stephen Gale says the rules will affect the price consumers pay for fibre.

“We are keen to hear from consumer advocates on our current thinking around how we treat key issues such as the cost of capital and what is included in Chorus’ regulated asset base.”

There’s a good chance the telcos will challenge the asset base calculations.

Anchor service

As expected the Commission is sticking with 100/20Mbps as the anchor service. Fibre companies must provide this service. They can only charge the contract price plus an annual increase for inflation.

The fibre companies have already moved towards providing unbundled services. This is due to begin at the start of next year. For now, the Commission will not regulate unbundled fibre prices. It says it may revisit this later.

That now looks likely. Vodafone and Vocus say they are unhappy with Chorus’s proposed unbundled fibre price.

Fibre regulation includes quality

Broadband quality is also on the regulator’s agenda. The new rules say fibre companies must disclose performance information.

Gale says: “The quality dimensions are based on the stages of the fibre service life-cycle and include customer service, service availability and performance among others”.

The Commerce Commission expects to finalise the rules by June 2020.

There’s a summary of the paper at the Commerce Commission website.

Chorus hits half million fibre connection milestone

Chorus fibre broadband buildingChorus says it now has 500,000 Ultra-Fast Broadband connections on its network. The wholesale network company also announced plans to cut wholesale prices for the fastest connection speed.

Fibre demand has accelerated in recent months. It took Chorus five years to connect the first 100,000 fibre customers. The most recent 100,000 joined in six months.

In September, Crown Infrastructure Partners released numbers showing there were 605,000 connections nationwide for all Chorus, Northpower, UFF and Enable. That total would be higher today.

Connection speeds rising too

Customer connections are rising fast, so are their connection speeds. Chorus says customers are moving from entry-level plans to higher speeds. In order to speed the move up-market, Chorus will cut the wholesale price of gigabit fibre broadband connections for home users.

From the middle of 2019 the wholesale price for a home gigabit connection will fall from $65 to $60. Chorus promises a  futher drop to $56 in the middle of 2020. This will reduce the price gap between a standard 100mbps plan and a gigabit plan, making the latter a more attractive proposition for many customers.

While dropping the wholesale price sounds like good news for consumers, it is up to retail service providers to decide whether they pass some or all of the savings onto customers. Some may do this, others may use the cut to fatten their margins.

Strange times at Spark

Writing at Stuff Tom Pullar-Strecker reports that Spark described the price cut as a step in the right direction. The company went on to say something quite strange;

…the wholesale price of fibre-optic broadband remained “far too high” and the retail prices Spark charged didn’t “allow for anything like an acceptable margin”.

This is bizarre as Spark is free to decide on its margin. If it thinks margins are not acceptable, it is free to raise prices. Any constraint on pricing comes from market competition, not the wholesaler.

The unvoiced subtext here is that Spark is annoyed that the Commerce Commission regulates fibre pricing. This means they have no leverage to demand a sharper wholesale price than other service providers. By law Chorus and the other fibre companies must offer the same wholesale price to everyone.

Unwelcome competition

Given that Spark accounts for getting on for half the retail broadband market it might normally expect to get a lower wholesale price than smaller competitors. In effect, you can interpret Spark’s complaint as it doesn’t like facing its competition on a level playing field.

This is all the more odd, because some parts of Spark are hurtling towards the fibre era with gusto.

In the company’s media statement, Chorus CEO Kate McKenzie says fibre broadband demand has been rapidly increasing. She says: “…even more so now as more content moves online and New Zealanders prepare to live stream the Rugby World Cup and other sporting events in 2019. The irony here is that Spark is starting to dominate streaming sport. Presumably the margins on Spark are ‘acceptable’ for the company. But they wouldn’t be achievable without ubiquitous fibre.

Chorus hits half million fibre connection milestone was first posted at billbennett.co.nz.

Bill Bennett edits The Download magazine for Chorus. He also writes a weekly telecommunications newsletter. That doesn’t mean he wrote this post On Chorus’ behalf, nor does it necessarily reflects the company’s option, although it might. It’s all my own work, blame him if you don’t like it.