The Commerce Commission says retail telecoms service will be one of its priorities for the next year.

While the telecommunications industry gets more than its fair share of political and regulatory scrutiny, there is unfinished business.

The Commerce Commission’s timing makes sense. The first phase of the UFB fibre build finishes over the next 12 months.

Soon after that, the pre-5G mobile jockeying will start in earnest. Spark is already making noises about moving to 5G.

In a media statement, the commission says it has “been working to improve its understanding of the retail telco issues faced by consumers”.

Service quality

This year the commission says it intends to monitor areas of service quality including billing, contract terms, marketing and switching between service providers.

The media statement says:

“We also expect to implement new consumer provisions from amendments to the Telecommunications Act, including industry codes to address issues of retail service quality.”

This is in addition to work the Commerce Commission is already doing on the implications of competition and regulation in mobile and fixed line services.

Are we being served

Service quality is something of a black hole in the telecommunications sector.

Improved service quality was one of the objectives of the 2009 reforms. It was just as big an issue then.

At the time Telecom NZ divided into what is now Spark and Chorus.

The planners thought telcos would compete on service quality after the industry separated into wholesale and retail layers. Instead they raced to the bottom on price.

Few if any telco’s offer a high service quality option today. Consumers are free to choose between various levels of indifferent service. They range from near-hostile to grudging customer support.

Little or no service

This has lead to a curious state of affairs.

Telcos offering less formal customer service rank higher in consumer preference surveys.

Spark’s low-cost Skinny brand often rates as delivering better service.

Skinny doesn’t have a traditional call centre. Instead it handles everything online.

Not offering much customer service, means Skinny customers don’t expect much. Their illusions are never shattered.

Of course Skinny targets a particular demographic: mainly young tech-savvy people looking for a bargain.

It’s a market that prefers not to use call centres. Moreover, younger New Zealanders have no recollection of a time when support seemed better.

Agile to the rescue?

Spark is moving to a new Agile way of working. Liam Dann has a great feature on Spark’s Agile project in The New Zealand Herald.).

Agile was originally a manifesto for software developers. One of Agile’s ideas is a focus on satisfying customers.

In the case of software developers, customer usually means whoever pays the bill. It can be an external client. It can also be another division of the same organisation. Consumers are rarely customers in this sense.

It isn’t clear if Spark version of Agile means satisfying consumers. Some of the rhetoric to leak suggests it is. If so, it’ll be interesting to see how this works. It’ll also be interesting to see if it satisfies the Commerce Commission.

Other service issues

The Commerce Commission is also looking at contract terms, marketing and switching.

Switching between providers is now easy. At least in theory. Number portability makes it simple for mobile customers. For fibre customers, switching involves little more than a click of a mouse button on a dashboard.

However, telcos like to tie customers into long contracts. This makes switching harder. In their language this is called customer churn.

Some telcos, Trustpower is an example, offer televisions or fridges to people signing longer terms.

Others, offer the lure of a low starting price for a few months. The small print says customers then pay more for the remainder of, say, a 24 month term.

These deals can end up more expensive that no-contract subscriptions.

Break clause

While most contracts are legal, they’re heavily weighted in favour of the telco. Some have expensive break clauses.

It can be hard to find a service from a name brand that doesn’t come with contract strings attached. This often means angst when customer circumstances change.

Many of the problems with marketing are linked to contracts. It’s rare for many months to pass without another telco pushing the boundaries of responsible marketing.

Both contracts and dodgy marketing remain regular issues for Telecommunications Dispute Resolution. There’s a clear need to beef up protections in these areas. The Commerce Commission is right to worry about them.

Vodafone says it will offer fixed wireless broadband to customers who are ‘frustrated’ waiting for a fibre connection. Customers signing for 12 months of the Vodafone Ultimate Home Fibre plan get an Ultra Hub Plus modem as part of the deal. In a media release, Vodafone says this will give them a “mobile broadband connection over Vodafone’s 4G/3G mobile network while they wait for their fibre broadband to be installed.”

The release quotes the outgoing Vodafone consumer director Matt Williams. He talks about “significant installation delays“.

According to Chorus, the average wait for a fibre connection is now 13 days. Enable says it generally connects customers in stand-alone buildings in under two weeks. These numbers do not sound like “significant installation delays”.

Installations can drag on longer for people in apartment blocks and more complex housing. So it is possible Vodafone’s wireless broadband offer will help in these cases.

Wireless broadband is a backward step

Most people who order a Vodafone Ultimate Home Fibre will either be on copper or Vodafone’s FibreX. Many will already have broadband speeds far faster than they could get from a 4G/3G fixed wireless network.

Broadband Compare reports Vodafone Home Basic 4G has a 36 Mbps download speed. It uploads at 10 Mbps.

Yet, the press release announcing the Vodafone Ultra Hub Plus modem deal promises less than that:

Maximum speeds will apply while the customer is connected to the mobile network through their Vodafone Ultra Hub Plus (up to 12 Mbps Download / up to 6 Mbps Upload).

Vodafone’s own Everyday Home VDSL plan has a Broadband Compare listed speed of 50 Mbps down and 10 Mbps Up. The company’s Smart Connect FibreX plan runs at 200 Mbps down and 20 Mbps up. Even Vodafone’s ADSL plan is 10 Mbps down and 1 Mbps up.

These speeds are only estimates. I have a Spark VDSL connection that runs at around 70 Mbps down and close to 20 Mbps up. There is a range of speeds, but the Broadband Compare figures are realistic averages. We can take them as a guide.

Life in the slow lane

Many Vodafone customers waiting for fibre will get slower broadband if they opt for Ultra Hub Plus.

That’s not all. The 36 Mbps speed is what you should get with a 4G connection. As Vodafone’s own marketing makes clear, some users will be on a 3G connection. Vodafone’s press release announcing the Ultra Hub Plus modem deal says (my emphasis):

The Vodafone Ultra Hub Plus 4G/3G connect and mobile backup are only available in 4G/3G coverage areas with sufficient capacity. 4G/3G not available everywhere.

The small print also says:

Traffic management and fair use policy applies.

In other words Vodafone can cut you off if you use it a lot. The copper plans mentioned above all have unlimited data options. So customers used to unlimited data might find this aspect frustrating.

Vodafone’s Ultra Hub Plus modem wireless broadband deal is not much of a drawcard at all.

Disconnection

Williams is on more solid ground when he says: “…others say they are putting off a move to fibre because they simply don’t want to be disconnected while they wait”.

It’s not as connection cuts anyone off for long. Most fibre installs only take a few hours. And if they are Vodafone customers then there’s a good chance they’ll have mobile phones. It’s not hard to get internet access on a modern mobile phone.

If that’s not enough, then, at a pinch, they can tether. That way phoned connect laptops or desktop computers for an hour of two while a connection goes in.

Another part of the press release says:

In addition to enabling customers to be connected while they wait for fibre installation, the Ultra Hub Plus modem will also provide a mobile backup connection allowing customers to stay connected in the event a fault affects their fibre service.  Once the fault is repaired, the modem will automatically switch back to fibre, which ensures customers are always connected.

This is a good idea. Automatic failover is a good way of handling problems. Although fibre networks are more reliable than copper or fixed wireless broadband. Back-up is a nice-to-have. It would be wonderful for people who can only get a copper connection. Most people on the fibre network will never use it.

Imagine if at 9pm one Thursday evening there was a sudden 20 percent surge in demand on the electricity network. At the very least there would be a few households reaching for candles and electric torches.

Yet that’s exactly what happened to the national internet network last week when a software update to Fortnite, the popular computer fighting game, landed.

The network company Chorus saw a 20 percent spike in traffic yet nothing untoward happened. There were no reported outages. If anyone noticed their fixed-line connection slowing, it wasn’t serious enough to be public news.

Robust, resilient, reliable

Our internet network took the surge in its stride. That’s a measure of how far we have come. It’s robust, resilient, reliable: all the R-words.

And if you don’t think this is a big deal, take a look across the Tasman where Optus efforts to stream the 2018 World Cup strained telecommunications infrastructure.

Chorus has become used to seeing spikes. Every month or so it reports a new, higher peak as network traffic continues to rise. From the consumer point of view this has all happened in the background with no obvious side-effects.

The normal pattern on the network is for data traffic to hit a peak at around 9pm when the number of people streaming TV content reaches a daily maximum.

Fortnite cover

Last Thursday the Fortnite version five patch became available at about 8pm. This is just as the daily streaming traffic rises towards its crescendo. At the 9pm peak data traffic was 20 percent higher than normal.

Fortnite on fibre

Chorus says the amount of extra traffic at that time means as many as 30,000 New Zealander gamers were downloading the Fortnite patch at the same time.

As anyone who experience mobile network downloads of, say, an iOS software update for the Apple iPhone earlier this decade will remember, big software updates can clog networks. And yet that didn’t happen.

Network strategy manager Kurt Rodgers says Chorus has never seen a spike like that before. He says Fortnite is a great example of how fibre internet can support gamers.

There needs to be considerable headroom for any network to be able to take a 20 percent spike without blinking.

Disclosure: Chorus didn’t pay me or ask me to write this story. While I am paid to edit the company’s magazine I’d have written this story the same way regardless.

Clare Curran says: “We have to do more than better connectivity”. The minister for broadcasting, communications and digital media was speaking about the digital divide at last month’s Tuanz Rural Connectivity Symposium in Wellington.

https://twitter.com/clarecurranmp/status/1011468050825007104

Curran names ‘closing the digital divide by 2020‘ as one of her two big goals. The other is for technology to be the second biggest contributor to GDP by 2025.

Both are fine goals. Neither will be easy.

Digital divide

There are at least two types of digital divide. The first is geographic. To use Curran’s words, that issue is one of better connectivity. People in rural areas don’t have the same easy access to communications networks as people who live in towns.

Blame economics. The cost of getting fibre to a city dweller is lower than the cost of connecting someone living in a remote area.

Both types of customer pay the same price for a connection if they are on the regulated UFB fibre network. This means people living in easy-to-connect areas subsidise those elsewhere. Almost no-one complains about this subsidy. It’s a step towards bridging the digital divide.

And anyway, a flat rate simplifies billing for service providers. Billing is expensive, so simple bills help keep costs down.

Clare Curran at Tuanz rural connectivity symposium - digital divide

Drawing the dividing line

By the time the UFB project completes, 87 percent of the population will be able to connect to fibre. while the other 13 percent are more at risk of being the wrong side of the digital divide, they won’t all have second rate connections.

While the 87 percent cut-off point seems arbitrary, it is a reasonable place to draw a line. At least for now. Beyond that number each extra fibre connection gets more expensive to build.

Theory says that some point fibre isn’t economic. It’s not clear where that point is. When our ancestors built the copper phone network they managed to cover 99 percent of the population. We weren’t richer in those days, if anything the job was harder. So the choice about where to draw the line is as much about social priorities and politics as economics.

Beyond 87 percent

One day we may stretch the network further than 87 percent. There are already plans for still more fibre. Getting to 90 percent coverage wouldn’t be economic unreasonable. Getting to 100 percent would be.

As things stand there are more cost-effective ways of reaching the most remote 13 percent. Most involve wireless. That’s the approach favoured by the government subsidised Rural Broadband Initiative.

The problem is that wireless technologies are not as good as fibre. They offer slower speeds, are contested and they not as reliable. They are, in theory at least, cheaper. It costs less to beam radio waves across paddocks than to build fibre lines over them.

Contested

Contested means that users on a wireless network share bandwidth. If a lot of people are online at the same time everyone’s speed can drop. In contrast UFB fibre is uncontested. Contracts between fibre companies and the government guarantee performance.

Another problem with wireless is there is less network capacity. To get around this service providers impose data caps on users. Most fibre connections have uncapped plans. Wireless users get a set amount of data each month.

Although some fixed wireless data plans are generous, life is not carefree when you have to limit, say, your television viewing towards the end of the month to be sure of having enough data left for other uses.

Rugby World Cup

These issues could come to the fore during next year’s Rugby World Cup. Spark and TVNZ won the broadcast rights. Spark intends to stream games, the technology is like Netflix. We love the game nationwide, but Rugby’s heartland is rural New Zealand. Will fixed wireless networks cope when every connection on a tower is streaming high-definition television? Spark doesn’t say so in public, but some insiders have voiced fears about how this might go.

Wireless plans often cost as much as fibre plans. They offer less. Not a lot less. Yet on a like-for like basis they are more expensive than fibre plans. The extra cost may be an annoyance, but it doesn’t put a customer on the wrong side of the digital divide.

There’s a handy proof for this. Spark offers fixed wireless to customers everywhere on its network: rural and urban. Thousands of city dwellers have chosen fixed wireless.

If fixed wireless was dreadful you’d hear more about it. There would be a lot of angry people. Sure, there are some unhappy fixed wireless broadband customers. Yet citizens aren’t marching on Spark’s headquarters with pitchforks and burning torches. For many people it’s not bad.

Fixed wireless broadband may be inferior to fibre, but people who have it are on the right side of the digital divide.

Not there yet

It isn’t quite that simple. There’s a limit to the number of connections a wireless tower can accommodate. This means its possible there are some rural users who can’t get a connection because their local tower is full. Carriers can add capacity, but it may not happen immediately. A handful of people may miss out.

A bigger issue is that fixed wireless broadband doesn’t reach all the last 13 percent of the population. Not yet. The exact number is hard to gauge. At the Rural Connectivity Symposium, someone said there could be as many as 100,000 homes still out of reach of RBI. That’s about 5 percent of total connections. I’m afraid I didn’t make a note of who said this.

Moving goal posts

There’s another aspect to this. A decade ago when the Rural Broadband Initiative was being set up, the aim was 5Mbps. That’s enough for web surfing, email and movie downloads. Today’s acceptable broadband threshold is the 30 to 40Mbps needed to stream HD video. RBI towers can and do deliver these speeds. Wireless internet services providers do a terrific job getting connectivity to remote places.

Today’s rural network performance is way past the 2009 test of acceptable broadband. Also, thanks to the wisps, today’s broadband network reaches further into valleys and outlying areas than the 2009 RBI architects expected.

Yet the question mark hanging over the Rugby World Cup tells us there is still a rural-urban divide. Today the bar isn’t 5Mbps or even 40Mbps. It’s “is there enough broadband for people in rural New Zealand to enjoy the Rugby World Cup on an HD screen?”

And that’s the rub. The urban-rural digital divide is a moving target. Some rural New Zealanders will always feel they have second-rate broadband right up until the fibre network reaches them. Whether that’s reasonable or economic is a political matter, not one for the industry. Are we as a country willing to spend what it takes to get fibre as far as we managed to spread those copper lines?

Slingshot gigabit fibre broadband

 

Slingshot has dropped the price of its fastest unlimited data fibre broadband plan to a shade under $100. The Gigantic gigabit fibre plan is $99.95 a month. Slingshot says it is available in most towns and cities where there is fibre.

It is an aggressive price move from Slingshot. The company has thrown down the gauntlet to larger service providers who already complain about margins. Offering the cheapest option is vital in a market like New Zealand where consumers tend to buy on price more than any other criteria.

Spark charges $40 more for a service with similar characteristics although it does offer streaming TV and wi-fi hotspots as added incentives. The company’s no-frills BigPipe brand charges $130 for a naked, unlimited gigabit plan. Vodafone’s comparable plan is $110. 2degrees charges $115 for a similar product.

A gigabit by any other name would smell as sweet

The Gigantic plan includes gigabit fibre. While the term is in common use elsewhere in the world. New Zealand’s Commerce Commission rules don’t allow ISPs to describe plans as gigabit fibre.

That’s because there are network overheads so the available speeds to customers are less than the full 1000 mbps. In most cases customers get around 800 to 950 mbps. The company’s announcement is more cautious, it warns customers may only see speeds in the 700 to 900 mbps range.

Either way, it is still by far the fastest option and the best choice for heavy media users or homes with many devices. Whatever you call them, these plans mean there is never a case of not having enough broadband at home.

Slingshot General Manager Taryn Hamilton says the extra speed: “Makes a huge difference to the quality of the online experience”. He says the price cut is designed to stimulate greater take up of the faster plans.

Gigabit plans are still relatively new. Only a small number of users choose them, in part that’s because they normally come at a premium price. However, that’s changing fast. By dropping the price under $100, Slingshot has reduced the gap with the more popular 100 mbps plans. This means customers can upgrade to the best experience for a small extra amount each month.