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Auckland's first fibre
Steven Joyce installing Auckland’s first UFB cable – Albany – 24 August 2011

Australia’s politicians continue wrangling over that country’s FTTP (fibre-to-the-premises) project. Meanwhile New Zealand’s is progressing. Yet New Zealand’s low fibre uptake could yet inform Australia’s FTTP debate.

Figures released yesterday by communications minister Amy Adams show 134,000 homes and businesses can now connect to the UFB network. Building is taking place in 24 of the 33 towns and cities that will be on the government’s network.

Meanwhile 89,000 rural homes and businesses can connect to the Rural Broadband Initiative through fixed wireless connections. A further 36,000 rural users can now use fixed-line services.

To date only 3800 customers have signed for UFB fibre services. That’s a low take-up rate – less than three percent.

The priority at this stage is to sign businesses, schools and medical facilities. Yet the fibre companies started their residential build in areas where they expected the highest uptake.

GIven that fibre is no more expensive than existing copper broadband, this suggests there could be problems persuading consumers to switch.

There are two reasons why more haven’t moved. First, the big ISPs, who account for the overwhelming majority of the market, have yet to begin selling fibre services. That’s likely to happen in the coming months – having more people on the UFB will give them more incentive to move into the fibre market.

Second, the government and the people boosting fibre have done a poor job selling its advantages to consumers. Instead of telling people fibre is fast and reliable, they focus on ridiculous and, to most people, irrelevant, high-end applications. Telecom and Vodafone are likely to do a far better sales job than the government.

Telecom NZ temporarily cancelled 60,000 Yahoo Xtra email passwords at the weekend. The move follows ten days of spam messages swamping New Zealand in-boxes.

The biggest email outage New Zealand has seen.

Yahoo is the problem. Not just for the sloppy security which meant the Yahoo Mail site has a cross-site scripting vulnerability.

That’s bad enough. But Yahoo lied about the fault. Then it hid the vulnerability’s seriousness both from partners like Telecom NZ and from end-users.

Yahoo repeated claimed to have fixed the problem. It hadn’t.

The company simply cannot be trusted. That leaves us with no alternative: dump everything Yahoo.

That means you and I should have nothing to do with Yahoo. It also means Telecom NZ needs to pull the plug. Telecom’s lawyers should already be pouring over any contracts. Telecom NZ needs a transition process for customers locked into to Yahoo Xtra mail accounts to disengage, the sooner that gets started the better.  

Telecom NZ’s Chris Quin says the company could walk away from the outsourcing deal which sees Yahoo look after xtra.co.nz  mail accounts.

That’s a possible response to the latest security breach at Yahoo. The Internet company seems unable or unwilling to deal with the problem.

It is hard to see what value Yahoo gives Telecom NZ in 2013.

When Telecom NZ outsourced its mail service to Yahoo in 2007. It needed a way to manage the 800,000 or so Xtra mail accounts.

In those days ISP customers expected to get email accounts as part of their Internet services. Today’s ISPs sell data pipes with a little support and little else.

Many Xtra customers already have webmail accounts with services like Gmail and Outlook.com.

A YahooXtra account is almost unnecessary.

Almost unnecessary because there are two reasons Telecom can’t immediately dump them altogether.

First, history – what technology people might call ‘legacy issues’. Some of my email still comes via Xtra even though it is routed through Gmail. Figuring out which contacts have my old address and getting them to update my details isn’t straightforward.

Second, webmail addresses are second-class citizens online. Some services don’t allow customers to sign up with Gmail, Hotmail or Outlook.com addresses. Not every Telecom NZ customer wants to buy their own domain for a mail address, so keeping the Xtra domain as an option would be a good move.

Telecom NZ can walk customers through the process of setting up webmail accounts on alternative services – not a difficult job. Google and Microsoft would be only too happy to help sign up new business.

Vittore Carpaccio - The Ordination of St Stephen as DeaconA year ago I moved my site from a local New Zealand host back to the WordPress mothership. The goal was to make life simpler. That worked: at least for now.

The move wasn’t technically difficult, there are things to watch:

  1. Permalinks. These are not customisable with wp.com. You’re stuck with the WordPress format. I’ve no idea if this is good or bad for search engine optimisation. I don’t care.
  2. If you worry about search, the trick is to switch format a couple of weeks before making the move, otherwise Google gets confused. I started on this path, but the rest of my preparations went so quickly the new format was only in place about five days before the switch.

A year later Google Webmaster Tools tells me traffic is still looking for those old format links. The lesson here is if you think you may switch to WordPress’s host in the future, start using the permalink format now.

  1. I moved the domain name. There was no control over the time this happened, it happened at 11pm so I was effectively offline for about nine hours – this may not bother you. I don’t know how many people saw a dead site, in those days it would have been around 100 visitors. Any damage is fixed now. Another time I’d need to rethink how I’d do this.
  2. I paid extra for WordPress.Com’s custom design and used my own twenty ten child template. It didn’t look great, so I had to switch to a new template – this was the trickiest part of the process and I still don’t have it perfect. A year later I’ve shut all the custom stuff down and have a stock WordPress theme. Dammit, this is THE stock theme. People come to my site for words – I can use pictures to make it look better.
  3. Originally there was zero flexibility over the iPad and smartphone templates – this was almost a deal breaker for me. A year on and the problems are largely solved thanks to a responsive theme.
  4. There are a few minor irritations. Mainly lack of design flexibility. I wanted a simpler life, so I’ll just have to put up with them.
  5. On the plus side, the .com site is seven times faster than my hosted site, requires almost zero maintenance, has barely gone offline in a year, gets more accidental traffic and is free. The downside is I’m less in touch with WordPress coding – something I think journalists ought to get used to. To get around this I’ve built a couple of other sites.

Auckland's first fibre
Steven Joyce installing Auckland’s first UFB cable – Albany – 24 August 2011

At first sight Chorus’ submission to the Commerce Commission on the price the company can charge ISPs to deliver broadband over the copper network is business as usual.

While the regulator wants to cut copper access prices, Chorus argues against the move saying it could wipe up to $160 million from its annual profit.

Fair enough, the government did a deal with Telecom to spin-off the Chorus network division. It is only natural for the new businesses’ managers and shareholders to fight to protect their investment.

Chorus’ submission to the Commerce Commission goes on to argue cutting the price ISPs pay to use the copper broadband network undermines the UFB fibre network. Chorus is one of the companies building that network with the help of a soft government loan.

Delaying tactic?

Chorus has also requested a full review of the costs of delivering copper broadband. If nothing else  this will delay any ruling to cut prices.

And that’s where things get difficult for the government and Chorus.

If the price of copper broadband falls, it becomes more attractive to customers. In other words: more attractive than the UFB fibre network Chorus is helping to build.

Things get complicated because the roughly $1 billion dollars interest free loan the government is giving Chorus isn’t anything like enough to finance its share of the project. When the project was designed, there was a mechanism to plough back money from the built parts of the fibre network to finance the later part of the project.

Optimistic forecasts

Now we get to the hard part. The early forecasts of how many customers would buy fibre services were ridiculously optimistic. Numbers were quoted that are higher than in other countries with similar projects – planners fell into the “New Zealand will be different” trap. The government hoped to see 45% uptake. Its contract with Chorus is for a minimum of 20%. There’s now a question mark over that figure. Cheaper copper broadband isn’t going to help.

And that planning was done well before mobile data took off. Indeed, it didn’t take improvements in copper delivered broadband performance.

Prime Minister John Key has already talked of further government intervention – most likely a policy change to stop the Commerce Commission from regulating lower copper prices. An alternative would be to throw more government money at the project: that’s tax dollars.

A billion here… a billion there, soon you’re talking real money

The cost is peanuts compared to the money the government spends on roads. And there’s always a possibility Chorus will collapse. The current government is unlikely to let that happen under its watch. Yet it could be out of power by the time things reach crisis point.

Many taxpayers will be unhappy about subsidising shareholders who knew they were taking on a risk. Others will be just as unhappy if the government allows the pension fund and Kiwisaver money locked up in Chorus to wither. Yet more could be annoyed if the project changes so that they are forced to pay more for copper broadband while watching their neighbours enjoy the benefits of fast fibre broadband – especially if the project timetable drags out.

Shadow of Australia’s NBN?

Whatever happens next, the UFB project could yet become a political nightmare for the government. You only have to look across the Tasman at Australian to see how that could play out. Among other things, we could see electorate politicians looking at the UFB construction maps and deciding which areas get built next.

Labour communications spokesperson Clare Curran wasted no time blasting the government earlier today. She said: “Chorus’s deliberate delay tactics with the Commerce Commission are a blow to Kiwi consumers and must be condemned by the government”.

Curran accused the government of playing favourites with Chorus. That’s possible. Or perhaps Chorus has the government by the balls on this. And as Reg Hammond writes at InternetNZ there’s also the matter of dealing with the companies who didn’t win UFB contracts because their price was too high. Where will all this leave them?