Last week engineers completed the first UFB stage. The so-called UFB1 fibre network reaches three quarters of the country.
UFB2 will stretch that to around 87 percent. We can take fibre further, but that needs taxpayer money. A lot of it.
When New Zealand built its copper telephone network, government saw it as a nation-building exercise. Copper phone wires reached almost everywhere.
The number you often see quoted is that it reached 99 percent of the country. It could have been one or two percent less. That’s not the point.
Copper went everywhere
What’s important is that it felt as if copper reached every part of New Zealand. Perception is important.
There’s no technical reason the fibre network couldn’t do the same. The arguments against running fibre everywhere are economic. A nationwide fibre network is expensive.
Yes, it was expensive laying copper to outlying settlements and buildings. We did that at a time when there was less money around.
We also did it at a time the telecommunications network was a government owned monopoly.
The copper network was built as a public service, not a profit making business. Laying copper to the nation’s furthest reaches and maintaining the network created good-paying jobs for workers in regional New Zealand. That would have been a consideration. We rarely hear that argument today.
In a sense it was still about getting the maximum return on the investment, but not in the way modern companies measure investments and returns. There was a social component.
How far can we go with fibre?
We’re not about to go back to a state-owned telecommunications monopoly1. But there is still a social component to network building. So how far can we go given today’s conditions?
The easy answer is somewhere between the 87 percent already earmarked and the 99 percent the copper network achieved. It won’t be 99 percent, it will be more than 87 percent.
If pushed I’d say a little over 90 percent in the next five years with further add-ons later. But that depends on many moving parts. It also depends on technology not changing, which experience says is a mug’s bet.
Many forces drive network extension decision making. The most brutal economic fact is that the further you go, the more it costs to add each extra address to the network.
By the time you get to the last few percent the cost is way higher than can be justified by an investor looking for a rational economic return. At least as things stand today.
A nation building government could find the money.
The good news is that fibre uptake is much higher than anticipated at the start of the UFB project. It’s already close to 60 percent and will climb well beyond that number.
This means investing money connecting what were once marginal addresses is now more likely to pay off.
There will be places not included in the 87 percent covered by UFB1 and UFB2 where connection makes sound economic sense.
Politics of fibre
Another force pushing the number higher is political. People in rural areas see people in towns getting Netflix and high quality streaming Rugby pictures. Their kids want to play Xbox games.
People want fibre and may pressure politicians to deliver. Never underestimate rural New Zealand’s ability to lobby government.
By now the people connected to fixed wireless broadband on the RBI network know they have second rate broadband. It will take a long time for their service to improve, if ever. There are stories of capacity problems.
Not everyone who wants a wireless connection can get one. It is unlikely rural fixed wireless will ever match fibre. That’s more pressure.
One way or another government needs to subsidise further network extension. So the answer to the how far will the network goes question is a matter of the willingness of governments and taxpayers to put people in rural New Zealand on an equal digital footing.
Before you ask how far will fibre go, ask yourself how much you are willing to pay?
Discuss this by all means. Even if you think it is desirable, it’s unlikely. ↩︎
The Commerce Commission wants to continue regulating mobile roaming. At present it can make Spark, Vodafone or 2degrees give a new network owner wholesale access. This is part of the Telecommunications Act.
The Act also says the Commission faces a review of its responsibilities every five years.
Wholesale access to existing networks helps a new network get a foothold in the market. Something similar happened when 2degrees started and customers could roam on Vodafone’s network. At the time 2degrees only had coverage in four centres.
Telecommunications Commissioner Stephen Gale said in a press release:
National mobile roaming helped 2degrees deliver a nationwide service for its customers from day one, in advance of rolling out its own national network infrastructure. We believe the power to regulate remains an important competition safeguard, especially with 5G networks and potential new entrants on the horizon.
The key phrase in that quote is “potential new entrants“.
After all there is little prospect of a new mobile carrier entering a saturated market. Yet that doesn’t mean there isn’t a potential new entrant looking to enter the cellular market.
That would be Malcolm Dick’s Blue Reach. The Commerce Commission mentions this company in its review of the market.
The allocation of 5G spectrum may influence mobile competition:
The allocation provides a potential opportunity for a new entrant to purchase spectrum. A new mobile provider will almost certainly require a NR arrangement while it rolls out. We note that Blue Reach Services has entered as a fourth provider and has publically stated intentions to roll-out 5G.
Dick is a wealthy man who has succeeded in telecommunications before. He is a co-founder of CallPlus and an investor in the Hawaiki Cable network. The latter is set to start operating next month.
His Blue Reach project has been public for a couple of years. Early on Dick described Blue Reach as a 5G wholesaler. The idea is that it will offer fixed wireless broadband to retail service providers. In some ways it is like the failed Woosh Wireless operation. That company was ahead of its time.
At the time of writing carriers around the world are building the first 5G networks. Both Spark and Vodafone have trials here in New Zealand. The technology still hasn’t settled. More to the point, the extra spectrum needed to make it work is not ready in New Zealand. We can expect that to happen over the next 12 months.
Blue Reach plans a service resembling Spark’s fixed wireless broadband. Both Spark and Vodafone sell a similar RBI wireless product to rural customers. So do wisps (wireless service providers). Presumably the wisps are among the retailer Dick hopes will buy his services.
The Commerce Commission’s review hints that we are about to see more competition. Bring it on.
The Commerce Commission has called for submissions on the issue to before July 30. It expects to release a final decision on September 4.
To date 18 rural hospitals or health centres that have either already connected to the RBI network or are connecting.
The Ministry of Health identified a total of 37 rural centres that could use broadband. Which means the job is still only half-done. Over time all, or almost all, will have fibre.
Health is the focus. Yet, running broadband to rural hospitals, health centres and clinics has another benefit. The buildings often act as centres in civil emergencies.
After the Kaikoura earthquake, the town’s local clinic became a communications hub. Crowds gathered outside the building to use connections to let their families know they were safe.
Hokianga Hospital in Rawene recently got its fibre connection.
John Wigglesworth, CEO of Hokianga Health Enterprise Trust says fast broadband makes a difference. He says: “The technology improves data linkages between the hospital and its central GP clinic in Rawene with its nine primary health clinics situated in remote locations throughout the Hokianga.
Rural health video consultations
“This data network means patients don’t have to remember details or repeat their medical history if they go to any of the clinical locations. Medical staff don’t spend so much time re-gathering information that’s already available in the central database.”
Wigglesworth says the hospital uses tele-medicine. Patients in remote areas can have video consultations. The obvious benefit of this is that health professionals spend less time on travel, there’s also a cost saving from this.
He says the hospital also uses these links for planning and administration.
In a similar way, staff can take part in online training sessions. Again, without the need for travel.
Hokianga Hospital uses fibre to send x-rays to radiologists and specialists for diagnosis. In the past couriers handled this. Broadband means responses can be instant — and that can be vital in some cases.
Wigglesworth says: “Having improved internet services available to parts of the community means people who are connected will be able to access their own health information via a patient portal.
“This means they will be able to check their lab results without having to phone their clinic, look up what vaccinations they’ve had and medications they’re taking, and review their medical history. The patient portal provides an opportunity to save everyone – patients, clinicians and administration staff – time. It also enables people to play a greater part in managing their own health care.”
There are still gaps in broadband coverage. The second phase of RBI and UFB will take broadband further into rural areas. Most likely it will mean fibre in places with wireless networks filling the gaps. For some people in remote areas, boosted cellular coverage will give them mobile internet.
Wigglesworth helped ISPs with proposals that could give fibre connections to remote clinics in the area.
He says:“The goal is for our rural health services to have equitable access to the same digital technologies available to urban centres, technology which ultimately contributes to improving health care outcomes for all.”
Tenders closed last month. Crown Fibre Holdings is now assessing the responses. Bridges says the goal of the second stage is to extend fast broadband to the greatest number of homes possible.
Dealing with mobile blackspot
RBI2 includes $50 million set aside to improve mobile coverage in rural areas. This means reducing the coverage blackspots on state highways and increasing coverage in remote tourist locations.
Bridges says: “I’m pleased with the strong engagement and response to the tender process”. The minister says he encouraged regional operators to take part in RBI2. While technologies have not been specified, he says there is a preference for open access.
He says based on what he has seen so far, it looks like the proposals submitted mean the government will be able to “do far more than we anticipated”. In other words, the RBI2 funds will stretch further into the bush. After it is done, there won’t be many New Zealanders left behind.
Bridges hinted that decisions would be made soon. He told the Wellington audience they won’t have to wait long to find out what happens. Officially an announcement is due in August.
Rural Connectivity Group
Three bidders for RBI2 funds laid out their pitches at the symposium. 2degrees CEO Stewart Sherriff represented the Rural Connectivity Group. This is a joint venture between 2degrees, Vodafone and Spark.
The RCG argues that fixed wireless broadband is the best way of connecting rural New Zealanders. It says it will invest many more millions of its own money should it win the RBI2 tender.
Sherriff says: “We’re certainly not going to make a lot of money out of it. But we believe this is the best option to get the best bang for the buck. We also think we can do some good for New Zealand.”
He stresses that the RCG bid is both a mobile and a wireless broadband infrastructure play. “Mobile is becoming more critical than broadband in our opinion. Farmers need access beyond the home. They need it in the cow shed, they need it on the quad bike”, he says.
Competition between the three mobile carriers is often intense, so having all three come together bid has raised a few eyebrows.
Sherriff says that despite co-operating to build a rural network, the three carriers will all continue to compete. “We’ll compete on retail and we’ll compete on the wholesale level”, he says.
“The plan is to set up an independent joint venture to run the network. That means one set of towers, one set of antenna, one power system and one backhaul. These will all be shared. This business case doesn’t stack up with one operator. It barely stacks up with three”.
In effect the three will operate a mobile virtual network.
Sherriff says it will be an open access infrastructure so that other services such as wisps (wireless internet service providers) and emergency services can also use the network. While the towers are designed for co-location, the focus, for now, is on wholesale fixed wireless broadband.
4G now, 5G later
The RCG plan is to build a 4G network now, but make it upgradable to 5G later. Sherriff says the project will also include narrowband IoT. This will give an additional network for the Internet of Things.
Sherriff says the group plans to deploy 520 cell sites. He says: “This gives us 20 percent more coverage in New Zealand. It takes the coverage from around 50 percent to 62 percent in terms of the geography. That’s 20 percent more mobile, 20 percent more IoT and 36,000 more connected households. More than 1200 extra kilometres of state highway will be covered. It will cover 67 percent of mobile blackspots”.
Independent regional ISPs were shut out of the original RBI project. This time they could play a central role. Many small operators run strings of antenna on hill tops and poles to deliver fixed wireless broadband up valleys and in other rural areas.
Their fixed wireless service is not the same as the fixed wireless broadband based on the Spark and Vodafone mobile networks.
Each of the wireless ISPs is making its own tender to CFH for the funding. Many will ask for less than $2 million. This is a cut off point. A condition of the tender is that to receive more than $2 million, you have to build an open access network. That’s asking a lot of small operators.
Lightwire founder Murray Pearson made the case for local wireless ISPs to win CFH funding for RBI2. He spoke as a Wispa representative, not as Lightwire, a Waikato based ISP.
Pearson says a reason to choose wisps for the RBI2 project is that they are innovative and show technology leadership. “Most wisps have been born out of a need to solve a problem. They’ve grown from there into businesses that have evolved to serve their community.
“They focus on appropriate technologies. What you need to service a valley with five users is different to what you need to serve somewhere like the Hauraki Plains where you can see 5000 house from one high site. Most wisps use a variety of tower types to cover a broad range of requirements”.
Wisps have been around now for 10 years. Pearson says they have shown they are both reliable and resilient. “During that time they have demonstrated some very reliable networks. Most build in redundancy so if one site goes down, it’s the only one affected”, he says.
Low-power wireless tech
The equipment used by wisps tends to be low-power. He says this makes it practical for Wispa members to build solar sites. The operators tend to be nimble and able to respond fast when needed. He says this adds up to a cost effective solution.
Local customer focus is important. Pearson says wisps have tended to grow out of the communities they serve. Many of the people working in wisps grew up in the communities they serve. This focus means that the people involved have very good knowledge of local geography.
Pearson says wisps are good at working with others. Some work with lines companies to string cables, others work with organisations like Chorus to use fibre backhaul.
Wisps have some great stories to tell about how they have delivered in difficult conditions. Pearson gives the example of Canterbury-based Amuri Networks which was able to make a huge difference after the Kaikoura earthquake. Not only was it able to respond quickly, but its equipment proved resilient.
The weakness in the wisps case is that many of the businesses are so small they have little support depth. Some may rely on one or two key people to handle the technical work and installations. Who takes over if they get sick or incapacitated? It’s a version of the single-point-of-failure problem.
This can be fixed from a business point of view with insurance policies. But there may not be enough skilled engineers to plug the gaps even if there is money available to pay them. Having the wisps band together in
Chorus brings fibre
Chorus network strategy manager Kurt Rodgers says: “No one technology can do everything in rural. Rural New Zealand is challenging, the trick is picking the right recipe”.
In RBI1 Chorus built the fibre part of the network. It ran fibre to schools, hospitals and connected 110,000 homes and businesses in rural New Zealand. That meant building 1,000km of fibre and upgrading 1200 cabinets. It also ran fibre to 157 cellphone towers.
Rodgers says 80 percent of the 110,000 cabinet connections can get VDSL, but only 20 percent do at the moment.
Either way, there is a lot of suitable infrastructure already in place in rural areas. All of it is suitable to extend the broadband network. The copper telephone network reaches all but the last one percent most remote homes. And there is plenty of fibre.
He says fixed broadband works best where there is “a modicum of population density. The other places are where the other technologies fit in set”.
Rodgers says: “It’s all about taking fibre closer to people.
Because Chorus is a wholesale-only business, it’s fibre-to-the-bush strategy dovetails with other rural broadband approaches. It would, for example, be able to provide the Wisps with fibre backhaul.
While there’s no public RBI2 bid from the company, Phil Cross, the Australia-based sales director of IPStar made the case for satellites to reach the most remote users.
“Satellite often doesn’t get a good rap, but the economics of delivering broadband to remote areas doesn’t give you much choice”.
Cross says fibre and microwave technology will always be preferable, but they are not always practical.
He says one benefit of satellite technology is rapid deployment. He says: “It takes less than a day to get a connection. Often a lot less than a day.”
IPStar has a good New Zealand case study to draw on. It has provided affordable broadband to the Chatham Islands since 2012.
How do they scrub up?
Chorus’s fibre-to-the-bush plan means extending the UFB network or something similar much further into rural New Zealand. In the panel session following the presentations, the speakers all agreed that fibre is an important part of rural connectivity
Some homes and farms will get the same fibre connections as people in urban New Zealand. It’s not clear if they’ll get the same prices, but they will get the same services.
However, fibre won’t reach all the way. It means Chorus will need to use copper to reach a lot of people. There’s not much wrong with copper in itself. It can be fast, VDSL2 is capable of fibre-like speeds when connections are within a kilometre or so of a cabinet.
Wisps fill in the gaps
If anything the wisps’ proposal dovetails neatly into Chorus’s fibre-to-the-bush plan. Wireless is a great way to fill the gaps, especially when extending broadband further up valleys to farms and remote businesses or homes. The idea of wisps using fibre backhaul has appeal too.
The idea of Chorus taking land-based broadband up to say, 90 percent or thereabouts of the population, wisps extending that to 99 percent and satellites serving the last one percent makes a lot of sense.
Although wisps and even satellites could, in theory, help fill the mobile blackspot, that job is best left to the mobile phone companies.
Rural fixed wireless broadband
Vodafone built 157 rural towers for RBI1. In the first years these towers delivers fixed wireless internet connections using 3G phone technology. You really could not describe it as broadband. It was slow and unreliable. Only a fraction of the target audience took it up.
It worked better when Vodafone upgrade the towers to 4G. On a good day, in the right conditions, users can get fibre-like speeds. The downside is that wireless bandwidth is shared, so there’s a huge congestion penalty at busy times. Peak hour speeds are slower than quiet times.
The Rural Connectivity Group’s plan will work well for some of users.
Spending the CFH money
If RBI2 funds were unlimited, the RCG would get money to fill in the mobile blackspots with towers that could also serve wireless broadband. Chorus could extend fibre to wherever the population density makes sense. More RCG fixed wireless could be used in less dense areas, wisps could run their fixed wireless out to farms and up valleys. Satellite could fill the gaps.
IPStar’s Phil Cross nailed the problem when discussing satellite broadband delivery. He talks of the choices you have when delivering broadband to remote areas. Crown Fibre Holdings has $150 million to spend. Private investors will tip in more money, at least as much again as CFH.
We could fix New Zealand’s rural broadband with a world class network. It’s within our grasp. At first sight, the best option would be to use a mix of the technologies discussed above. All have a role to play.
Yet there is a fishhook. The RCG says it is not interested in building towers for the mobile blackspot unless it gets the whole rural deal.
That leaves CFH in a tricky position. Caving in to the RCG means great mobile blackspot coverage, less than ideal rural connectivity and a slap in the face to local wireless ISPs who were officially encouraged to tender. Turning down RCG will leave those mobile blackspots. Presumably one of the cellular firms will pick up the $50 million and fill some of the gaps.
While it’s not on their immediate agenda, Chorus and the other fibre companies would one day like to push their glass networks as far into the bush as possible.
The Commerce Select Committee may be about to help.
It is looking for “public submissions on the benefits of rolling out fibre on rural electricity infrastructure”. This is part of the work being done preparing the Telecommunications (Property Access and Other Matters) Amendment Bill.
One idea is that network companies can add fibre optic cables to rural electricity power lines without needing to negotiate terms with each landowner.
Under the proposal, the landowners will then be able to connect to the UFB network under terms set out in the Act.
Communications Minister Amy Adams says in a media statement: “As the broadband rollout moves into more economically challenging areas, it’s important to consider other ways to increase the opportunities to deploy fibre. One way might be using existing electricity lines for fibre”.
The government is keen to improve rural communications at a sensible cost, but there’s a risk of riding roughshod over land rights. This proposal is a neat way around the problems.
Adding fibre to rural electricity networks should be easy for the likes of NorthPower, UFF and Enable Networks who all have roots in the electricity business. The engineering companies working with Chorus also have strong links with the power industry.
Rural fibre projects need not be restricted to UFB companies. Most regional electricity companies bid for fibre build contracts when the UFB was first announced. Some could already be dusting down their plans or planning to partner with the UFB firms.