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Bill Bennett

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Tag: Spark

The telecommunications company formerly known as Telecom NZ. Still New Zealand’s largest telco and a major player in mobile and information technology services.

Commerce Commission revisits mobile regulation

Regulating termination rates introduced ten years ago kick-started mobile market competition in New Zealand. Now it’s time to review the rules. Don’t expect to see much change.

To no-one’s surprise the Commerce Commission’s draft review of mobile termination rates recommends they stay regulated.

A termination rate is the price one phone company charges another when a call from one network is made to a customer on another network. Mobile termination rates affect calls between the Spark, Vodafone and 2degrees networks.

Until a decade ago mobile termination rates were unregulated. Carriers could charge what they liked. And they did. New Zealand termination rates were high.

This stifled competition and meant mobile calls were expensive by international standards. That in turn meant people here didn’t use their phones as much as people overseas.

Calls between networks

Before regulation Telecom NZ, now Spark, and Vodafone, would charge customers less to call others on the same network than the cost of calling another network.

In the jargon of the time they offered have different prices for on-net and off-net calls.

Mobile termination rates mean customers on the least popular network end up, over time, paying more to use their phones.

This acted to stop people choosing 2degrees, in part because potential customers feared friends might call less often.

In 2010 the government stepped in. Termination rates have been regulated since then.

The move triggered a dramatic drop in call prices to the point where New Zealand moved from being an expensive place to use a mobile phone to a relatively cheap place.

Flat playing field

Most of all, the regulation flattened the playing field. This meant the third mobile network, 2degrees, could grow beyond being a niche player.

In turn this further boosted competition and paved the way for cheaper calls more innovative price deals.

Today we have a vibrant, competitive and innovative mobile market.

Mobile termination rate regulation almost didn’t happen. Ten years ago Telecom NZ and Vodafone negotiated a voluntary agreement with government to lower charges. The Commerce Commissioned agreed.

It was all set to go. Then Vodafone began selling the most aggressive on-net plan ever seen in New Zealand. The Commerce Commission reversed its earlier decision.

The case against mobile termination rates

Fast forward to today. The Commerce Commission now says there may be a case for dropping regulation of termination rates for SMS text messages. That’s because of the popularity of alternative over the top services like WhatsApp.

This external pressure has reduced txt prices to the point where many plans offer customers unlimited texting at no extra cost. High charges are unlikely to return.

The Commerce Commission says voice call termination rates should remain regulated because there are few competitive alternatives.

That’s true on one level, but it’s not straightforward because today’s mobile battleground is all about data. With lots of data, customers can make voice calls using free or cheap over the top services.

And anyway, voice calls are not as popular as they were ten years ago.

If, in a world without regulated mobile termination rates, a carrier attempted to charge higher voice call rates, the move to data calls would accelerate. The trend away from voice calls would speed up. So, it’s possible we no longer need to regulate.

On the other hand economist Donal Curtin thinks the regulation needs another look.

The Commerce Commission now wants feedback on its MTAS draft review findings.

New Zealand got lucky twice with broadband

It’s no secret that, for most New Zealanders, broadband is world class. Our UFB network was always a good thing. It proved its worth again since the Covid–19 forced large numbers to work from home.

Fibre is by far the best technology for these times. 1 It is reliable and has ample bandwidth. Most homes have enough capacity for people to work and hold video conference meetings while others watch streaming video.

A 100 mbps plan is plenty for working from home. No applications demand more bandwidth. You could run half a dozen separate video conferences and still have headroom to play with.

Get a gig

Yet gigabit plans cost only a few dollars more. Unlimited data plans are affordable too. Few starting today sign up for less than a gigabit connection with unlimited data.

This combination can cost as little as $80. Taking inflation into account that’s often less that we paid for dial-up or ADSL. If money is short, there are cheaper fibre plans.

We got to this point because a dozen years ago politicians from both main parties went into an election promising a fibre network.

An earlier generation of industry reforms forced Telecom NZ into operational separation. As part of that process, it build a fibre to the node network. This made building fibre to the home easier.

Lucky first time

Were we lucky? Well, we were in the sense that everything needed to get to this point converged at the right time. Although it may not have seemed like that back then.

This was in 2009. The 2008 Global Financial Crisis was still a threat.

In the November 2019 edition of the Download magazine I interviewed Sir John Key and Steven Joyce about the original UFB plan. Times were tough. A fibre laying infrastructure project was part of the plan to get New Zealand back on its feet.

As Sir John says:

“UFB was an ambitious programme. We executed it really well. You can contrast this with the NBN (National Broadband Network) in Australia. I spend a lot of time in Australia and the Australians are jealous that we delivered this fantastic outcome while they are still battling.”

The events of recent weeks have only served to underline this.

Lucky two times

The second lucky break was when Spark outbid Sky TV to buy the broadcast rights to the Rugby World Cup. Telcos around the world have stuck their feet in and out of broadcast sports rights. BT in the UK has some Premier League football. Optus and Telstra in Australia have links with sporting codes there.

Sparks’ plan to show Rugby as a digital stream was also ambitious. As it turns out it was alright on the night, apart from an early glitch.

We got lucky a second time because of that ambition. It became clear Spark had overreached. The networks were robust and strong. Yet they may not have been quite ready for millions of New Zealanders to watch the nation’s favourite sporting tournament online.

To prepare, Spark and the other telcos invested in beefing up their networks. Chorus and the fibre companies did the same. The entire industry brought forward about 18 months or so of network investment.

In the end it was over-engineered. The industry built almost half as much more capacity than needed. It was better to be safe than sorry.

It turns out that over-engineering gave networks more than enough capacity to deal with most of the nation working from home. In the next few days school and university students will be studying from home. We have the bandwidth.

There are challenges ahead. We will need more capacity and more headroom. The fibre companies and the telcos are working to stay well ahead of the demand curve. When it comes to broadband, the lucky country is New Zealand.

Bill Bennett edits the Download magazine for Chorus. 


  1. Many people who don’t have access to fibre tell me fixed wireless is good too. But some people have a less stellar experience. ↩︎

Everyday is like Sunday

For the last week or so Chorus has issued a daily update on the data traffic passing through its network. After an initial surge when large numbers of people began working from home, things have settled into a pattern.

It’s the new normal. As Spark’s technology director Mark Beder points out, weekday data use now looks the way weekend’s looked before the lock down. Weekend peaks are now higher again.

Spark says the amount of data on its network has doubled since widespread remote working started. Data peaks are about 27 percent higher than before the pandemic arrived.

Peak mobile traffic is up 22 percent. The company says it has seen some congestion at times and is working on adding capacity.

Call of Duty update

An update to the Call of Duty game on the first weekend of the lockdown period caused what Spark technology director Mark Beder describes as a “massive spike”.

Away from Spark, Tuesday evening saw traffic peak at 2.70Tbps on the Chorus network. There was an update to the Fortnite game during the evening which may have accounted for the extra traffic. The busiest midday this week was Wednesday with 1.72Tbps.

Both Ultrafast Broadband and Enable Networks have registered similar increases. UFF says it now sees about double the amount of pre-lockdown data.

Traffic well within capacity, for now

The Chorus figures are well within the network’s capacity limits. In the run-up to last year’s Rugby World Cup, which was streamed by Spark Sport, Chorus and most of the rest of the broadband industry brought forward capacity upgrades by 18 months or so.

Today the network is built to cope with 3.5Tbps. That’s comfortably above the peaks we are seeing at the moment. Traffic could go higher again when school and university terms restart, but there appears to be more than enough headroom to cope.

 

Voice volumes surge as New Zealand enters Covid-19 lockdown

New Zealand voice networks recorded the highest call volumes in history this week. There was a peak on Tuesday. This followed Prime Minister Jacinda Arden’s announcement she was raising the Covid-19 alert level from two to four and the country would begin a four-week lockdown.

All carriers experienced congestion. Callers overloaded government call centres with enquiries. The congestion affected the three mobile networks and Spark’s landline calling network.

A Spark spokesperson says: “Following the prime minister’s Covid-19 announcement today, telecommunications providers experienced call volumes beyond any level of calling ever seen in New Zealand. This is creating significant congestion for voice calling at an industry-wide level.”

The TCF spoke for the industry saying telecommunications companies were working quickly and collaboratively to fix the issues arising from congestion.

Carriers called on phone users to switch to digital communications technologies using the nation’s fibre network to free up voice lines.

Customer services struggling

Customer service teams struggled to cope. In part this is because operators closed their overseas call centres or are running them at a reduced level to protect staff from infection risks. There were also much high call volumes.

Vodafone issued a plea to its customers to use the company’s mobile app, chatbot and website where possible to reduce the load on call centre staff. The company asked customers were to contact the company’s social media team which extended their hour to cope with the extra demand.

The company says: “Due to precautionary measures in New Zealand and internationally, our customer care teams are managing the impacts of Covid-19 while dealing with higher call volumes. We have major call centres in different offices in New Zealand and India, and a small specialist customer care team in the Philippines – and while we’re able to redirect work and calls for some customers between them, we are also planning for future impacts including what we can expect will be further increased restrictions on movement in cities worldwide.”

Covid–19: Fixed wireless broadband not up to the job

Spark and Vodafone sell fixed wireless broadband as an alternative to fibre. The service is far from rubbish. Yet it isn’t up to the demands New Zealanders will make of it while spending more time at home during the Covid–19 outbreak.

Companies are asking employees to work from home. Schools haven’t yet sent students home, but may. Because of social distancing people stay at home instead of going to the movies, the pub or other activities.

All this means people will be more reliant on broadband connections. For work-from-home employees, broadband is their livelihood. For everyone else it is a useful communications tool. It also delivers entertainment needed to stave off the boredom of stopping at home.

Insufficient data

All those examples need data. A lot of it. That’s one thing fixed wireless broadband can’t do. Most fixed wireless broadband plans come with data caps that limit a customer’s data. Which leaves people with a problem if broadband is the main Source of entertainment during the outbreak.

There are two other issues that suggest fixed wireless broadband is not up to the demands people will make of it.

First, fixed wireless is prone to congestion. A fixed wireless tower shares bandwidth between users. If there’s only one user at a given moment, connection speeds can be good. If everyone is online at once, the performance drops. It can drop below the level needed to sustain a video stream.

Swampy Covid–19

During the Covid–19 pandemic most people will spend the evening at home most of the time. The demand may swamp fixed wireless towers.

Spark slowed fixed wireless broadband sales in the run-up to Rugby World Cup for this reason. It knew customers would not have a good streaming experience.

With everyone at home, the data traffic is set to beat the highest Rugby World Cup levels.

The second part of this is that with congestion, some users may not be able to connect at times. It’s one thing to miss the last 15 minutes of a movie. It’s another thing to have your main channel to the rest of the world shut off during the Covid–19 pandemic.

Which brings me to the third problem. Clogged fixed wireless broadband networks can impact mobile wireless reception and coverage. The mobile network is our vital lifeline. Few people still have copper voice line connections. If busy fixed wireless broadband towers make it hard to make phone calls we are all in trouble. We will need phones more than ever during the outbreak.

What should the telcos do?

First, stop selling fixed wireless broadband where fibre is an option. Get customers onto fibre where possible. Where there’s a mix of fibre and non-fibre premises, leave fixed wireless for people who can’t yet get fibre.

Where fibre is not available, it makes sense to give towers a capacity upgrade. Move to 4.5G or a higher technology. And then do a better job of managing the capacity. Which, means not milking the network too hard.

Fixed wireless has a role to play in the broadband mix. Pretending it competes with fibre diminishes its overall value.