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?

communications plug

Tuanz — Telecommunications Users Association New Zealand — wants better consumer protection when the government revisits the Telecommunications Act.

Earlier this week Communications Minister Amy Adams published what she calls an “options paper”. This asks for feedback on the government’s proposed utility-style model for regulating fixed line telecommunications services after 2020.

The paper forms part of the government’s review of the 2001 Telecommunications Act. The Telecommunications Act 2001 review options paper is online at the Ministry of Business, Innovation and Employment website.

One of the goals of the review is to bring telecommunications regulation more into line with utlities such as electricity lines and gas pipelines. Fresh mobile regulation is possible with potential provisions for infrastructure sharing.

In a press release Tuanz CEO Craig Young says:

“Tuanz has been arguing strongly for significantly stronger consumer disputes processes under the current mandatory code regime. However, the options released today leave this important function with the TCF.

“There may be no choice but to push for the alternative option of an independent dispute and complaint model to ensure that management of disputes is user-friendly, and focused on their rights.

This is important. The recent media stories about poor UFB installations highlight how powerless consumers feel when dealing with large, faceless telecommunications companies.

New Zealand’s access model with separation between network companies and retail service providers is good, but there is a danger of finger-pointing when problems occur. An independent referee would restore confidence.

“It is also disappointing that calls for a properly funded consumer advocacy group, and end-user focused research, have been ignored.

This has worked well in other counties. In the past Tuanz has done a lot of the consumer advocacy work, but that isn’t the organisation’s primary purpose and not what it’s member pay subscriptions for. Likewise the research.

With adequate funding, the organisation could do more work in both departments. Or it could play a role setting up a new separate, consumer-oriented body. It wouldn’t be expensive and would be cost-effective.

As Young goes on to say:

“The successful Australian model proves that contestable funds are an effective way of providing these important services and that leaving it up to the support from corporate entities is unrealistic.”

In the recent past government has looked to an industry levy to fund its rural broadband project and certain services for disabled users. While it would be better to ditch the levy — the telecommunications industry is unfairly targeted in this way — it wouldn’t hurt to set aside a small share of this money to fund an independent consumer-oriented body.

Disclosure: Bill Bennett is working on a writing project for Tuanz. 

Southern Cross Cable

Odd email appears in journalists’ inboxes on April 1. Here’s one:

Please find attached a media release from Hawaiki announcing the coming into force of the Hawaiki cable.

Please also note that despite the date, this is not an April Fools’ joke – it is for real.

Hawaii cable contract

Hawaiki: Australia to Hawaii via New Zealand

If it was an April Fools Day prank, it wouldn’t have been a funny joke.

When built, Hawaiki’s cable will run from Australia to Oregon in the USA via New Zealand and Hawaii. There are options for branches to Pacific island nations.

It will be the second trans-Pacific submarine cable network linking New Zealand to the USA. The Southern Cross Cable Network has been doing the same job since 2000.

There may soon by a third. The Dominion Post reports rival cable operator, BlueSky, says it will still push ahead with yet another trans-Pacific submarine cable.

Hawaiki appears to have succeeded where Pacific Fibre and Spin did not.

Remi Galasso, Hawaiki CEO, has worked on the project for years and was previously involved in the Spin cable. It can’t have been easy getting this project over the line.

Hawaiki investor group
Hawaiki investors. From left: Remi Galasso, Laurent LeBretan, Sir Eion Edgar, Hamish Edgar, Malcolm Dick.

It’s very much a New Zealand project. Galasso lives here. He has teamed with Malcolm Dick, best known for being the power behind CallPlus and Slingshot. Sir Eion Edgar is a Hawaiki co-developer.

Hawaiki: Cable to the islands too

Like Spin’s abandoned project, Hawaiki plans to run cable spurs to New Caledonia, Norfolk Island, Fiji, Vanuatu and Samoa among other island destinations. There’s also provision to reach the Cook Islands.

Hawaiki Network

The April 1 press release has no specifics about island links. Instead it says there are : “options to expand to several South Pacific islands”.

Earlier Galasso said the cable would run to Hawaii and then pick up other cables to mainland USA. The April 1 press release says it will go to the US West Coast and provide an alternative route from Hawaii to Oregon.

Hawaiki contract signed, construction phase coming

The press release says a contract between Hawaiki Submarine Cable LP and TE SubCom has come into force and “the construction phase has commenced”.

We need to be careful about that last clause. While a contract “coming into force” is officially the moment when a cable project goes live — in theory, it is unstoppable — nothing is real or final until the ships lay cable. Indeed some submarine cables have been laid and not lit.

Hawaiki says the system will be complete by mid–2018.

Cable completion dates can slip

When Vodafone, what was then Telecom NZ and Telstra announced the go-ahead for the Tasman Global Access cable in December 2014, the press release said:

“The project will begin early in 2015. Alcatel-Lucent has been selected as the cable laying contractor after a competitive tender process, and the TGA Cable is expected to be built and providing data traffic by mid–2016.”

According to sources close to the project, the ship that was booked to lay the cable across the Tasman is now busy repairing the damaged Basslink cable between Tasmania and Victoria. TGA now hopes work will start in October of this year.

Cable laying is quicker than you might expect, so TGA could be live early in 2017 — just six months or so after the promised date.

If it runs to schedule, or even a little behind, the new trans-Pacific cable will be operational by the time New Zealand finishes its urban, fibre-to-the-premises UFB roll-out in 2019.

You won’t notice a thing… but that’s not the point

Few everyday users will notice if another submarine cable connects New Zealand to the rest of the world. It won’t make your broadband faster. It won’t mean bigger data caps. Prices for internet plans won’t change.

For most of us it will be business as usual.

The chances of an accident cutting us from the rest of the world will reduce. But for ordinary users that’s just another way of saying business-as-usual.

After all, we haven’t been cut off in the 15 years or so the Southern Cross Cable Network has been our digital gateway to the rest of the world.

There’s no pressing need for extra capacity. The Southern Cross Network has plenty of headroom and when the TGA cable starts operation it will add further capacity across the Tasman to where the big regional cloud and entertainment data centres are located.

SCCN CEO Anthony Briscoe on why Hawaiki isn’t needed

At a Tuanz After Five meeting in Auckland earlier this week Southern Cross CEO Anthony Briscoe used the same arguments his company has always used against a new trans-Pacific cable.

Tunaz After Five, Auckland April 2016. From Left: Luke Mackinnon, Vocus, Anthony Briscoe, Southern Cross, Mark Rushworth, Paymark
Tunaz After Five, Auckland April 2016. From Left: Luke Mackinnon, Vocus, Anthony Briscoe, Southern Cross, Mark Rushworth, Paymark.

His argument is persuasive, there are no pressing technical, economic or political reasons to install a second line across to the USA. He admits there may be an argument for the additional resilience a new cable would bring, but otherwise dismisses Hawaiki’s proposed cable as not making one jot of different to the everyday internet user in New Zealand.

As Mandy Rice-Davies once put it: “He would say that, wouldn’t he?”. Southern Cross stands to lose some business, or potential business, if Hawaiki comes on-line.

Vocus: A customer’s point of view

Vocus is one of Southern Cross’s largest non-telco customers. Chief technical officer Luke Mackinnon appeared on the Tuanz panel to give a user’s perspective of the international submarine cable market out of New Zealand.

Mackinnon says Vocus grew big on the back of wholesaling capacity on the Southern Cross Cable Network and is still experiencing 150 percent year-on-year growth in that market. Although a lot of that growth is out of Sydney, not New Zealand.

Reliable

He says that the network: “Has been architected to provide resilience. It’s not like the other cables operating out of Australia.”

This is a timely reminder of just how reliable SCCN has been over the years. There was a small disturbance when a ship disturbed a cable, but the network’s figure-of-eight configuration meant traffic could be rerouted.

Compare this with other networks out of Australia. Most have suffered major outages in recent months. Basslink, which is connected to a power cable, has been down for three months. Sea-Me-We 3 out of Western Australia is frequently broken.

Mackinnon says Vocus sees Hawaiki as offering an “interesting alternative route. It will give us access to other destinations. We might want that.”

Yet he says Vocus is looking for performance and is unlikely to stray from Southern Cross in the short term.

However, a few years ago Vocus CEO James Spenceley said his company was a “price taker” when it comes to international bandwidth. Since then Vocus has grown in size and importance, the arrival of an alternative route to the US is likely to give Spenceley more bargaining power.

Rushworth: It’s about competition

Tuanz asked former Pacific Fibre CEO Mark Rushworth to offer an alternative view. After agreeing, or rather not disagreeing, with many of Briscoes’ arguments against a new cable, he took little time zooming in on the key point.

“Do we need more capacity? Probably not. Would a new cable change prices? No. But, we’ve learnt in New Zealand that it’s never good when one company owns a market. Imagine life with just one airline or one bank”, he says.

Rushworth says New Zealand needs a second trans-Pacific cable because of what competition brings to a market.

Pacific submarine cable myths

Anthony Briscoe answered the critics, dismissing their arguments as myths:

  • Capacity. If users think they have slow internet because of insufficient international data capacity: “They should talk to their internet service provider. There’s no shortage of capacity. The ISPs may not be buying enough.”
  • Prices won’t change. The international component of a typical home user broadband plan is NZ$4. With plans costing from $75 for 80GB, halving the price of the international component won’t make a difference.
  • Redundancy. “They may have a point, but SCCN has never been out of service. If there was a redundancy problem the Tasman Global Access will go live soon.
  • Choice. “Consumers don’t buy international capacity, ISPs and telcos do. New Zealand ISPs get it for the same price, sometimes lower, than Australians”
  • Congestion at peak times has little to do with international links. Most content is cached locally, almost all the rest is cached in Australia”.
  • *SCCN only cuts costs when competitors emerge*: “We’re not that smart. We have a simple pricing model and we sell a long way ahead”.

Unpicking Hawaiki’s economics

At the Tuanz session, Briscoe ran over back-of-an-envelope calculations for the new cable network. The numbers here have not been checked back with Hawaiki, so they need to be treated with caution, but they’re too interesting to ignore.

Briscoe says the Hawaiki network will cost around NZ$500 million to build. This is the number Hawaiki has used in its publicity material.

“The depreciation on that investment would be $25 million. To break even on these numbers the network would need sales of NZ$50 to $60 million a year. At the moment the total traffic sold in New Zealand is $202 million a year”, he says.

While demand is climbing — remember Vocus talks of 150 percent year-on-year growth — revenue will not be increasing at anything like that amount. So a new player entering the market is likely to have a dramatic impact on Southern Cross Cable Network revenue.

IITP CEO Paul Matthews has achieved what others couldn’t manage: bringing together most of New Zealand’s IT-focused organisations under a single umbrella. Next year 11 other bodies will join IITP at the ITx 2016 conference in Wellington.

According to a press release, the three-day event, will be held at the TSB Arena and Shed 6 complex on 11-13 July 2016. The organisations behind ITx say they hope to attract 1200 attendees. It may pay to book early, Wellington isn’t awash with hotel accommodation.

The ITx organisers say while the event will include 12 tech-related conferences under one roof, there will be common sessions.

The organisations are:

  • The Institute of IT Professionals NZ (IITP), New Zealand IT Professionals;
  • NZ Technology Industry Association (NZTech), represents tech companies;
  • NZRise, represents NZ-owned digital technology companies;
  • IT Service Management Forum NZ, tIT Service Management professionals;
  • Citrenz, computing schools in the Institute of Technology and Polytech sector;
  • Health Informatics NZ, individuals practicing in health IT;
  • Tuanz, IT and communications users.
  • Test Professionals Network, forum for promoting excellence in systems and software testing;
  • Agile Day, where Agile professionals come together;
  • InternetNZ, the voice of the internet community;
  • Project Management Institute of NZ, representing PM professionals; and
  • NZ Open Source Society (NZOSS), the body promoting Open Source Software in NZ

Bringing together so many bodies together for a single conference is a smart idea. Events of this nature are costly and time-consuming to organise, spreading the load makes sense.

Also, attendees, sponsoring companies and likely exhibitors are all under time pressure. Crunching everything into three busy days is a better use of everyone’s time.

While ITx 2016 makes commercial sense and is an outstanding political triumph, the need to pull multiple events into one reflects changing industry economics. Tech giants no longer make stellar profits, at least not the companies likely to take an interest in professional technology events.

The historic technology event scene came about because marketing dollars needed to find a good, productive home. Vendors no longer have as many marketing dollars to splash around, no matter how worthwhile the cause.

Similar pressure scythed through the technology press. It is now a fraction of its former size.

Consolidation in the tech conference sector mirrors the consolidation taking place in the wider technology industry.

IITP and Tuanz have a track record of interesting conferences. Here’s a wrap of what I found at the 2113 event.

Tuanz CEO Paul Brislen nails the problem in product disclosure. He says the idea of product disclosure is good, but at the moment consumers only get basic information. The more difficult, technical stuff is still hidden.

He writes:

I don’t have a problem with traffic management plans, but when the telcos hide that information away it makes buying decisions doubly tricky, 

Today’s broadband product disclosure regime isn’t perfect, but it makes sense for today’s broadband market. It won’t be good enough in the near future when services move from copper to fibre.

On UFB, the wholesale fibre companies get to design the broadband delivery products. They are standardised.

This means companies selling retail internet services get to pick from the same pool of delivery products then package them with their own back-end and support. Those difficult technical details are the areas where they can differentiate themselves from rivals. Consumers may find it hard work ploughing through those details — although that’s where people like me can help explain matters — but soon they will be the only parts of the contracts that matter.

Which means either we tighten the disclosure regime, or it will become meaningless.

By the way, I’d also like to know things like how long it takes for a service provider’s support desk to answer incoming calls among other non-technical matters.