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Vodafone fibrex

“What’s in a name? that which we call a rose
By any other name would smell as sweet”

– Juliet’s speech from Shakespeare’s Romeo and Juliet

Consumer makes an important point. It writes:

“People considering signing up for Vodafone’s FibreX service might be surprised to learn they won’t actually be getting fibre broadband.”

The new name for Vodafone’s rebranded cable service implies customers are getting fibre. There’s no getting away from that.

FibreX is not fibre

But they’re not getting fibre. Not fibre as New Zealanders understand the term in 2017. They get the old Vodafone hybrid fibre-coaxial.

The fact the term HFC includes the word fibre confuses matters. HFC is a long way from Ultrafast Broadband fibre. It is, in effect, a high-quality copper connection.

Vodafone’s HFC cable has been around for ever. The company picked it up when it acquired TelstraClear. Before that, the network’s name was Saturn. Even Saturn wasn’t the original incarnation.

Before Saturn it was Kiwi Cable. That company was a long ahead of the market in the 1990s. If my memory serves me well — readers may be able to clarify — the company produced its own TV show. How modern.

Pimp my copper

Vodafone pimped the HFC network’s software with an upgrade to DOCSIS 3.1. That means it has faster speeds1 than the old HFC network. But customers don’t see all the extra performance all the time.

That’s because, unlike a UFB fibre connection, FibreX customers share bandwidth. It’s like fixed wireless broadband in that sense. If a lot of people are on a cable segment at the same time, the speed drops. In contrast, when you have an old fashioned ADSL or VDSL copper broadband connection, there is a dedicated line from the cabinet to your house.

Even on a good day FibreX is slower than a real fibre connection.

Look at the latest TrueNet performance measured by time-of-day chart. It’s reproduced below, but you can see the chart better online.

Webpage download speeds
Webpage download speeds – data from TrueNet.

The FibreX speed is slower than any of the true fibre services. It is even slower than Vodafone fibre, which takes the wooden spoon in this TrueNet report.

Slow at peak times

More to the point, FibreX slows to a crawl at peak times. As you can see, it downloads web pages at about one-third of the speed you’d get from an Orcon connection.

It is clear, as Consumer says, the FibreX name is misleading.

The Commerce Commission cracked down on service providers calling fast broadband services ‘gigabit’.

That decision was overzealous. Service providers around the world use gigabit to describe their broadband services. They run at the same speed as those in New Zealand, in some cases they are slower.

Many of those countries have tighter regulatory regimes than New Zealand.

A gigabit connection is what service providers buy wholesale. The speed drops because service providers need headroom for network control.

If ISPs can’t describe broadband at 90 percent of a gigabit as “gigabit”, then Vodafone shouldn’t use FibreX. The broadband product is zero percent modern fibre.


  1. In theory DOCSIS 3.1 can shovel data down a pipe at 10 gigabits per second. Australia’s NBN find the technology exciting. Other Australians do not. ↩︎

Silverdale 4.5G cell siteCompetition and regulation economist Donal Curtin says in a blog post there may be unfinished business with the mobile termination rate.

The mobile termination rate is the sum one cellphone company pays another for calls going from network to network.

Curtin is responding to the Commerce Commission annual report on the telco market.

He writes:

I speculated last year that maybe it is time to revisit our regulated mobile termination rate: it’s still unrevisited, at a left-high-and-dry level by comparison to current overseas rates, for no obvious reason that I can see. And there’s an ongoing issue with the high cost of mobile data downloads to data-only devices.

It’s a good point. Some see the MTR as done and buried. Yet there were always plan to reset the rate. As Curtin points out, the charge in New Zealand is high by international standards.

Yet, I’d argue this is far from the most pressing piece of telephone industry regulation. I’ll write more about what should worry the Commerce Commission in another post.

Mobile termination rate

The mobile termination rate is a financial transfer between the three cellphone companies. Vodafone, Spark and 2degrees pay each other.

This was of vital importance when 2degrees was still a fledgling cellular company as it meant the company ended up paying a larger slice of its revenue to its rivals. This made it a barrier to market competition. In effect, the MTR rate penalised 2degrees for being smaller than its rivals.

What matters most about MTRs is not the total payment from one company to another but the net payment. As 2degrees’ market share increased, the net handover of MTR money decreases.

Competition barrier

If you had three players with identical market share, the net MTR transfers would be zero. We’re not at that point, but the market is moving towards it.

It speaks volumes that 2degrees hasn’t sought to raise the issue again in recent years. During the company’s early years it did a lot of lobbying about MTRs. That can be distracting to a business and imposes a different set of costs.

The lack of noise from 2degrees is not the only reason that MTRs are of less interest.

Curtin mentions mobile data. The cellular market is switching from voice calls to data use at a clip. Data is already more important than voice. In other words, the MTR has less impact. When the Commerce Commission last regulated the MTR, calls were close to 100 percent of the cellular business. Today they might account for 50 percent at most.

Underlining this switch, all three mobile carriers offer affordable unlimited voice plans. Skinny has unlimited calling plans starting at $30 a month. Spark’s and Vodafone’s start at $60. With 2degrees unlimited call plans covering New Zealand and Australia start at $50.

If carriers can deliver all-you-can-eat mobile plans at these prices, the MTR doesn’t seem to be a barrier to competition.

Sure, reducing the MTR would mean a flatter playing field, but in many respects the New Zealand cellular market works fine.

Vodafone NZ RBI2 bidCrown Fibre Holdings’ Rural Broadband Initiative and Mobile Black Spot request for proposal closed on Monday.  That’s RBI2 to the rest of us.

At stake is $150 million of money funded by the Telecommunications Development Levy. Of that, $100 million is to finance high-speed broadband. It needs to reach to the last 15 percent of the nation not covered by UltraFast Broadband. The $50 million is to improve cellular coverage in areas not yet served.

The process is confidential. So far four bidders have gone public revealing some aspects of their plans. There could be others.

Chorus: extend and improve existing land-based networks

Chorus aims to extend the reach of its fixed-line network beyond urban New Zealand. The company says it is willing to work with others. It did that when it joined Vodafone to build the original Rural Broadband Initiative.

Extending can mean new fibre and maximising the use of existing fibre in rural areas. It can also mean upgrading copper.

Chorus says it wants to improve fixed-line network performance in rural areas. This could mean upgrading copper to VDSL. Newer copper technologies are also possible.

It says its fixed-line networks are not prone to congestion at busy times. They don’t need to use data caps to manage demand. That’s a dig at fixed wireless broadband on cellular network.

Central to the Chorus proposal is its networks will be open access. Any retail service provider can use them.

Choose wireless say Vodafone, Spark and 2degrees

Vodafone, Spark and 2degrees have combined to offer a cellular-based approach. Their proposal includes up to 520 new cell sites.

They say the extra towers will extend the reach of today’s cellular coverage by 25 percent. Not only will the three companies share rural towers, they will also share antennae and spectrum.

That’s a huge step for Vodafone and Spark but it makes economic sense. It will reduce capital expenditure, stretching the money further. And it will keep running costs down.

Updated: While the companies’ press didn’t say the RBI2 towers will be open access, Spark says they will be. This echoes the approach in the first stage of the RBI where Vodafone built towers, but other carriers can use them.

Wispa makes case for small, local service providers

Wispa, a coalition of small rural wireless ISPs aims to win up to $2 million from the fund for each of its 30 members. Spokesman Chris O’Connell says Wispa member already serve 40,000 customers. They deploy wireless broadband in areas bigger companies often consider uneconomic.

In some cases Wispa members work with the big telcos reselling their services.

Wispa members are experts at rural broadband. They know the terrain and they are close to their customers. Most know how to deliver great broadband on the smell of an oily rag. Many will be able to deliver CFH the greatest bang for the buck. On the downside, it can be harder managing 30 small players than cutting a deal with the big operators.

Alongside Wispa, Aird Towers aims to build what it describes as “operator agnostic” towers. In other words an open access alternative to the carriers. The Aird plan would allow the main mobile carriers and small wireless ISPs to share access.

Mix and match

The mobile carriers’ joint bid looks like an ideal way of fixing the mobile black spot problem. Otherwise, when it comes to delivering the best possible broadband to rural users at the least cost; it’s not a case of either or. All the proposals have some merit.

Tuanz CEO Craig Young says users would probably be best served by a combination of the bids. And that’s the most likely outcome.

Most bidders accept there is overlap and room for co-operation1. Vodafone CEO Russell Stanners told Stuff: “..it makes sense for the Government to spend all the $150 million it has earmarked for improving rural telecommunications on new cellphone towers. With none going on improvements to the fixed-line network.”

Even then there is a case for Chorus to provide fibre to the new cellular towers. There is also a case for any towers to be open access so that Wispa members can use the infrastructure.

After all, it seems wrong to deny rural users the benefit of full broadband competition.

RBI2 reaches the last 15 percent

When work finishes on the second stage of UFB, 85 percent of New Zealanders will have fibre access. The RBI2 plan is to boost broadband for the last 15 percent. In some ways they need it more than city folk. And the rural economy makes up the bulk of exports.

Fibre is the best way to connect to the internet. In an ideal world, everyone would get it.

It makes economic sense to connect the first 85 percent of the nation to fibre. Once you get beyond that segment of the population, connection costs rise fast. Each home in the next five percent costs, say, twice a much on average to connect as the bulk of homes. With the last 10 percent, the per house costs rise further.

So away from any low-hanging fruit, wireless is likely to be their best option. The most cost-effective way of getting broadband to the wop-wops is a mix of fibre and wireless.

Crown Fibre Holdings says it is now assessing the RBI2 proposals before moving to negotiations with shortlisted suppliers. It hopes to announce contracts by July.

For another take on the rural broadband extension bids listen to InternetNZ deputy CEO Andrew Cushen talk to Kathryn Ryan on RNZ Nine-to-Noon.

Bill Bennett is editing The Download magazine for Chorus and has previously worked for Spark NZ.


  1. Originally the story said the mobile carriers didn’t talk about co-operating. Spark clarifies this saying: “We haven’t said we won’t co-operate.  All we’ve said is no more $ should be spent on copper”. ↩︎

Spark fixed wireless broadband

New Zealand fixed wireless broadband speeds are on a par with ADSL services delivered over copper lines.

In tests broadband monitoring firm TrueNet found it is: “considerably slower than VDSL and far behind fibre”.

High latency

TrueNet says wireless services slow more than other technologies at busy times. This is because customers jostle over shared bandwidth.

The tests also found fixed wireless has the highest latency of the broadband technologies tested.

TrueNet is an independent broadband performance measurement company. It holds a contract with the Commerce Commission to report on speeds.

In the latest test TrueNet added fixed wireless broadband to its tests. It already measures speeds on fibre and copper networks and the Vodafone HFC network.

Fixed wireless broadband uses the mobile phone network to deliver broadband to homes.

Spark and Vodafone sell fixed wireless

Spark and Vodafone sell fixed wireless to Rural Broadband Initiative customers. They also offer services to residential customers in urban areas. Spark’s Skinny subsidiary also sells fixed wireless broadband.

When fixed wireless first appeared delighted customers reported high speeds. In part this was because of light networks use. As more customers share the limited wireless bandwidth, the speed per user drops.

ADSL download speeds

TrueNet found fixed wireless services download web pages at an average speed of between seven and eight mbps. ADSL copper connections run at roughly the same speed.

Copper customers with VDSL can expect to download web pages at around twice the speed. Even the most modest fibre connection would be four or five times the speed of wireless.

Most fibre connections now running at 100 mbps or faster. Users can download at close to 20 times the speed of a wireless connection.

Fixed wireless has a general speed of 22 mbps. This compares to 11 mbps for ADSL and 37 mbps for VDSL. Fibre and cable speeds are higher again.

Spark has been aggressive selling fixed wireless in recent months. The company says it prefers fibre. Yet it has pushes wireless to low-use customers as an alternative to copper connections.

Many low-use urban fixed wireless customers are not concerned about speeds. Another large slice of users choose fixed wireless because they don’t have a better alternative.

Of course wireless technology is evolving, it can improve with network upgrades.

Most of TrueNet’s funding is from the Commerce Commission. Chorus funded the company to test fixed wireless connections.

Sky TV to become Vodafone-SkyThe Commerce Commission declined the proposed Vodafone-Sky merger saying it would decrease competition in telecommunications.

That seems right1. The important thing is that Sky has all the important rights tied up. It owns or sub-licenses all the popular sporting codes. Most of all it has the rights to Rugby.

At the moment Sky has a deal with Vodafone to sell its services over broadband as a bundle. But in practice anyone with a broadband account can buy services from Sky.

Vodafone says it doesn’t plan to stop Sky selling to all comers, but that’s not a legal obligation. It could have made a formal undertaking to continue the practice, but did not.

Vodafone-Sky exclusive

Therefore, Vodafone could at any point decide that its customers get access to some or all channels. The moment, say, an important sporting fixture, becomes a Vodafone-Sky exclusive, then all other broadband companies would be in trouble as their customers switch telecommunications service provider.

This will be twice as effective if exclusive Sky material is distributed to Vodafone mobile phones.

The temptation to do this will be great. It is also why Sky was worth the price Vodafone was prepared to pay.

After all, what is the point of having a monopoly if you can’t milk it?

Clearly the move has other telcos rattled. A little over half of all homes have Sky. There’s the potential for them to be locked out of those customers. This applies to both broadband and mobile.

Integration

There’s also vertical integration. Telcos love vertical integration. It is anti-competitive.

The point of the government building the UFB fibre network and splitting Chorus from Telecom was to break vertical integration.

Having said all that, TV over broadband, especially over fibre, is, in general, a good thing.

That would have been a positive. It would be good if Sky could find another way to move all its business online.

A last point worth mentioning. The Commerce Commission can only say yes or no to a proposal. Overseas regulators, like, say, the ACCC in Australia, can impose conditions. The Commerce Commission can not. So it was not an option for the regulator to say to Vodafone “you can buy Sky, but must continue selling video services to all comers”.

Had that been the case, the ruling may have gone differently.


  1. Right in the sense that a merger would decrease telecommunications industry competition. Let’s not pass rash judgement on the Commerce Commission decision.  ↩︎