The Telecommunications Bill going through Parliament sets the tone for New Zealand’s fibre era.

By 2022 around 87 percent of New Zealand’s population will have access to fibre.

Many homeowners and businesses have already chosen to connect to fibre. This month Statistics New Zealand reported one in three broadband connections are now fibre. That’s up from one in eight connections two years ago.

According to the most recent Broadband Deployment Update from the Ministry of Business, Innovation and Employment, uptake is now 44.1 percent. In some regions uptake is already higher than 50 percent.

The numbers continue to climb.

Fibre is only likely to get more popular with Spark buying up sports broadcast rights. Early next year the company will launch an app so viewers can watch Rugby, Football and Formula One racing online in high-definition. Other sport will follow.

Fibre everywhere

I’m not sticking my head out here by saying I expect half of all New Zealanders to have fibre connections by 2022. The number could be higher.

By then Spark will have a 5G mobile network, other mobile carriers could also offer fast mobile broadband and fixed wireless services with fibre-like speeds.

Many of those left with copper networks should see better experience thanks to VDSL and other fast copper technologies.

We will be in a new communications era.

New rules

Last year the National government introduced the Telecommunications Amendment Bill. It aims to set out the rules for fixed line telecommunications in the fibre era.

Most insiders expect the Bill to have its third and final reading between now and Christmas. After then it will be law.

This week the government tabled a supplementary order paper for the Bill. Among other things it sets a new cap for the wholesale price of a fibre connection.

The government has decided that a 100/20 mbps connection will be the benchmark. It calls this the anchor service. Some in the industry have argued that by 2022, 100/20 mbps will be bordering on obsolete. Never mind, the key point is that the price cap will $46.

Telecommunications Bill brings certainty

This is important as it gives everyone in the industry something to work with as they plan strategies for the coming era.

The figure means wholesale broadband companies make a profit. They have enough incentive to expand fibre networks beyond the reach of 87 percent of the population. No doubt this will happen over time.

Likewise retail service providers know what they need to charge consumers to make their broadband services pay. Everyone in the industry likes certainty.

Elsewhere the Bill will make telecommunications regulations more like those in other utilities. It will remove unnecessary rules that are a hang-over from the copper era.

Watching service quality

The Bill also aims to get the Commerce Commission to take more notice of retail service quality. The Commerce Commission will also get to check that emergency services are available even in the event of a power failure, which would knock out fibre services.

The Commerce Commission will be allowed to conduct inquiries into any matter relating to the industry or for the long-term benefit of consumers.

Telecommunications Minister Kris Faafoi says the new regulated price: “…represents a fairer deal for everyone: a good price for New Zealand broadband consumers and a reasonable price for Chorus”.

Chorus CEO Kate McKenzie says the supplementary order paper provides some clarification. She says: “We welcome this step towards a new regulatory framework for New Zealand’s key communications infrastructure. We look forward to the passage of the bill and to starting work on implementation”.

One thing that hasn’t been said in public, but is discussed by the industry in private is that the certainty brought by the Bill when it becomes law should calm things down between the various players.

The last year or so has seen retail and wholesale companies jockey for position ahead of the Bill. Relations between players have been tense. Most of the time this has been behind the scenes, but every so often something emerges in a speech or a media interview.

Once the Bill becomes an Act, everyone can get back to the more important business of finding innovative ways to make money from telecommunications services. That means giving customers what they want and seeking out new things that we are going to want in future.

D-Link’s NZ$600 Covr attempts to help home users fill Wi-Fi blackspots. I say attempts because the results are hit and miss. Most of the time it misses.

The kit first arrived at Castle Bennett in May. I tried and failed to make it work at the time. This week I tried it again and got it to work. Yet, as we shall see, it disappointed.

In the last few days I’ve been busy revisiting and retesting all the routers and related kit that I have to hand.

Chorus installed my fibre this week. I’ve a gigabit line. So for the first time Wi-Fi is my speed bottle neck. There’s a slew of products which, on paper, promise Wi-Fi speeds greater than 1 Gbps. None of them come close.

More about that in another post. Let’s get back to Covr.

During testing it worked as expected for a fleeting moment. The system was unable to create a stable network for more than 20 minutes at a time. When it did manage to work, the performance was erratic and poor.

Covr is an unwelcome reminder of the bad old days of home networking.

If you were there you’ll know what I mean. In those days a new piece of software could make a network grind to a halt. At times it felt like a sneeze could put a home network out of action for hours.

D-Link Cover home wireless mesh network nodes

Mesh network

D-Link’s Covr is an example of something known as a mesh network. This is a way of spreading Wi-Fi signals over a larger area than a single wireless router might cover. In effect you have three connected wireless routers, but to the user they look and act like a single router.

Mesh networks are common in offices, campuses and large buildings.

You might want a mesh network if you have a large home or the house is laid out in a way that means the Wi-Fi isn’t strong enough in places where you want it. Say you’ve had fibre installed next to your TV at one end of the house and a kid’s bedroom at the other end gets a poor Wi-Fi signal.

There are other consumer mesh network products on the market. Most seem to suffer from similar flaws. This suggests to me this is because the technology isn’t quite ready for everyday users.

If Apple hadn’t lost interest in home networking, mesh technology would be ripe for that company’s attention. Apple has a knack for packaging unpolished technologies in a consumer friendly ready-to-use format.

Not so simple

In the Covr box are three wireless access points. One is the main unit. D-link calls them nodes.

Each node has a power supply. And that means it needs a power socket. The power cables are about a metre long, so you’re restricted to putting nodes near power outlets. There is a rival home network technology that uses power outlets. You might want to consider that instead of Covr.

The box also holds a single Ethernet cable and, for the aesthetically minded, alternative colour fascia plates for the access points. Presumably this is to make sure your nodes don’t clash with the curtains. I find this silly because even if you change the cover the nodes still stand out.

There’s also a sheet of paper optimistically labelled Simple Setup Guide. You can work through this, or you can download an iOS or Android app that walks you through the process.

As we shall see, the app didn’t work for me. Which meant I had to return to the paper instructions.

Covr app

The app tells you to connect the main node to a power supply and to turn off your modem. You then connect the access point to the modem with the Ethernet cable and switch everything on. Once everything is running, you are then asked to log into the Covr wireless router from your phone.

In my case this simply did not happen. The iPhone could find the router, but it couldn’t log on. Nor could my small iPad Pro or my other iPad Pro. I then tried to do this all over again with an Android phone. Once more, there was nothing. Four attempts with four devices didn’t work. Not a sausage.

When I first tried Covr I gave up in frustration at this point. This time around I attempted to manually log-in to the router from a desktop Mac. It worked. I managed to get into the web-based control panel.

Part of the panel shows a map of the network. If one of the connections, and this includes the connection from the main node to the internet, is broken it shows up in red. At this point things appeared to be running fine. The next task is to configure the secondary nodes.

Secondary nodes

In some ways configuring secondary nodes is clever. As already mentioned, you have to find an extra power socket to do this. Given the master node needs to connect to a modem which needs to connect to the fibre ONT and all three need a power supply, you need four power points to configure Covr. I had to use a distribution board. There are other cables here, so it is a rats’ nest.

Once you have power, you then connect the secondary node to the main one using the Ethernet cable. After a few minutes the light changes colour. When it turns white, you’re configured.

At this point you can unplug, move the secondary node to a Wi-Fi blackspot and connect it by wireless back to the mothership. The light flashes orange then glows white when you can connect. You may need to move it about for a while until it turns white. Let’s hope all your Wi-Fi blackspots are in easy reach of a power socket.

A working wireless mesh?

At this point I had a working wireless mesh. Well almost. None of the mobile devices would connect. But I did have strong signals around the house and all the PCs in the house were able to connect.

After about 20 minutes of a working mesh network, the main Covr node lost its internet connection. I should point out that nothing had moved, there were no external events, no visible triggers.

Next the secondary nodes dropped off the mesh network. I spent an hour troubleshooting, but nothing I did changed things.

Eventually I decided to reboot everything and start once more from scratch. It took about an hour to get back to the same point with a working mesh. About an hour later it all fell apart again.

This was the pattern all day. Actually I’m not sure about that. I gave up the third time the network collapse. Life is too short. In the end I packed the Covr bits and pieces back in the box. It’s not for me.

Performance issues

During the brief interludes while things were humming, I tested the internet connection speed from the iMac. It was getting around 150 mbps up and down. This is less than half the usual connection speed through the main UFB modem and wireless router. Typically the iMac ‘sees’ 350 to 420 mbps. So the price of filling in Wi-Fi blackspot is a much slower connection.

It turns out poor performance is by design. Mesh networks in offices and factories have a separate channel to manage traffic between nodes. Covr uses the same Wi-Fi bandwidth that connects devices to the access points. In other words it shares the connection with your devices. This explains why we only saw half the usual connection speed.

I can’t recommend D-link’s Covr. It seems half-finished. There was a firmware update that I installed before testing, so the software is up-to-date.

Of course, you might have a different experience. The fact that none of the devices, other than the computer, would connect is a deal-breaker. For me the slow network speed is also a problem. I’d prefer to spend the NZ$600 asking price on a better quality wireless router and learn to live with any Wi-Fi black spots.

New customers signing for Vodafone’s home fibre plans can get an Ultra Hub Plus modem as part of the deal. This means they get a connection on the carrier’s mobile network straight away. Lucky customers will connect via 4G. Less fortunate ones may have to do with a 3G connection.

Ultra Hub Plus is an interim fix while customers wait for fibre. It means their connection is not disrupted during the installation. Once they are on the UFB network, it then acts as an always on backup connection. Like a lot of these things it is good in parts.

Vodafone’s press release says the Ultra Hub Plus makes for a smoother switch to fibre.

It goes on to describe the Ultra Hub Plus as a “game changer”: isn’t everything these days? The release also says it is super easy to set up and use and a seamless experience.

I tested the device and found Vodafone isn’t exaggerating on those counts. Yet it’s not all wonderful. The Hub’s fixed wireless broadband performance is only so-so.

Vodafone Ultra Hub Plus

Easy as

When you sign up, Vodafone dispatches an Ultra Hub Plus modem by courier. Open the box and along with the modem and its power supply are a couple of sheets of paper. One says: “Five minute easy start”.

Experience says that a marketing department that uses words like “game changer” then adds both ultra and plus to an otherwise straightforward product name might not take a lot of care over a claim like five-minute easy start.

In practice, Vodafone’s claim is modest. I had a working connection in four minutes.

You plug the device in, then hit the power button. The instruction sheet says the modem’s wi-fi is active in around 90 second and the 4G or 3G connection is ready in three minutes and thirty seconds.

Both sets of indicator lights switched on more or less on schedule.

Wi-fi router

The next step is to connect wireless devices to the modem. Vodafone includes another sheet of paper with a QR code. All you need to do is point an iPhone or iPad camera at the code and those devices will connect.

If you use Android, you’ll need to download a QR app first. Depending on your circumstance, this could take you past the five minutes. But not by much.

With Apple devices, you only need to scan once, all your other Apple kit learns the password by what seems like telepathy. In truth this is one of those Apple features which feels a little like magic.

Ethernet

There are three Ethernet ports on the back of the Ultra Hub Plus, so connecting a laptop or desktop with a port is a breeze. Connecting by wi-fi is also straightforward. Either use the scan code or press the WPS button and find the Hub in your wi-fi router list.

This is as easy and fast as Vodafone’s marketing promises.

It is not the end of the set up story.

While the set-up speed for Ultra Hub Plus is impressive, the broadband speed is not great.

As you can see from the screen shots, I get around 13 mbps down, less than 5 mbps up.

Throttle

While higher speeds are possible in theory, Vodafone says it throttles the speed to 12 down and 6 up. At the same time, it tweaked the hardware to deliver a decent level of service.

How decent? In practice the throttled, optimised throughput is plenty for acceptable high-definition television streaming. When I first tried, we saw plenty of buffering. Once things started the modem seemed to cope with the stream.

Next I tested Sky’s Fan Pass and BeIn Sport on an iPad. In both cases the apps stumbled at first. Each gave me an initial error message. Fan Pass thought there wasn’t a network connection for a few seconds. BeIn went blank.

None of this happens with my normal connection. It might scare less tech-savvy users, but everything worked fine only seconds later.

In both cases the picture was acceptable soon after. There was a little stutter at first, then it settled down. I even managed to get two streams running at the same time. Which says a lot about acceptable baseline speeds for non-specialist home internet users.

Vodafone Ultra Hub Plus verdict

There’s a clever balance here between ‘enough broadband to tied you over’ and ‘not clogging the mobile network with fixed wireless traffic’ or ‘encouraging customers to choose this instead of fibre’. Vodafone has the mix spot on for what the Ultra Hub Plus promises on the box.

The Ultra Hub Plus’ ability to act as a back-up connection for when fibre fails is also smart.

Fibre doesn’t break down often, except in a power cut which, ironically, would also take out the Ultra Hub Plus. In that case then you’ll need to use a mobile phone. Many of us are so dependent on broadband that an alternative channel, that’s still able to handle Netflix is an insurance policy.

Silverdale 4.5G cell siteFor 5G to deliver its promise, carriers need to use higher frequencies than today’s mobile networks.

Higher frequencies means more bandwidth. This can deliver faster data and more connections per square kilometre.

As a rule, higher frequency radio signals travel over shorter distances. Higher frequency sites will be useful in areas of high population density. In some cases they may be only a few dozen metres apart.

Cover every street

When cell sites are a few dozen metres apart, you need a lot of them. They will, in effect, need to go down every street in the country. The antennae don’t need to be as high as today’s cell towers. You can install high frequency cell sites on telephone and power poles or the sides of buildings.

Compared with today’s cell sites each one will cost a lot less to build. The hardware is smaller and less of an eyesore so the planning requirements will be simpler. And there will be some incremental upgrades.

Yet there will be so many new sites that the total cost of a 5G network could be as much as the earlier mobile. It all depends on how far New Zealand carriers intend to push the technology. It’s possible we won’t get the same 5G service as customers in say, Shanghai, Paris or New York.

Fibre is the 5G backhaul answer

Connecting lots of cell sites is tricky. Today’s cell sites often connect back to hubs using fibre connections. This is the best technology.

When Telecom, now Spark, built its XT mobile network it made a big deal of its towers using fibre backhaul. That’s the name engineers give to the practice of getting signals back to major centres.

Fibre backhaul gave the XT network a clear performance edge over Telecom’s rival. At least it did once Telecom ironed out the initial teething troubles.

Wireless option

Carriers don’t have to use fibre for 5G backhaul. In my NZ Herald interview Alex Wang said self-backhaul would be a feature of 5G. That is the towers link to each other in a wireless mesh network to get traffic back to a central hub.

Wireless backhaul is possible, but it limits overall network performance. You need a lot of bandwidth to backhaul thousands of 10 or 20 Gbps data streams.

It needs to be line-of-sight and it often uses higher power signals. Cue the protests and renewed fear of microwave signals causing health problems.

In practice fibre is a better way to handle 5G backhaul. It’s the most practical way to deliver the promised performance.

Overbuild

And that’s where the New Zealand mobile telecommunications industry hits a potential problem. There is already a nationwide fibre network for UFB.

Fibre companies already have fibre running down every urban street. It cost more than $5 billion to build that network.

That’s how much carriers must spend if they want a viable nationwide 5G network and compete with each other.

You could argue that building three more nationwide fibre networks would waste resources.

It would also add a lot to the cost of using a 5G network. Add in the cost of new antennae, site fees and network controllers. It could add up to more investment than carriers spent on earlier mobile generations.

Shared network

In practice there’s little chance of carriers building three more nationwide fibre networks. In theory the carriers could build a shared network.

There are arguments why this should not happen. For a start it could shut out any new competitors. There’s also a fear that three carriers owning shared mobile infrastructure could become a cartel. That’s also bad for competition and terrible for customers.

You can assume the Commerce Commission wouldn’t sign-off on shared infrastructure unless it is open access and otherwise regulated. The alternative is anti-competitive and would stifle innovation.

One third of a lot of money is still a lot of money

Even if carriers build a shared fibre 5G backhaul network, the cost per carrier would still be one-third of a big sum. It is more money than Vodafone or 2degrees appear to have today. This is before they need to spend on towers, antennae and the other kit needed to run a 5G mobile network.

Spark could raise the money for its share. The company has little debt. But even its investors might baulk at the cost of a nationwide fibre 5G backhaul network.

As we’ve already mentioned, a 5G network may need many more towers than the 4G networks that are in place today. Each site is likely to cost a lot less than the cost of a 4G site. The number of 5G sites needed to blanket cities and towns means the capital expenditure is going to, at least, be on a par with the investment in 4G. In reality it is likely to cost more.

A billion here, a billion there

Carriers don’t like to talk about the cost of building their networks. In round numbers each has spent in the region of NZ$1 billion on mobile network infrastructure.

Sure, that’s a back-of-an-envelope calculation. The exact numbers aren’t important. They have also invested many millions in buying spectrum.

The three carriers’ total capital spend on 4G to date is on a par with the amount needed to build the UFB network. They will also need to find the thick end of billion or so to build the extra sites needed for 5G.

This would be fine if there was a chance of getting customers to pay a premium for 5G mobile. That’s not going to happen. We’ll look closer at the business case for 5G in another post.

The open access model

New Zealand already has a tried and tested model for a separate wholesale layer. It’s called UFB.

The big telcos don’t like that model because by law wholesalers treat them the same as small ISPs. Spark can’t go to, say, Northpower and ask for a special deal “because we’re your most important customer”. That grates with the big carriers.

They also resent the wholesale charges. Remember the copper tax debate? It annoys telcos that the wholesaler gets 40 percent of each customer’s subscription.

Never mind that sum means the wholesalers gets a fair return on their investment. The regulator decides what’s fair.

The Chorus proposal

Which explains why the four big telcos scorned Chorus CEO Kate McKenzie’s proposal. She suggested that Chorus could provide the fibre 5G backhaul. They fear loss of control and they fear having their tickets clipped. The cost per mobile connection for such a service would be tiny. It would be far less than the cost of building a new network.

In reality one or more of the mobile carriers may end up using some Chorus fibre to backhaul. They may also use NorthPower, UFF or Enable resources. What they don’t want is another wholesale network muscling in on their turf.

Yet, it looks like they will end up with either Chorus or a regulated Chorus-like wholesale organisation. Only Spark could go it alone. But it has better capital expenditure options on than overbuilding a fibre network.

Disclaimer: Chorus pays me to edit the Download magazine and a weekly newsletter. It didn’t pay me to write about 5G backhaul. Indeed, this post doesn’t reflect anyone’s opinion other than my own. No one vetted or otherwise approved this. Any mistakes are down to me. Your corrections or alternative opinions are welcome.

It’s no coincidence Sky TV reported a $240 million loss days after Spark won the Premier League Football rights. A thread connects the two news stories.

Spark is New Zealand’s rising media power. Sky is still number one, but fading.

You can’t blame Sky’s problems on Spark’s football win. The traditional pay-TV company hasn’t owned Premier League rights for five years now. Yet the move underscores the shift from old school television technology to streaming media.

Football key to sport portfolio

The English Premier League joins Spark’s growing TV portfolio.

The telco, yes Spark is still mainly a telco, also has the local rights to Manchester United TV. On the team’s current form that may not be much to write home about. Even so it’s a sound investment. United is the best know and most followed English club outside of the UK.

Spark says it plans to wrap the two football deals into a new standalone sports media business. Spark already has the rights to next year’s Rugby World Cup.

The company has hinted there is still more to come. Sky TV doesn’t have the clout, or the money, it once had. So Spark has an opportunity to prise other popular sports away from the incumbent. If nothing else, New Zealand Netball and Cricket must be possible candidates. And perhaps various motor sports.

Sky FanPass

This is not great news for Sky. But there are chinks of light among the dark. The pay TV broadcaster cut a deal allowing Spark to resell its FanPass service.

Fanpass is now another small, but nicely done plank in Spark’s sports media portfolio. It also means Sky gets to tap a market that it has previously struggled to reach.

Let’s not forget LightBox. Spark’s streaming TV operation may be a pale imitation of Netflix, but it’s a useful value-add for Spark’s broadband business.

Another useful add-on for Spark is that it offers cut-price Netflix to customers signing for long broadband contracts.

Sticky TV

All-in-all Spark already has enough media properties to keep viewers glued to its broadband services. And that’s a critical part of the company’s TV-over-internet strategy: customers who buy a bundle of services are less likely to decamp to a rival broadband service.

Premier League football isn’t New Zealand’s most popular sporting code by a long shot. However, it has particular value for Spark. First, it tends to be watched by relatively well-heeled fans who are willing to pay a couple of hundred dollars or so for a year’s worth of games.

Second, Premier League fans are well used to watching games using streaming. It was the first major sporting property to be picked up by a digital organisation. That was Coliseum Sports Media which had the rights from 2013 to 2016. Spark works in a partnership with Coliseum before BeIn Sport won the rights.

Overseas moves

In a media statement Spark managing director Simon Moutter say his company developed its plan after looking at overseas sports content media moves.

He says: “We’ve carefully considered the different models and will be looking to replicate the good things other businesses have done and learn from the challenges they’ve had — all the while thinking carefully about how sports media fits in a New Zealand context”.

Spark says it will launch its own sport ‘platform’ early in 2019 and will annouce pricing and package deals closer to the launch.

Latch

Spark Sport head Spark hired Jeff Latch to head the Spark Sport operation. He will oversee buying more content rights and will take charge of the ‘platform’. Latch was previously director of content at TVNZ. In that role he was in charge of buying content, including sport. Spark is partnering with TVNZ for the Rugby World Cup project.

Latch says Spark will work with a specialist sports-streaming company. He says the platform used will be different from the one used by Spark’s Lightbox service.

He also said Spark intends its sports media operation to work as a standalone business and not be used merely as a way to woo broadband or mobile customers. To a degree this is what Spark has done with Lightbox.

Netflix close to two million NZ viewers

Had Sky merged with Vodafone it may have fought off the challenge from Spark, although that’s far from certain. Yet nothing could protect Sky from its other threat: Netflix.

Roy Morgan research says Netflix now has nearly two million viewers in New Zealand. The service saw subscription numbers grow 35 percent in the last year to reach 1.9 million viewers. The research company goes on to report:

“Now over three million New Zealanders have access to some form of Pay or Subscription TV, up 13.9 percent on a year ago. The growth in Pay and Subscription TV is being driven by the likes of Netflix along with a suite of rival streaming services including Lightbox, Sky TV’s Neon and Amazon Prime Video.”

Viewer numbers are growing slower for Sky TV’s Neon service. It was up 1.7 percent in the year to reach a total of 1.6 million viewers. Lightbox is the second most popular video on demand servide with 830,000 users. That’s up 43 percent on last year, growing faster than Netflix. Vodafone TV has 295,000.