New Zealand's Government Communications Security Bureau facility in Waihopai.
One last chance to show a photo of New Zealand’s Government Communications Security Bureau facility in Waihopai. Photo from Schultz.

One last chance to show a photo of New Zealand’s Government Communications Security Bureau facility in Waihopai.     Photo from Schultz.[/caption]

Commerce Commission wants marketing code, better dispute resolution

On Monday the Commerce Commission instructed the telecommunications industry to develop a marketing code. On Thursday it called for improvements to the Telecommunications Dispute Resolution Scheme.

Both moves are part of a larger ComCom project to reduce the remaining customer pain points.

The Commerce Commission wants to see a marketing code that gives customers all the information they need to make informed buying decisions.

It issued a set of marketing guidelines and told the Telecommunications Forum (TCF), the industry body, it has 60 working days to turn these into a retail service quality code.

Accelerated process

That timetable will mean working through the summer months. In part that’s because there is pressure to move fast.

Telecommunications Commissioner Tristan Gilbertson says there’s increased marketing active thanks to Chorus starting to remove the copper network and Spark retiring the old public switched telephone network.

Although it will take time to develop the code, Gilbertson wants telcos to move their marketing in line with the yet-to-be-developed code as we head into Christmas. This is traditionally a busy time for sales in the sector.

When the code is developed, the Commerce Commission wants it to be binding on TCF members.

Specific guidelines from the Commerce Commission include:

  • Making sure consumers have sufficient notice of changes to copper service so they are not rushed into decisions.
  • Telling consumers about the full range of available alternatives. In most cases this won’t square with what their existing providers want them to buy.
  • Information on the performance of alternative services. The Commerce Commission wants to see the end of claims of speeds “up to” and theoretical maximums.

Upgrading disputes resolution scheme

New Zealand’s 14-year old Telecommunications Dispute Resolution Scheme (TDRS) is about to get its first upgrade.

Telecommunications Commissioner Tristan Gilbertson wants to see improvements to raise the profile of the TDRS with consumers and lift its performance.

He says: “Our work shows… that most consumers have never heard of the scheme and, even if they have, they can find themselves locked out because many basic issues, including speed and performance problems, are currently excluded.”

This means there is a fragmented way of dealing with telecommunications complaints.

His plan is to upgrade the scheme to make it “a one stop shop for fast and effective resolution” of complaints.

One key change is to make the TDRS independent of the Telecommunications Forum. The TCF is made up of telecommunications service providers which can make for blurred lines of accountability.

TCF chief executive Paul Brislen says his organisation has started working on the TDRS upgrade.

He says; “…consumers are given contradictory messages about who to contact if they have issues with their provider. We want to make these processes as clear as possible for consumers and we support the Commission’s desire to have a one-stop shop for consumers to resolve their complaints.”

There are a lot of complaints. The TCF says it handled 2812 complaints and enquiries from customers last year.

Brislen says 98 percent of these were resolved promptly with service providers working with the customers.

2degrees hits new revenue high in Q3

2degrees services revenues hit $148 million in the third quarter. That’s an increase of 7 percent on the same period a year earlier. The company has reported record revenues for three quarters in a row.

The numbers reported by Trilogy International Partners, 2degrees’ parent company, show an eight percent year-on-year rise in postpaid connections. That’s an indiction 2degrees is earning better margins.

Broadband connections are up 13 percent and revenue from the broadband part of the business is up 15 percent year-on-year.

In the announcement 2degrees said its 5G network will launch in the first quarter of 2022.

Sky to join TDL contributors

Spark, Vodafone, Chorus and 2degrees will continue to pay the largest share of the government’s Telecommunications Development Levy (TDL). But there’s a new name on the contributor list this year: Sky TV, which is now a significant player in the broadband market.

This year’s TDL is $10 million, down from $50 million in recent years. The levy is used to pay for essential, but not commercial, infrastructure and services such as rural broadband, a relay service for deaf users and 111 emergency calling.

The Commerce Commission has issued a draft determination and is looking for submissions by November 23.

Spark signals 5G progress

Speaking at Spark’s AGM, CEO Jolie Hodson said the company now has 5G coverage at nine locations. As previously noted in the Download 2.0, Spark is accelerating its 5G roll-out.

Hodson told shareholders Spark will spend an extra $35 million in this financial year bringing the total 5G investment for the year to $125 million. The plan is for nationwide 5G coverage by the end of 2023 although that depends on spectrum rights.

Elsewhere at the AGM, Spark said its Skinny Jump connections for low-income families now has 15,121 active connections.

Mattr to provide My Vaccine Pass plumbing

Spark-owned Mattr won the closed competitive tender to provide the technology underpinning the Ministry of Health’s My Vaccine Pass. The pass is a QR code that shows a person’s vaccine status. Having a pass will let people into shops, other businesses and events.

Waihopa spy site has done its dish

The Government Communications Security Bureau (GCSB) is to close the Waihopai satellite communications interception station. Announcing the closure, GCSB minister Andrew Little said the site is no longer needed and is close to obsolete.

In other news

Immarsat has merged with Viasat. The satellite companies both planned to start LEO networks next year to rival Starlink.

Weta Digital is the latest New Zealand technology business picked up by an overseas buyer. The buyer is Unity, a US-based 3D content specialist. Reseller News says the deal is worth $2.3 billion.

At the New Zealand Herald Chris Keall reports that Privacy Commissioner John Edwards’ move to the plum UK privacy role is now official.


 

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Gartner’s forecast for New Zealand’s tech sector looks bright for everyone except communications services.  Gartner

NZ Comms sector left behind as IT spending surges

Gartner’s latest forecast says spending on New Zealand information technology will grow 6.7 percent next year. The forecast growth will be uneven. Gartner forecasts spending on enterprise software and devices will grow over 10 percent. Meanwhile spending on communications services will be flat; growing 1 percent. Next year Gartner forecasts the total IT spend to rise to $14.7 billion. That’s up from $13.8 billion in 2021.

Sideways

Spending on communications services will move sideways from $4.16 billion in 2021 to $4.2 billion. This is the largest segment. All the other segments will grow. Spending on data centre systems will climb 5.2 percent from $362 million to $381 million. Gartner says this reflects the shift from on premise computing to the cloud. IT services spending will grow 6 percent from $4.1 billion to $4.4 billion. This will take it past spending on communications services for the first time. This category includes managed services, consulting, and cloud infrastructure as a service (IaaS).

Enterprise software

Enterprise software continues to see rapid progress. Last year it grew 13.1 percent from $2.7 billion to a shade under $3 billion. This year Gartner forecasts 10.8 percent growth to a little under $3.5 billion. In 2021 spending on devices, for the most part that’s PCs and tablets, was up 6.1 percent. Remote work and learning drive growth. Gartner sees that continuing over the next year. Enterprises will upgrade devices and spend on new hardware to help employees with remote or hybrid working. The total installed base of PCs in New Zealand grew by 30% in 2020 and a further 18% growth is forecast for this year.

Vodafone relaunches wholesale unit as VIP

Vodafone has relaunched its wholesale division. Now branded as Vodafone Infrastructure Partners or VIP the unit will sell fixed and mobile services along with a range of specialist products and services. This will include options for mobile virtual network operators (MVNOs) and the Internet of Things (IoT)

Tony Baird, the company’s wholesale and infrastructure director says Vodafon.e already works with more than 100 partners including “international carriers, hyperscale operators, managed service providers (MSPs), greenfield property developers and iwi businesses”.

There’s a clear emphasis on iwi partnerships. Baird says: “As part of Whārikihia, our business-wide Māori development strategy, we want to partner with Māori business and iwi on customised infrastructure solutions and collaborate to create long-term value. Our approach is summed up in our tagline, Tūhono ki te Paerangi, which means connecting to the horizon.” 

He says the company sees a lot of opportunity for growth, 

Murray Osborne, a ten year Vodafone veteran, who in the past lead the public sector team will head VIP. 

Opensignal flags Vodafone as fastest 5G

While there’s little between them in five out six 5G experience categories, downloads are faster on Vodafone’s network. The 2021 5G Experience Report from Opensignal clocks downloads on Vodafone’s network at 275.6Mbps. Users on Spark’s 5G network see download speeds of 157Mbps. Upload speeds are the same, 18.9–21.3Mbps on both networks. These speeds put New Zealand in the top 15 countries around the world for 5G speed. We are one place behind Australia. Opensignal says there is “no significant difference in users’ experience” when playing videos, gaming or using voice applications. Likewise there is nothing between the two when it comes to network availability. The company’s researchers made measurements over 90 days from the start of July 2021.

Chorus: NZ in broadband top 10 next year

Chorus says its planned upgrade will propel New Zealand into the top ten countries for broadband speed by early next year. The wholesale fibre company is offering to upgrade 100Mbps consumer connections to 300Mbps. Upload speeds will climb from 20Mbps to 100Mbps. Some business fibre plans will move to 500Mbps up and down. Modelling shows the average download speed after the upgrade will be around 230Mbps. It’s up to broadband retailers how they handle the speed upgrades. Chorus says it hopes most customers will see the benefit before the end of the year.

Chorus goal: 1 million fibre connections in ’22

CEO JB Rousselot says Chorus aims to have a million fibre connections on its network by the end of 2022. In a presentation at the annual general meeting on Wednesday Rousselot says Chorus hit 900,000 connections earlier in the week. Uptake in fibre areas is 66 percent. The company added 23,000 connections in the recent quarter despite Covid restrictions. Since then fibre connection activity has returned to pre-lockdown levels.

Small business under attack as security breaches double in three years

Research carried out for HP says more than half (54 percent) of New Zealand small businesses saw online crime in 2021. Attacks are now at twice the level reported in the previous 2018 survey. HP says the average cost of an attack is $159,000. With a large number of employees working from home there are new vulnerabilities. Half (49 percent) of the respondents say outdated software is a significant security threat. Almost as many put the blame on their workers: 44 percent of respondents identified employee carelessness as a threat. HP doesn’t say so, but this suggests companies need more security training.

In other news…

Australia’s Telstra plans to buy Digicel Pacific for US$1.6 billion. The deal os backed by the Australian government. China Mobile was a potential buyer for the regional mobile operator. The move is as much political as commercial. At Reseller News, Rob O’Neill reports Spark-owned distributor Telegistics has a new brand. From today it is Entelar. CommsDay reports Sydney and Auckland are among the most expensive datacentre locations. Auckland is cheaper than Sydney but both are a long way behind cities like Singapore. At The Register Simon Sharwood writes: China Telecom booted out of USA as Feds worry it could disrupt or spy on local networks. He says: The FCC now believes – partly based on classified advice from national security agencies – that China Telecom can “access, store, disrupt, and/or misroute US communications, which in turn allow them to engage in espionage and other harmful activities against the United States.”


 

The Download 2.0 is a free weekly wrap up of New Zealand telecommunications news stories published every Friday.

All it requires is an email address. Your address is only used to send out the newsletter. It will not be sold to anyone.

I’m not collecting the data for anything other than sending out the newsletter. You name isn’t going to be sold anywhere.

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Xi Jinping has grasped a fundamental truth in his quest to win the technology race – that internet companies are all ultimately disposable

Writing at the Guardian John Naughton wonders if  there are lessons for the west in the way China deals with its tech giants. 

This is story of two parallel universes. Over in the western one, neoliberal capitalism rules. In the other – the Chinese universe – a different system presides. In both universes, government concern over the growing power of giant tech companies has been growing for a while, but there the similarities end.

None of this should be taken as an endorsement of the Chinese regime, but to raise two serious questions.

The first is an exam question: does the contrast between western feebleness in reining in our tech giants and Chinese effectiveness at controlling theirs imply that only authoritarian regimes can bring swaggering corporations to heel? Discuss. Do not write on both sides of the paper.

The other question is whether Xi Jinping and co understand something that we seem unwilling to accept – that social media companies, no matter how large and apparently powerful, are ultimately disposable.

Let’s deal with the last question first.

Social media companies are disposable. Closing them would be disruptive but it would do little long term harm to the economy.

Unhealthy dependence

Many business depend on aspects of social media. Yet every one of those dependencies could transfer elsewhere.

Take the companies who put all their marketing eggs in, say, the Facebook basket. There are other, often better advertising options available elsewhere.

Groups or families who use Facebook for communications can find other forums. It’s not as if there is a lack of choice.

Making the adjustments would take time. But, on balance Naughton and the Chinese Communist leadership are right: Social media is disposable.

What about the West’s inability to rein-in the worst aspects of tech giant’s abusive behaviour?

For now there is not the political will to act. That will not always be the case.

It will start with Facebook which is the worst offender by some distance.

Now the awful truth about Facebook’s cynical behaviour and its arguably evil business model is out in the open there will be fewer and fewer prepared to defend the company against regulation and even accountability.

There will be a fight. The results may be imperfect and often unsatisfactory, yet change is on the way.

Amazon Web Services says it will build a Region in New Zealand. AWS plans to start operating local cloud data centres by 2024.

An official press release telling us about this runs to more than 3200 words. It’s long, wordy, poorly written and hard to understand.

Despite the torrent of words, it is light on details.

Mystery

It doesn’t answer key questions.

Such as: “Where will Amazon locate its promised data centres?”

That’s not mentioned anywhere in the 3200 plus words.

It’s an important question. New Zealand is on a fault line. That has implications.

Our biggest city, Auckland, is closest to the submarine cables piping in data from around the world. That’s handy. Yet because it sits on an active volcanic field it may not be the best site for a $7.5 billion investment.

Auckland has a large workforce, although the construction skills needed to build a data centre are in short supply. Does Amazon propose to bring that expertise in?

Electricity

There’s an undersupply of electricity in the Auckland region. In winter Huntly’s dirty old coal-based power plant kicks in to top up the power supply.

Will AWS be using that power?

Meanwhile, at the other end of the country there is, or soon will be, an oversupply of low cost, clean, green power. Is that in the plan? It should be.

New Zealand’s south has a cool climate. Cooling is a major operational cost for data centres. Locating in a cooler climate not only reduces costs, it smartens up green credentials, an important part of any cloud marketing programme.

Data transit

If Amazon locates in or around Auckland, it won’t have to pay much in the way of transit charges for data travelling up and down the nation’s backbone.

Nor will it pay for the cost of bringing in the power needed to run a hyper-scale data centre.

New Zealanders subsidise moving power around the country. There is a limit to how much of that is possible without network upgrades. Who pays for that?

AWS’ numbers look as they have been polished up for maximum press release impact.

From the press release:

AWS released an economic impact study (EIS) that estimates it will create 1,000 new jobs through investment of NZ$7.5 billion (US$5.3 billion) in the new AWS Asia Pacific (Auckland) Region with an estimated economic impact on New Zealand’s GDP of NZ$10.8 billion (US$7.7 billion) over the next 15 years.

Jobs for who?

We can assume many of the 1000 jobs will be temporary roles for people building the data centres. It’s rare for a giant data centre to employ more than a handful of people and that includes security guards.

Once the ball is rolling there won’t be many data centre jobs. There could be development work piggybacking off the data centre. AWS doesn’t say. Nor does it say where the people to fill those roles will come from.

Amazon doesn’t tell us enough about its plans for any sensible analysis of its $7.5 billion investment claim.

We know AWS is a worldwide hyper scale cloud business. Any comparison with Spark is always going to look odd. Yet, Spark operates New Zealand’s largest existing data centre at Takanini. That makes it the closest we have to a benchmark.

Spark’s original project cost $60 million. Subsequent expansion means that price will be a lot higher. It won’t be anywhere near $7.5 billion. It won’t be one tenth of that amount.

Market share

IDC Research says Spark and Datacom have a 43 percent share of New Zealand’s Infrastructure as a Service market. Amazon has a 23 percent market share. Microsoft is a touch behind on 19 percent. In other words, the four are all roughly the same size.

As a rule, the large, hyper scale cloud providers AWS and Microsoft Azure take 70 to 80 percent market share in any territory.

Their lateness to build here is one reason they have less share at the moment. The lure of winning that additional market share could be part of the reason both Microsoft and AWS have made big New Zealand cloud announcements in recent months.

Sure, there is more to cloud than IaaS. Yes, the market is expanding fast. Yes, Amazon is hyper scale. Does it need to spend 20 or 50 times as much as Spark?

Datagrid

Datagrid is a $700 million project to build what may still be New Zealand’s first hyper-scale data centre. The business is headed by Remi Galasso and Callplus founder Malcolm Dick.

The pair know a thing or two: they got the Hawaiki cable off the ground.

Datagrid has chosen a Southland site.

Interestingly, Amazon has invested in Hawaiki. It’s likely the Datagrid team has talked to AWS about potential cooperation1.

Part of Datagrid’s plan is to build a new submarine cable connecting Invercargill to Australia. There will also be a domestic submarine cable linking the site to major New Zealand cities.

Will Amazon build a similar cable to distribute its data?

Scale

At first Datagrid will be a 60 megawatt, 25,000 square metre data centre. Over time it will grow to 100 megawatts and 40,000 square metres. That’s a lot of data centre.

Assuming data centre costs scale better than linearly and Amazon can call on its worldwide economies of scale, its project will build more than ten times Datagrid’s capacity.

Which brings us to another question. How big is New Zealand’s cloud market?

In March Spark told Computerworld’s Sarah Putt it estimates total cloud revenue at around $730 million.

That figure doesn’t square with AWS’s $7.5 billion build budget over 15 years unless AWS anticipates the market continuing to grow at a fast rate.

Assuming AWS doesn’t capture the entire market and intends its New Zealand operation to be profitable, either the local market would need to grow at about 40 percent a year for the next decade or the company expects to host a huge amount of international business here.

Unknowns

There are plenty of unknowns. Too many unknowns to make a careful analysis of AWS’s plans. Yet there are four possible conclusions one could make about the $7.5 billion announcement.

The first is the most cynical: that it is pure public relations hype.

Mentioning a big enough number and promising lots of jobs is a sure fire way of seeing off any resistance and buying-in political good will. AWS can rest assured no-one is going to look back in 15 years to check it spent $7.5 billion.

Big technology companies like AWS have plenty of form when it comes to talking things up.

Efficient

A second conclusion, is that Amazon throws money around like water and is hugely inefficient. It overpays for everything.

This is implausible. It doesn’t square with anything we know about Amazon which is famous for trimming costs to the bone. Operational efficiency is key to making money from the cloud.

The third possibility is that AWS expects to scythe through the local cloud market. It has done this before. It’s possible, but wise cloud customers are wary of dealing with a single international ecosystem. Many will seek alternative service providers as a back-up.

That’s going to limit AWS’ potential market share. And even 100 percent share of a $730 million market doesn’t justify spending $7.5 billion even with heroic growth rates.

A more likely story is that AWS has bigger plans for New Zealand that serving local markets. It has hinted at this without explicitly saying anything. New Zealand gives, say, Australian AWS users a viable alternative location with, if not always similar, at least readily understood local conditions.

One last point. Until now, the big global cloud companies stayed away from New Zealand. They didn’t like it when there was only one submarine cable network. They didn’t like what they saw as a hostile and monopolistic telecommunications market. It took ten years of industry reform.

As far as technology is concerned, no-one thinks of us as a smug hermit kingdom.


  1. A speculating person might wonder if Datagrid will become part of AWS. ↩︎