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telecommunications

VDSL price, New Zealand’s missed broadband opportunity

Tuanz CEO Paul Brislen says Commerce Commission regulation artificially inflates the VDSL price. He says that’s one reason the copper-based broadband technology isn’t more widely used.

He has a good point.

VDSL squeezes higher broadband speeds from cable networks than ADSL2+. That’s the main technology Chorus delivers to most of New Zealand through its roadside cabinet network.

Good for small business users

This makes it a good interim technology while we wait for the UFB fibre to reach the suburbs. In particular, it works well for video applications. According to TrueNet it suits most small businesses, especially those in suburban homes. VDSL also has potential in rural New Zealand.

Where I live, I see around 12 to 15Mbps down on my ADSL2+ connection. In theory I should get 1Mbps up, in practice I’ve never clocked uploads at that speed.

I’m 600 to 700m from the nearest Chorus cabinet. With VDSL I may get double today’s down speed and see perhaps 10Mbps up.

VDSL price makes it expensive option

As Brislen points out, VDSL2+ is expensive.

I pay $105 for a Telecom Total Home Broadband plan with 120GB of data. A VDSL2 plan with a similar amount of data costs around $160. There are gotchas with call prices and other aspects of the plans which will add to the cost. And I’d need to buy a new modem.

UFB fibre is due down my road – although maybe not past my house – in roughly two years from now. In round numbers a fibre plan with the same amount of data I enjoy today, but 100Mbps down, 30Mbps up will cost around $130.

All up, it would cost the thick end of $2000 to enjoy two years of being able to video-conference. That might just be worth the price if my colleagues and clients were keen to use video and were suitably equipped at their end. They’re not, so no VDSL for me.

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telecommunications

Ask not for whom the telco levy tolls….

Although it is called a levy, the $50 million government collects each year from telecommunications companies looks a lot like a tax.

That’s not necessarily a bad thing. The Telecommunications Development Levy pays for worthy causes like the government’s $300 million Rural Broadband Initiative, services for deaf people and upgrades to the 111 emergency call service.

Subsidising rural users

The TDL replaces an earlier scheme called the Telecommunications Services Obligation (TSO) which, in theory anyway, divided up the cost of providing land-line telephone services to unprofitable rural customers.

In effect it meant companies like Vodafone, CallPlus and Orcon had to shoulder some of the costs mainly carried by Telecom as a hangover from the days when a phone system was a public service, not a commercial business.

There was no end of arguing over the TSO. Vodafone pointed out those subsidised rural land line customers might be better off with mobile coverage than land-lines. There were other disputes.

New fund, new arguments

Now Chorus, which provides wholesale services to retail telcos, argues it shouldn’t pay the new levy. The company’s prices are largely regulated. Chorus can’t pass the additional cost on to its customers. The Commerce Commission, which manages the TDL doesn’t agree.

After considering charging content providers like Sky who deliver services over the telephone network, the Commerce Commission has backed off. The telcos aren’t happy about this, not is the Tuanz, the telecommunications user association.

The usual process is New Zealand is for too-ing and fro-ing between interested parties before the Telecommunications Commissioner makes a final decision.

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telecommunications

Trans-Tasman mobile roaming regulation coming

Two years ago the Australian and New Zealand communications ministers agreed to investigate trans-Tasman roaming. At the time Stephen Joyce and Senator Stephen Conroy suggested they might regulate.

Although that regulation moment appears closer, don’t hold your breath. Governments rarely move fast on these matters.

Yesterday the Ministry of Business, Innovation and Employment published submissions responding to a list of suggested options.

Tuanz: scrap roaming charges

Tuanz – the New Zealand telecommunications users group – wants to scrap roaming charges between the two countries.

While this sounds radical and will no doubt worry telcos it isn’t extreme. Europe is heading in the same direction. In theory the Australia and New Zealand economies are almost as closely tied as the European ones.

InternetNZ wants link roaming to the planned spectrum auctions – making spectrum licences conditional on better  behaviour or, like Tuanz, scrapping roaming charges.

Market failure

A key test for any government intervention is “has the market failed?”. Economists might question whether trans-Tasman roaming is a failed market in an abstract, academic sense. Others prefer a common sense approach. Business people will notice the dampening effect roaming rates have on trade between the two nations.

Something must be wrong if the first thing we have to do on landing is buy or refresh a local pre-paid Sim card, then divert calls to the new number. That can get tricky if device settings need changing at the same time.

Telcos: What market failure?

Telecommunications companies on both sides of the Tasman argue competition is enough to push down roaming prices. They say regulation is unnecessary. In Australia Optus says the problem is a lack of consumer information – that’s a startling, arrogant claim.

True, prices have fallen in recent years – as much as 90 percent. Cynics might argue that’s less about competition and more about heading off government regulation. Meanwhile, the Commerce Commission also regulates roaming inside New Zealand.

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telecommunications

New Zealand’s submarine cable debate

How does New Zealand get another submarine cable project off the ground in the wake of Pacific Fibre’s fund-raising failure?

Ryan Ashton posed the question at a technology industry networking event last night. Ashton wants to trigger a debate and people at the event joined in. At least one had worked for Pacific Fibre.

Ashton’s idea for a new cable amounts to crowd-funding. He says the three or four hundred million dollars required could be spread over, say, a million New Zealanders. The same logic could be used to argue for government funding.

An informal after work event held in a bar isn’t the best place for this discussion, yet this is a necessary debate. There are many issues to consider.

First we have to decide if an alternative to the existing Southern Cross Cable Network is necessary. And if it is, does that imply there’s something broken that government can fix by regulation or means other than building a fresh cable?

Replacing Southern Cross

Southern Cross will need replacing at some point and we don’t want to leave it to the last-minute. On the other hand, money is tight, perhaps it could be better spent elsewhere now and the problem revisited later.

Security is an issue. Southern Cross is a loop with two lines in and out of the country, that’s better than a single point of failure. A new cable will make us more secure. What would be the optimum number of cables for a country with a population of less than five million?

Does a new submarine cable need to stretch right across the Pacific when a simple drop across the Tasman could offer a quicker and cheaper alternative?

Is this something best left to market forces or is there a case for government involvement. How do we square China’s enthusiasm to take part when the US and Australian governments are hostile towards firms like Huawei?

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telecommunications

Tablet buyers prefer wi-fi-only models

Media coverage of a report from IDC Research says sales of Wi-Fi only tablets have passed sales of 3G models in Australia and New Zealand.

IDC’s analyst explained the shift away from mobile networks to Wi-Fi in terms of product offerings. This misses the point: for most people 3G doesn’t make sense on a tablet.

3G option is costly

Adding 3G, and now with the new iPad, 4G to an Apple tablet adds NZ$200 to the price. For the 16GB iPad, that’s a hefty 27 percent premium. For that kind of money, you need to know you’ll use that tablet while on the move.

To use mobile data you also need a Micro-Sim card and a mobile data account with a carrier. Make that an extra Sim card and account unless you don’t have a mobile phone.

3G is troublesome

When I bought my iPad 2 I decided this would be too much trouble. I might only need to use 3G with my iPad once or twice a month and I didn’t want to deal with extra Sim cards and mobile accounts.

Instead, if I need a 3G iPad connection while I’m on the move I use my mobile phone as a Wi-Fi hub. That way my phone account picks up the data cost.

I’m not likely to travel anywhere with my iPad and not take my phone as well.

Phone Wi-Fi hub fast enough

I haven’t benchmarked speeds on my iPad and phone combination against a 3G iPad alternative because the comparison is not important. My set up is more than fast enough for my everyday needs, the only drawback is using my phone as a Wi-Fi hub drains the batteries faster than normal use.

This approach means less administration and it consolidates all my data buying in a single account which means economies of scale.

If you’re always on the run and need plenty of data a 3G tablet might make more sense, for most users it doesn’t.