All about Telecom

November 12th, 2010 at 2:00 pm by David Farrar

Four recent issues, so will talk about them all in the one post.

First they have a new data roaming deal.

The new pricing gives customers 100 megabytes (MB) of mobile data for $100 while roaming overseas in these locations that’s the equivalent of $1/MB.

Customers will be charged $8.00/MB for the first 12.5MB and a remaining 87.5MB worth of data for the rest of their billing month will be free.

A year ago we were all paying $30/MB for roaming data, so this is a good step in the right direction.

If you are on a big trip and will use close to 100 MB this is a damn good deal. If you will only use 10 MB or so, then not so great.

charge $5/MB in Australia and $10/MB elsewhere (off memory). So if you plan to use more than 20 MB in Australia Telecom are better. And for US and UK they are cheaper at any rate.

My personal price point is around $1 – $2/MB. I will grudgingly pay that for international data for my mobile devices.

Secondly Stuff reports on the UFB tender:

Telecom will today step up its campaign to become the Government’s partner, releasing a poll on its website that says more Kiwis would prefer its network arm Chorus got the job of building the ultrafast network than electricity lines companies headed by . …

UMR said 48 per cent of those polled would prefer to see Telecom broken up and have “an independent, stand-alone Chorus extend the existing network”, while 28 per cent favoured the Government investing in a new network rolled out by electricity lines companies led by Vector.

Vector spokeswoman Philippa White responded: “Essentially the decision as to who will partner with the Government for the UFB build sits with Crown Fibre Holdings”.

The poll is interesting but to some degree irrelevant. Because it ignores the most important factor – cost.

If the Regional Fibre Group/Vector and Telecom/Chorus both say “Yes we can do fibre to the home to 75% of NZ if the Crown invests $1.5b”, then my view is you would absolutely go with Telecom/Chorus due to their existing infrastructure.

If the two bidders are even “close” to each other – ie Chorus says we can do it for $1.7b and Vector/RFG for $1.5b, then you’d probably still go with Telecom/Chorus – just to avoid the possibility of Telecom using the copper network to make the fibre network unprofitable by undercutting them.

But what the poll ignores, is that there may be a large difference between the two bids. If Vector/RFG are saying we can do 75% in 10 years for $1.5b and Telecom/Chorus are saying we can do 75% but need $2.4b to do it within 10 years, then one goes with Vector (in my opinion). And this scenario is not impossible. The lines companies already have infrastructure assets and resource consents which may allow them to do the job far cheaper than even a structurally separated Chorus.

So at the end of the day it is not a popularity contest between Telecom and Vector. The actual commercial details of their bids are vital.

Thirdly, Telecom have put together a one stop shop website about UFB and their bid. I’ve already read most of the site – lots of useful info there.

Finally, we have an announcement from Telecom and Vodafone about a joint bid for rural broadband:

Telecom and Vodafone have announced they have made a joint bid for the Government’s $300 million rural broadband initiative, bids for which are due in today.

Telecom chief executive Paul Reynolds said the solution would New Zealand’s two largest telecommunications providers “combining their extensive resources and skills to bring the benefits of high speed broadband to rural communities as quickly as possible”.

One goal of the rural broadband initiative is to ensure 93 per cent of New Zealand’s 900 rural schools have access to 100 megabit per second broadband, with the rest getting a 10Mbps service.

The other goal is that 80 per cent of rural New Zealanders get a 5Mbps service to their homes, with the rest able to access broadband with a speed of at least 1Mbps.

Telecom said the joint solution would involve extending Telecom’s existing fibre infrastructure to key rural points of presence, including schools and hospitals, and expanding Vodafone’s wireless infrastructure “that harnesses the power of this fibre to deliver high speed broadband services wirelessly”.

Telecom said any service provider would be able toretail services over the new infrastructure. “This means that rural customers will have not only faster data services but also a much wider choice of technologies and suppliers for these services.”

Telecom would be responsible for building fibre to schools and hospitals, cellsites and rural exchanges and cabinets.

Vodafone would be responsible for the design and build of “open access tower infrastructure” that Vodafone and Telecom XT would share, “as indeed could any other wireless service provider who wishes to do so”.

I’m very supportive of this. I think open access cellphone towers are where the future is. It makes a lot of sense economically, and from a resource consent point of view, to share this infrastructure.

Once we do have announcements on who will be the local (or national) fibre companies, there could well be a role for them in providing future cellphone towers, which Telecom, Vodafone, 2 degrees etc could all put gear on. The fibre company of course would provide high capacity backhaul. There are some technical challenges around size of towers and having all the gear high enough to get a good signal, but these are workable.

So good to see Telecom and Vodafone moving in this direction.

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21 Responses to “All about Telecom”

  1. adze (1,695 comments) says:

    Slightly off topic but I remember my first internet plan (with Voyager): $10/hour. On dial-up. :)

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  2. mjwilknz (606 comments) says:

    Expat, you there, mate? Been awhile since you and I last talked telecommunications. How ya feeling about this one of DPF’s posts?

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  3. mjwilknz (606 comments) says:

    Is anyone else wondering when the Government’s gonna wake up and realise that, long term, the technology’s gonna all be about wireless? One day in (hopefully) the not too distant future, wired broadband, including all its cumbersome routers and modems, will be a thing of the past!

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  4. kaya (1,360 comments) says:

    mjwilknz – what are the prospects for high speed wireless? We have a place on Gt Barrier Island and can only get satellite “broadband”. We are restricted to 1mb download, 256k upload and it costs us $60 per month for 1 gig!!!!!
    Cheers for any heads up.

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  5. mjwilknz (606 comments) says:

    Kaya, perhaps you can fill me in on Great Barrier – I know little of the place. What are the prospects on high speed broadband there? In terms of the (long term) possibilities of wireless, perhaps cellphones are some guide. Has anyone put a tower on the island? During a trip there in 2004, I found a small amount of coverage although I believe it was from towers on the Mainland. Please tell me about the island.

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  6. James Stephenson (1,885 comments) says:

    mjwilknz – wireless might be the future for the access network, but the core is going to be wired for the forseeable future. In all this blather about fibre to the home and 100Mb to 75% of the population, nobody seems to be talking about what the core needs to be to cope with it – 100G links, on our fibre infrastructure?

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  7. mjwilknz (606 comments) says:

    Possibly, James, possibly! I’m no expert on the infrastructure required to have all this going, but I do like to think about what people like! One thing not many people like is having to fuss with routers etc! Yet that’s what’s going to be required for a wired network of broadband to the home.

    How many announcements of areas of wireless broadband coverage (such as the area on Wgtn’s waterfront) is it going to take before the Government backs off from wasting our money on something many/most of us won’t even like: using wires?

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  8. IHStewart (388 comments) says:

    Totally agree about the open access to cell towers I see multiple towers within meters of each other all over the place. It has always struck me as pointless duplication. I know people who have had a tower erected outside their house when a tower from a competitor is just up the road on a public reserve. I would lay down money that their property value has gone down significantly. I haven’t seen 2Degrees offering any compensation or the former Manakau Council offer rates relief to the property owner to compensate but I bet the council has a nice little earner. A certain former Citizens and Ratepayers councilor should reflect on that and that the councilor ( Sharon Stewart, no relation ) who did take a stand on this issue is on the new Auckland City Council. I work in Howick but live in Mt. Eden how I wish I had had a canditate of Stewart’s quality standing in my ward.

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  9. kaya (1,360 comments) says:

    mjwilknz – from what I know (limited) there is wired broadband to perhaps 75% of the island? Their is a “tower” not far from my place but this is probably a repeater for cell phone.

    We are just off the main line, for some reason we can get a hard wired phone line but not broadband in the area where we are. We get fluctuating line of sight signal from Port Jackson on the Coromandel. (Calls are frequently dropped.) Limited population (600 – 700) and a wide distribution area with difficult terrain. It’s hard to imagine the telcos coming and giving us full access without Govt. subsidy which is why your comments re wireless interested me. My partner works in IT and for us to move their permanently we need reliable broadband. Cheers for any info.

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  10. RightNow (6,348 comments) says:

    kaya – if you have a hard wired phone line and can’t get broadband then it probably means the Telecom exchange you’re connected to has run out of DSL ports (or the exchange is simply not broadband capable). Check with Telecom, and if that is the case then you can go on a wait-list for a port.
    Either when someone else cancels their broadband, or if Telecom sees enough demand to install new kit in the exchange.

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  11. kaya (1,360 comments) says:

    Thanks RightNow – I’m picking there is a different exchange where we are based, no one in our little bay (100 or so) has wired broadband. Actually when I first visited in the early 90s the still had a manual exchange where someone physically plugged you in to connect you so we’ve come a long way!

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  12. mjwilknz (606 comments) says:

    Kaya, you sound keenly interested and I regret to say I have no inside information for you. I can understand how subsidies appear to represent the best way for you to come by broadband. However, the problem with our Government committing to a particular form of technology to roll it out faster is, what will happen if it ends up being the wrong technology? We will be lumped with an expensive dinosaur, hardly the right thing for a country that can ill-afford to waste money!

    The only careful and safe way, it seems to me, is to have patience. Technology is continually developing. A great amount of care needs to be taken before anyone, be it government or private, commits to anything. That care does not appear to have been taken by the NZ Government re:broadband.

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  13. mjwilknz (606 comments) says:

    DPF and IHStewart, while open access to towers might seem a sensible option, it is one that must be taken, no, even just talked about, with great care. If companies feel there is any risk they won’t retain control of towers they invest in, boof, there goes the incentive to invest in new towers! Let me spell it out, if people talk about requiring open access to towers so loosely, no new towers will get built!

    The end result of going down that road is the Government is the only one to invest in new towers. I for one have no faith at all that the Government is able to choose where and when to site cellphone towers. Last time I checked, this was not Cuba!

    DPF, you are in a position of some influence; I believe NZ would benefit if you were a little more responsible before you talked about open access in this way. Do you really want to make our cellphone networks worse than they already are?

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  14. IHStewart (388 comments) says:

    mjwilknz I disagree, it isn’t about control it is about requiring telco’s to act in a responsible manner. The market will dictate the price of utilising each others sites. If a competitor digs in the heels so be it in that case the company should aquire the site it requires privatley rather than destroying the wealth of an uneffected property owner to the transaction. Incidently if the telco’s can’t do this without compulsion then I think it will be forced on them. You clearly have never been to Cuba.

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  15. mjwilknz (606 comments) says:

    IHStewart, if not by control, how do you propose to “require” the telcos to do anything? Won’t they just ignore you? Oh, hang on, you say it “will be forced on them.” How on earth is that not about control?

    Re: Cuba, no, I will admit that I have not been to there, but perhaps you might explain to me how wonderful it is that Fidel Castro “requires” people to act in a responsible manner. It’s a great pity all those political prisoners have to be locked up while they have a responsible manner “forced on them”, don’t you think?

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  16. expat (4,048 comments) says:

    Mjwilkz, hey, been offline for a while.

    Initial thoughs-
    Data roaming charges seem more reasonable, amazing what can happen when the govt reigns in industry self regulation eh?

    Strategically it makes sense for CFH to get other suppliers besides VF and TC into the mix to promote long term competition.

    The rural thing seems to be VF and TC splitting the cost of a PR loss leader with some other motivation from TC to support the proposed geni farm data services architecture.

    Good to see some real movement in the industry thanks to the Govt taking a real leadership role.

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  17. expat (4,048 comments) says:

    And thinking a bit more it is a natural extension of The CFH model for a shared 4G cellsite infrastructure company to replace the existing 2/3G cell networks. Whether this is a crown enterprise or an industry partnership is another debate, I’d prefer the state to but out now the shape of the market place has been created.

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  18. mjwilknz (606 comments) says:

    Hey expat, good to hear from you. I don’t share your enthusiasm for the Govt taking a “real leadership role” with CFH. It’s all very well for now, but what if CFH are leading us down the garden path to a second rate technology? You say it’s good CFH is promoting “long term competition”, but I’d counter it’s only creating competition within CFH’s technology. What about long term competition from other technologies?

    However, your second comment appears to take a different line. I agree the State might best butt out – a partnership might work, but it’s up to the industry players to decide on that, surely. Given you sound like you’ve got a heap more experience than I in this industry, can you fill me in on why we don’t need to worry about incentives in this case? How will the Gov’t have an incentive to make good decisions to about where to site cell towers?

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  19. Eddie (295 comments) says:

    We could very well have investment in a dead-end technology but that kind of mistake isn’t just the preserve of the state to make i.e BETAMAX so not quite sure I agree with you fully but do agree in principle that CFH needs to have a long term mandate, resource and roadmap accordingly.

    From my limited experience I think that now the state has created the new framework and parameters for the core network the rest can be filled in without too much risk of a cosy duopoly cornering the market and screwing the consumer…however nothings certain.

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  20. mjwilknz (606 comments) says:

    Eddie, I agree that the private sector could just as easily go down the wrong track as the government. My problem, however, is that the private sector is much better at drawing the line by saying, “this technology is a dead end and we best cut our losses and move on to something else.” Because Governments departments only have to worry about getting their leaders re-elected and not about turning a profit for investors, it’s less likely they’ll admit they got it wrong; instead they’ll just keep throwing good money after bad!

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  21. expat (4,048 comments) says:

    mjwilkz, Have just read the dompost article on the this topic and note the following

    2degree Hertz’ broadcast (ha ha) about ‘open access’ being a different beast to ‘equal access’ wrt telco’s sharing the cell towers and that VF and TC could be trying to tie up the market and I think that you could extrapolate and suggest this could set the precedent for future cell site sharing nationwide thereby stifling true competition.

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