Broadband – the good and bad

February 21st, 2012 at 12:00 pm by David Farrar

First the good from the Dom Post:

New Zealand’s $3.5 billion investment in an ultrafast network will reap economic benefits worth nearly $33b over 20 years, according to a study carried out by Bell Labs in the United States.

Alcatel-Lucent New Zealand chief executive Andrew Miller will present the results of the study at a Commerce Commission conference in Auckland today that is looking at barriers to uptake of the network, which will be available to three-quarters of homes and businesses by 2020.

Miller said the benefits included the “consumer surplus” – gains to consumers that aren’t directly reflected in higher incomes or GDP.

Bell Labs, which is owned by Alcatel-Lucent, estimated the gains in health and education at $5.9b and $3.6b respectively and said it would be worth $9.1b to the dairy industry in increased productivity.

The biggest benefit of $14.2b would come from helping businesses in general improve productivity, reduce travel expenses and make better use of cloud computing services.

I wouldn’t place huge reliance on the exact numbers as these sort of studies always tend to be rather optimistic. However I don’t dispute the overall conclusion that there will be net economic benefits from having the ultra-fast broadband go out to 75% of New Zealanders – that is why it is being done. The study shows that the benefits could be considerable. I think the reduction in travel and increased use of cloud computing will be major. When people can access files from home as quickly as from work, and when they can say do a six way video conference at the push of a couple of buttons, then some workplaces will reduce to meeting rooms only.

And the bad:

British actor Stephen Fry will not be the only one up in arms if internet providers don’t improve miserly broadband , the Telecommunications Users Association says.

Fry labelled New Zealand broadband a “digital embarrassment” in tweets yesterday after finding he could only upload videos over the internet at a snail’s pace while working from a house in Wellington.

He is in the capital for the filming of The Hobbit.

It transpired that the connection he was using had been intentionally “throttled” down to a slow speed by Telecom because he had exceeded the data cap on the broadband plan – the amount of data that can be downloaded and uploaded for a fixed monthly charge.

Fry said restrictive data caps were “a disaster” for the economy.

But Telecom spokeswoman Kath Murphy said he had been using a plan that “clearly wasn’t suited to his needs”.

Comedian Raybon Kan consoled Fry, telling him: “Don’t think of it as the worst broadband in the world, think of it as the best dial-up”.

Heh.

Data Caps are a huge pain though. They fundamentally change the way you use the Internet as you are always thinking about what if exceed the cap. Some ISPs also have an effective daily data cap and will throttle your speed if you use to much data in a 24 hour period (even if well below your monthly cap).

The consensus at the 2011 Net Hui seemed to be that data caps are the biggest remaining issue for the NZ Internet community.  A great example of what we are missing out on is here:

Netflix’s Christchurch-born vice-president, Brent Ayrey, said in November that meagre data caps were one factor preventing the popular United States online movie and television service launching in New Zealand.The average customer in the US consumed a terabyte each month.

I’m on a 60 GB plan, which is the largest available from my ISP. You can double your data for extra money but still a long way off allowing Netflix to launch in NZ.

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21 Responses to “Broadband – the good and bad”

  1. iiq374 (262 comments) says:

    “still a long way off allowing Netflix to launch in NZ” – not necessarily, just like sing iSKY doesn’t count towards my cap, I’m pretty sure Netflix would be able to work out a peering scheme to do the same. Datacaps are the red herring here.

    What really needs focus on is the patently stupid copyright and distribution rules that prevent the likes of Netflix and Hulu operating wherever they like (extends beyond NZ).

    Really NZ et al should be pushing the U.S. and saying “sure we’ll sign ACTA, and it will apply to anything that is distributed worldwide at the same time without arbitrary (and probably disallowed under WTO rules) region restrictions. Anything else isn’t covered and will have no enforcement rights”.

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  2. dime (9,972 comments) says:

    Cloud computing is going to be huge in the coming years.

    I just watched a Windows 8 demo showing its skydrive app. freakin awesome.

    i use 100gig a month on a big month. god bless slingshot and their free offpeak hours.

    [DPF: I would love to backup my entire hard drive to the cloud, but it is impossible with data caps]

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  3. Fletch (6,386 comments) says:

    I rented a movie off iTunes for the first time last month, since my broadband rolled over the next day and I had data left.
    It still took a couple of hours to download it though where I am, and I had to watch it on my computer monitor.
    You’d need Apple TV I think, or whatever Netflix uses to make it worthwhile (as well as, yes, uncapped broadband).

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  4. adze (2,126 comments) says:

    What pissed me off about Stephen Fry’s tweets was the sycophantic response from followers, all knowledgably agreeing about how terrible broadband in this country was compared to everywhere else in the world (everywhere, I tell you!1!11one). Clare Curran was quick to get her oar in too, I noticed, saying National’s UFBB rollout was flawed because the great Satan Telecom was the supplier.
    One tweet suggested she was paying $80 a month for a 2GB plan – well it must have been a crappy 3G plan because I pay less than that for my iPad’s XT prepay monthly usage. My plan at home has a 40GB cap, and speedtest.com measured the download speed at 15mbps, which according to that site’s records was representative of 69% of all tested download speeds.

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  5. wreck1080 (3,909 comments) says:

    Actually the current trend is to have caps. Many overseas ISP’s are capping plans now.

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  6. lee.hinkleman (17 comments) says:

    What download speed is hoped for, or predicted, in 2020?

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  7. Ed Snack (1,872 comments) says:

    Those return numbers smell an awful lot like BS to me. If the returns are that great why the hell does the government need to put up any money ? Or are we talking nebulous “it takes me only half the time to upload all my photos onto Facebook” time equals cost savings ?

    If you want to get returns, first let business throughout the country get decent access at reasonable prices. I have sites that can’t even get digital telephone lines, and fibre, in the area but costs multi-tens of thousands to physically connect for a start.

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  8. Maaik (33 comments) says:

    No data cap is wonderful – I can download Gigabytes without worry. But who pays for all that broadband? At the moment, the big downloaders pay more for their larger share, while the rest of us pay less. Will we all have to pay more if there is no cap? Undoubtedly. Are we willing to pay more? NEVER!

    Another typical case of Kiwis wanting everything paid for by the gummint (or the evil big business).

    Telecom, Vodafone and the others exist to make money. We are willing to give them money in exchange for capped contracts. Nothing will change until someone starts selling uncapped contracts for a reasonable price. At the moment, there is still too much money to be made out of the public. I am not willing to give up my capped plan and go without until they get it right, so the problem will continue.

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  9. iiq374 (262 comments) says:

    @Fletch – except you don’t need “uncapped broadband”, you’d just need uncapped for the particular peered sites; just like the majority of NZ streaming TV sites (with a notable exception of TVNZ) have now with most providers. You don’t necessarily need uncapped to arbitrary offshore P2P or streaming sites…

    However the most relevant point here so far was brought up by @Ed Snack. It is pointless putting all these superfast pipes into the home when the server / business side is so expensive to both connect and then host. All the UFB initiative is doing is putting faster pipes into the home than the servers they are connecting to. (although a foot note that this is actually fine for EG Skype which uses P2P for traffic)

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  10. berend (1,709 comments) says:

    DPF:Data Caps are a huge pain though. They fundamentally change the way you use the Internet as you are always thinking about what if exceed the cap.

    Hmm, really? You have access to 120GB. How much netflix would you have to stream to fill that? I would say the 120GB caps we currently have are pretty good. Obviously the option to get more would be even better (why am I looking at Vodafone? Why haven’t you put in any resources to left that stupid doubling only cap???), but there are ISPs that basically allow unlimited, although at some interesting extra charge.

    Specially only netflix: they have options so 30 hours of content would be less than 20GB. So you can fill 180 hours per month watching netflix. If you got time to that, this nation has other worries.

    And you set it even lower, i.e. 10GB per 30 hours: http://blog.netflix.com/2011/03/netflix-lowers-data-usage-by-23-for.html

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  11. RightNow (6,994 comments) says:

    The big impediment here is the cost of international bandwidth, something that will remain an issue until competition is introduced. I think an ISP still pays about $70/mbps wholesale for a single feed, not including their kit and national backhaul costs.
    Some ISP’s will include free national traffic depending on your connection type – EUBA for example (aka Naked DSL) – which connects you directly to your ISP.

    If content and services can be provided from within NZ then that makes it viable to give customers a terabyte of national traffic while still charging for international traffic (assuming they have the right connection with the right ISP)

    So –
    1) we need the second international cable to drive international bandwidth pricing down
    2) we need local content and service (e.g. cloud storage) providers. If someone like Netflix set up NZ based servers then hey presto.

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  12. lcmortensen (38 comments) says:

    The UFB initiative will bring 75% of New Zealand’s population *within reach* of FTTP, not FTTP to 75% of New Zealand’s population. The UFB initiative stops at the customer’s boundary, with the customer responsible for arranging and paying for the final connection across their front garden.

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  13. RightNow (6,994 comments) says:

    lcmortensen – it may not necessarily be expensive though. Telecom/Chorus have advised that where possible they’ll simply draw the fibre through the conduit using the copper pairs – i.e. tether the fibre to the end of the copper and pull the copper out/fibre in.
    Won’t be viable in circumstances where the copper needs to be retained but if the copper can be done away with then it makes for a cheap install method.

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  14. Jim (398 comments) says:

    One problem with NZ that has persisted since the mid ’90s is the ‘rationing’ mentality behind the low speeds and small caps.
    A provider that was prepared to turn that model around and make capacity available would become very popular.

    Historically the undersea cable cost and capacity was a big factor, but that has shrunk significantly. There is plenty of capacity (and potential for plenty more if someone pulls another cable). Having it unsold and unused on the bottom of the ocean is stupid.

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  15. Mark Unsworth (41 comments) says:

    “The big impediment here is the cost of international bandwidth, something that will remain an issue until competition is introduced.’

    Sorry RightNow but you are 100% wrong on that front.Southern Cross are a major player in Australia as well as being the sole provider to NZ.They price to NZ at identical prices as they do to Australia and yet Australia has much cheaper and more generous broadband deals.When asked about this last year a Vodafone executive just said that the retail market was “more competitive ” in Australia.The international cable costs are totally irrelevant despite what you may hear from those wanting to build a new cable.

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  16. DJP6-25 (1,387 comments) says:

    What are these ‘data caps’ of which the correspondents speak? People in Korea and Japan take ultra fast broadband for granted. I sure do.

    cheers

    David Prosser

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  17. Viking2 (11,470 comments) says:

    Get a decent provider for gods sake.
    Callplus send me an email at 75% so I know and when over they just charge me $10 bucks for as much again. No throttling back, which of course is counter intuitive to sales, just more which I happily pay for.

    But then you all get sucked in by the big boys and their whiz bang advertizing which most often never reflects the actual performance.

    Do yourselves a favour support a decent Kiwi company and get the good stuff.
    Cheap tolls as well.

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  18. ben (2,379 comments) says:

    One word about the Bell Labs analysis: nonsense.

    The private sector is not known for walking past $20 bills lying on the street. It cannot be true that it requires a $1.5 billion investment from government to unlock $33 billion in benefits. If it is then, on behalf of all taxpayers, can I have my money back please.

    However, where it takes $1.5 billion to unlock only, say, $0.5 billion in benefits then government will have to be involved. And therein lies the real story.

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  19. RightNow (6,994 comments) says:

    Mark Unsworth – that’s a riveting anecdote, however while pricing in Australia is better than pricing in NZ you still won’t find any genuine unlimited traffic plans from either country.
    Try comparing Australian broadband plans with US and UK broadband to see the real difference when international bandwidth is abundant and truly cheap.

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  20. seanmaitland (500 comments) says:

    @ben – thanks, but I would take Bell’s word over yours every single time. Working in the software development industry, it is obvious to me the immense economic benefits there will be as a result of this, and it is safe to assume that other industries will see benefits also. And this is before we even consider the impacts that the new Pacific cable coming online will have.

    Its hilarious to see all the idiots claiming that everywhere else in the world has lightening fast internet – from working in Italy and England every year, their upload and download speeds are no better than what you get with Telecom over here. The upload speed I got on Telstra cable in Wellington was 8 times what I have witnessed in home unlimited data cap packages in both the UK and Italy. This is with me routinely uploading around 15 GB of data per month to various servers – so I’m pretty familiar with watching secure shell upload speeds.

    The price and data caps are better over there, but you are kidding yourselves if you think they have amazing speeds on those budget plans for 30 pounds/euros a month.

    But that seems to be the way of a lot of Kiwi’s these days – stand around bitching and whinging about things they don’t even really know about or actually understand.

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  21. paul_nod (2 comments) says:

    The one thing I don’t understand is when they compare Aus to NZ (herald today) with the whole 1TB plans. Would anyone even be able to consume that much data in one month?

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