Kiwiblog

The Herald reports:

The lowest price of broadband internet access is less important than ensuring consumers move as quickly as possible to high-speed fibre-based services, says Telecommunications Minister Amy Adams.

I disagree. I’m a huge fan of the fibre roll-out but you don’t force people onto fibre by artificially keeping the cost of copper high.

“I don’t think the over-arching criteria in this is ‘what is the cheapest option’,” Adams told BusinessDesk. “If that was the case, we’d be sticking with dial-up. I don’t think you’d find any consumer saying ‘if dial-up’s cheaper, let me have that’.”

I don’t accept that comparison. The difference between dial-up and broadband is massive. My laptop effectively freezes on dialup. The difference between dial-up and DSL is like the difference between a wheelchair and a car. While the difference between DSL and fibre is more like the difference between a Lada and a Porsche. And for some people a Lada is fine.

Her comments followed her announcement the government would accelerate its timetable for reviewing the regulatory regime for telecommunications services. The decision effectively neuters the Commerce Commission, which issued a draft determination late last year that could favour a longer life for the existing copper wire network by pricing it highly competitively with new fibre services.

That draft determination, which Adams described as a “curve ball”, sparked protest from the key players in the ultra-fast broadband roll-out, including NZX-listed Chorus, whose share price recovered 12 per cent today, immediately following Adams’s announcement.

I think it is disappointing that the Government has intervened in this way. The Commerce Commission is doing the job set down by statute. If it has made an error, then that can be challenged in the submissions on the draft and if need be in court. I’ve not see any suggestion the Commission has got the law wrong.

“Carrying on the way it was would have changed the landscape in the way telecommunications services were priced and delivered and we saw some real risks around that in terms of market uncertainty and the market not looking to develop and promote high speed fibre products,” said Adams.

I think the market works better when the Government doesn’t artificially push the price of one product up.

“What became very clear is that this sort of uncertainty and decisions coming out that have really taken everyone by surprise are the last thing that anyone needs in this space.

Not at all. I am not surprised that the Commission found out copper services were over-priced.

Tom Pullar-Strecker at Stuff reports:

Communications Minister Adams has declined to shed light on whether the Government is considering intervening over broadband pricing because of concerns about copper-based competition to ultrafast broadband, or Chorus’ ability to fund the UFB roll out.

Adams said claims that consumers would lose out if the Government overruled a Commerce Commission move to drop the wholesale price of copper broadband connections by as much as $12.53 a month were exaggerated.

It “was highly unlikely that retail service providers would fully pass through any wholesale cost savings”, she said.

I’m quite dismayed that the Government’s response to the Commerce Commission’s draft copper pricing determination has been to threaten to legislate to overturn it, if they persist with it.

Lower prices are a good thing. Unless the Commerce Commission has misinterpreted the law they operate under, they should be applauded for looking after the interests of consumers.

And while it is right that retailers may not pass on the entire $12.50 a month saving, I am confident they would pass on the vast majority. If you think they won’t, then you are saying we do not have a competitive retail market and that is a far bigger issue.

I have been a huge supporter of the fibre roll-out to 75% of New Zealanders. But you don’t get people onto fibre, by artificially inflating the price of copper.

To be blunt the Government should shut the hell up on the Commerce Commission’s draft determination. There are some aspects of the Commerce Commission’s work where they refer to to Ministers for a decision, such as mobile termination rates. In those areas it is entirely appropriate for Ministers to express a view – as they are the decision making.

But in this area of setting copper access prices, it is purely a decision for the Commerce Commission, under the law passed by Parliament. The only response by Ministers should be that these pricing decisions are a matter for the Commission, and they support its independence.

Stuff reports:

The price of broadband could fall by about $12 a month in two years’ time if internet providers pass on swinging cuts to Chorus’ charges that were proposed yesterday by the Commerce Commission.

Good.

But Scott Bartlett, the boss of New Zealand’s fourth largest internet provider, Orcon, is doubtful. He said Telecommunications Commissioner Stephen Gale already seemed to be signalling “almost in code” that the commission would back down from the steep cuts when it finalised its decision on wholesale pricing in June.

Prime Minister John Key signalled that the Government was concerned about the effect cheaper copper-based broadband could have on the fibre-optic ultrafast broadband network, in which the Government has agreed to invest $1.3 billion.

He did not rule out using legislation to overturn the proposed price cut yesterday.

I think that would be a bad thing. The Commerce Commission should be left alone to set the price of copper access based on existing competition law.  I’m a huge fan of the fibre rollout, but we shouldn’t try and get people to move to fibre by having copper priced artificially high.

Stuff reports:

Today’s confirmation that Chorus will provide free ultra-fast broadband connections to many residences with awkward access is good news, a telecommunications commentator says.

Network provider Chorus announced in partnership with the Government today that it would contribute $20 million towards the cost of connecting “non-standard” homes, in an effort to encourage greater uptake of high-speed broadband.

Up to 30 per cent of homes within the UFB rollout zone are thought to have fallen into the Chorus “non-standard” category.

Paul Brislen, of the Telecommunication Users Association of New Zealand (TUANZ), said many urban houses were more than 15m from the street, Chorus’ previous limit for free fibre.

So today’s announcement that Chorus would extend that limit to 200m was “tremendous”.

“That captures 99.3 per cent of the [UFB network] population, possibly even more …That means everybody that can get connected will be able to without extra cost.”

Excellent.

However, Brislen said there was a drawback in that the offer only lasted until 2015, by which time only about a third of the network would be completed.

“Most of the connections for residential customers won’t take place until after 2015, so we need to use this to get the ball rolling and then revisit it rather quickly.”

I suspect come 2015, things may get extended – time will tell.

Chorus, which has contracts to provide 70 per cent of the Government’s UFB network, has so far rolled out 1500km of ultra-fast fibre, enough to connect 72,000 customers.

But to date, only 700 have signed up.

Brislen said the problem was that speed alone was not enough to encourage many customers to switch to UFB. Overseas, penetration of ultra-fast broadband was about 38 per cent and a good uptake in New Zealand was important to justify the expense.

Absolutely few will sign up for speed alone. What will push uptake is when companies such as Sky roll out TV and movies on demand services that work far better over fibre. A killer home video-conferencing app that works through your TV set and is as simple to use as a TV remote will also get people flocking to it.

Matthew Backhouse at NZ Herald reports:

Hotels are charging exorbitant rates for Wi-Fi and guests are much better off paying for mobile internet, a consumer advocate says.

A survey of New Zealand’s top central-city hotels, as rated by Five Star Alliance, has found only two offer free wireless internet in rooms – despite some exclusive suites costing more than $2000 a night.

It’s like charging for water. I can understand 10 years ago charging extra for wifi, but the vast majority of hotel guests today will want wifi – either because they are travelling from overseas or to reduce their mobile data usage.

What I want to do one day is set up a website (or get an accom website to do it) which lists the wifi charges for every hotel and motel in NZ, so people can pick ones with cheap or free wifi. I think that would provide an incentive for more accom providers to stop charging for it. Whne you have have paid over $200 for a room, it is aggravating to be told 24 hours of wifi will cost more than a month’s data for a residence.

The other top hotels either make guests buy packets of data or charge up to $45 a day.

The rates compare poorly with mobile data plans, which give 1GB of data for an average of $20 a month.

I used to have a vodem, just to avoid hotel wifi charges. Now I tether my iPhone.

Tourism Industry Association chief executive Martin Snedden disagreed that free Wi-Fi was the norm overseas, saying he had been charged as much as $30 a day during a recent trip to Europe and America.

Now sure where Martin stayed, but in the US it is free most places I have stayed at.

The Herald reports:

Broadband users are being bombarded with offers of higher data caps, Sky TV discounts, free surfing on unmetered websites and cheaper prices.

And an industry expert says New Zealanders will soon have access to even more data without any great cost increase.

Orcon is leading the charge with a $99-a-month plan that includes unlimited data and national landline calls of up to an hour.

That’s pretty good. I suspect they have some sort of reasonable use policy though for their data.

A year ago, customers on Vodafone’s Ultimate package paid about $120 for 30 gigabytes of data and anytime national toll calls.

Now their data limit has been lifted to 80GB – at no extra cost.

Telecom has also increased its 30GB data allowance to 50GB – also at no extra cost.

That’s good from both.

Telecom’s head of marketing, Chris Thompson, said more of its customers were spending time online and increasing their data use mainly because of the availability of music, video and on-demand TV services.

Among its packages is a 500GB plan for heavy users. “We are also seeing usage increasing on mobile data very strongly as Kiwi take-up of smartphones rapidly increases.”

Orcon’s general manager of retail, Taryn Hamilton, said that three years ago, customers paid $81 for 1GB.

“Now we do 30GB and free national calling for $75, or unlimited data for $99.”

As UFB really hits my expectation is data plans will be TBs not GBs, and hopefully one day NZer kids will say”Daddy/Mummy what was a data cap”.

Some may have seen this already, but the NZ broadband test by REANNZ is a bit more sophisticated than other tests – it asks you what plan you are on so it can compare ISPs and plans.

I’ve got 1 Mb/s up and 9.2 Mb/s down which isn’t too bad.

Stuff reports:

Mobile 2degrees will today launch a new offer that knocks down one of the biggest mobile data customer pain points by allowing customers to share data from one account.

“Shared Data” means a customer can use data from one account across a range of devices, or share that data with friends and family, provided they too are on 2degrees’ network.

Malcolm Phillipps, 2degrees’ chief marketing officer, said 46 per cent of mobile users now have more than one device while 72 per cent of those with a mobile data plan don’t use their full allocation.

Shared Data will address both of those issues and simplify account administration and payment for customers.

Now, many customers “tether” devices such as iPads, setting up a wifi network from their smartphones and using that for their tablet to avoid extra data charges. Shared Data means customers will no longer have to do that, said Phillipps.

This is a good initiative. To save money I tether my devices but it can be a hassle to bluetooth them together and to have them all with you. I’m currently with Telecom and Vodafone on contract but could consider 2degrees at some stage. Of course quality is also a factor. Telecom has been good for signal availability and strength.

The Herald reports:

In a draft determination, the Commerce Commission indicated it wants to reduce the geographically averaged unbundled copper local loop (UCLL) service to $19.75 a month from its current price of $24.46 over two years.

UCLL lets Chorus’s competitors use the copper network between an exchange and an end-customer’s premise to offer their own voice and broadband services. The current urban price only has to come down $19.81, and the biggest access gains would be in non-urban areas, which are sitting at $36.63. …

Wholesale prices for access to the copper lines were averaged as a result of legislation enabling Telecom to carve out its Chorus unit last year, something that rankled with rival telecommunications companies who claimed it would lift their costs. The de-averaged urban and non-urban prices are $15.82 and $29.19 respectively, the regulator said.

It is a pity the Government decided to require an averaged price, as it means urban users are subsidising rural users. Instead of urban users getting a wholesale price drop of $3.99 and rural of $7.44 the drops are $0.06 for urban and $16.88 for rural.

But still good to see overall wholesale prices heading in the right direction.

First the good from the Dom Post:

New Zealand’s $3.5 billion investment in an ultrafast broadband 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 data caps, 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.

Hamish Fletcher in the NZ Herald reports:

CallPlus plans to offer internet users hooked into the ultra-fast broadband network at least a terabyte of data each month.

While New Zealand may be looking forward to the 100 megabit speeds on the fibre internet network, commentators are worried the infrastructure will not be used to its potential as data caps will restrict the amount customers can download each month.

Slingshot and CallPlus director Malcolm Dick said his companies could offer unlimited data on the ultra-fast broadband network if more internet links out of New Zealand were built.

“A couple of years out … you’d hope that all those caps would be removed and it would be the same as in Europe and the States. Certainly in the worst case we’re looking in the terabytes [of internet use a month]. It will be up to at least a terabyte, I reckon, it has to be,” Dick said.

Having more content hosted and cached in NZ would help also, but sadly it is cheaper for major content providers to host in the US than in NZ.

A 1 TB data cap would be a lot better than the current offerings. But let us look at how quick it might still be gobbled up.

Say you are on the 30 Mb/s plan. That is equal to 3.75 MB/s. A TB is around 1 million (2^20) MBs so a 1 TB cap would last for around 280,000 seconds or 4,660 minutes which is around 78 hours.

Now a month has around 720 hours in it, but you don’t tend to spend all day on the Internet and you don’t spend all your time using the maximum speed.

So a 1 TB data limit would look to be pretty good to me.

There’s been a number of news stories on the Government’s Telecommunications Amendment Bill, which is currently before the Finance & Expenditure Select Committee. A typical story is this one at Computerworld.

The telecommunications sector is always somewhat controversial, but this bill has attracted criticism from just about everyone – telcos, ISPs, the Commerce Commissions and user groups. This post is aimed to explain what the debate is about, and reflects my views.

It is worth noting that most of what is in the TAB is not controversial, and is generally well supported.

Three aspects which are controversial are:

1. a “regulatory holiday” for the local fibre companies until 31 December 2019.
2. “re-averaging” the costs of local loop unbundling and unbundled bitstream, which will lower the wholesale cost in rural areas but increase the wholesale cost in urban areas by around 20%
3. possible structural separation of Telecom if they win the majority of regions for fibre rollout

In this post I will leave (3) for now as that little baby is so complicated it needs its own post. I want to focus on (1) and (2) and these will apply (if passed) regardless of whether Telecom wins most of the regions for urban fibre, or the lines companies led by Vector win most of the regions.

You may ask why would the Government consider giving the future fibre companies an exemption from the normal regulatory oversight of the Commerce Commission? Well the short answer is because the companies bidding to be future fibre companies have asked for it.

Okay well companies ask for lots of things from the Government. Many companies would like to be exempt from the Commerce Commission until 2010. Why would the Government agree to this?

The answer is because then the bidders will make better bids. They value having a regulatory holiday, so they will agree to roll out more fibre for the same subsidy. It is what Sir Roger Douglas (very perceptively) said was a regulatory subsidy instead of a greater direct financual subsidy.

Now before we talk about the pros and cons of this approach, you need to know the background. In the 2008 election National pledged $1.5b towards having ultra-fast broadband rolled out to 75% of NZ over the next decade. This was a lot of money (Labour committed only $300m – 1/5th of what National did) and it was in my opinion a great policy.

Work done by the NZ Institute concluded that investing in ultra-fast broadband, would result in significantly higher economic growth, and there is evidence from other countries to back this view up.

Now the cost of rolling out fibre to 75% of NZ is hard enough to estimate, let alone what the direct commercial returns will be on doing so in ten years time. The amount of subsidy needed to achieve the 75% target was estimated at $1.5 billion, but this was an estimate. An opposition does not have the resources available to get a precise projection, and even when you do have access in Government to Treasury, even then projections can be wrong.

To some degree one was never going to know until the actual commercial negotiations conclude, whether $1.5b was enough. InternetNZ did try to get some idea of how much it would cost to reaach the goal of 75%, and what would be the best way to go about it. They (which includes me)  commissioned a report from Network Strategies, a specialist economics consulting firm, which is here.  It was published in 2008.

The report concluded that the cost of fibre to 75% of NZ was around $3.3b if one utilised existing utility companies for at least half of it, and that the government’s contribution would need to be around $1.75b. So the $1.5b was a pretty good estimate, but may be not quite enough.

So this takes us back to why the Government is seeking to legislate a regulatory holiday – it makes it more attractive to its potential commercial partners, and helps close the gap. So the motivation is good – to save the taxpayer money.

However that does not mean it is the right decision. If there is a funding gap between the 75% target and what you can achieve with $1.5b, I would rather it be dealt with directly, not indirectly by way of regulatory holiday. Options are to increase the $1.55b on offer, or to reduce the coverage area from say 75% to 70% or push out the timeframe from say 10 years to 12 years etc.

The concern over the regulatory holiday is that whomever wins the contract, will be exempt from the Commerce Commission regulating access to their services until 2010. The Government will be relying just on the contracts they had to regulate the price, However this places Crown Fibre Holdings in the unenviable dual role of being an investor and a regulator. Also 2020 is almost nine years away, and that is a lifetime in the Internet world. The costs and prices of fibre and data may have changed massively in that time. Many people are very nervous about what could happen in the next nine years. This is partly because of the lessons from the past with Telecom (note again they may not be the fibre companies).

Now the Minister has pointed out that as the local fibre companies can not be owned by a company that will provide retail services over them, then it is less likely there will be a need for regulation, as the fibre companies should operate on an open access platform to all providers. But a lot of devil is in the detail. For example you could have Chorus (if they win) saying it will operate a volume discount scheme that only Telecom Retail will qualify for due to its size.

The Minister also says that as the fibre products will be competing against the regulated copper and that the challenge will be ensuring uptake, which will keep prices down also. I suspect Steven is right on the prices – but from my thinking why remove the safety net of the Commerce Commission, in case you’re not.

Now the other major change is that the calculation of costs and hence prices for the current copper based broadband services is to change from deaveraged to reaveraged. At present the costs and prices reflect the fact it is cheaper in urban areas than rural areas. The Government is proposing to legislate to change this, which means the price of broadband over copper will increase in urban areas. The estimate I have seen is by 20%.

So again why would you do this? The answer is the same. It means those bidding for the fibre contracts will be motivated to invest more money into them. Because if the price of broadband over copper increases, then you can be confident that more customers will switch over to broadband over fibre.

So again the rationale is quite understandable, but again that does not mean it is necessairly a good thing. It means people in urban NZ will pay higher prices than they should for broadband over copper for the next six years or so. Should the Government be effectively tilting the playing field to favour fibre over copper?  Again I’m in favour of tilting the field by way of Government subsidy, but not in favour of tilting the field by interfering with a regulatory regime that actually has worked very well in the last few years.

As I said, in a separate post, I’ll cover the possible structural separation of Telecom, and how this may result in a really great outcome or a really lousy outcome, depending on how the structural separation is done. And the consequences of getting it wrong will reverbate for a couple of decades. This is not something to rush.

The Government has announced that Telecom has won most of the remaining areas for fibre to the home rollout. This includes Auckland and Wellington, but in Christchurch and Dunedin the local lines companies are still  in the running, with both them and Telecom proceeding to negotiations.

This is pretty exciting, as it means Telecom will structurally separate, with Chorus becoming a standalone telecommunications infrastructure company. This will be the most important change in the telco sector for a generation. The details of how the separation occurs will be crucial in determining how beneficial this is.

Vector will feel hard done by, but that is the nature of a tender process. Their involvement has probably meant the bid by Telecom is significantly better for taxpayers than would otherwise have been the case.

Telecom will be pleased to have won the bulk of the country, but not be that happy that they may not end up with Christchurch and Dunedin – they’ll need sharp pencils.

So the overall picture is:

* Hamilton, Cambridge, Te Awamutu, Tokoroa, Tauranga, New Plymouth, Hawera & Wanganui – WEL Networks
* Whangarei – Northpower
* Dunedin – Aurora Energy
* Christchurch, Rangiora – Enable or Telecom
* Timaru – Alpine Energy or Telecom
* Elsewhere – Telecom

No Right Turn has breathlessly labeled as corruption the Government’s announcement of the first ultra-fast broadband contracts.

Why? He blogged:

So, what does this look like by electorates? UFB will be rolled out to:

• Whangarei, held by National’s Phil Heatley, with a majority of 14,663;
• Hamilton East, held by National’s David Bennett with a majority of 8,820;
• Hamilton West, held by National’s Tim Macindoe, with a majority of 1,618;
• Taupo, held by National’s Louise Upston, with a majority of 6,445;
• Taranaki-King Country, held by National’s Shane Ardern, with a majority of 15,618;
• Tauranga, held by National’s Simon Bridges, with a majority of 11,742;
• New Plymouth, held by National’s Jonathan Young, with a majority of 105;
• Whanganui, held by National’s Chester Borrows, with a majority of 6,333.

So, the first thing to note is that only National-held electorates get broadband; those with Labour MPs need not apply (sorry, you voted for the wrong person and so must be punished). The second thing to note is the targeting of marginal seats New Plymouth and Hamilton West. It’d be interesting if someone who knew about IT policy used the OIA to delve into National’s rollout decision, but from here it looks like pure pork-barrel politics. And I don’t like it one bit.

Idiot/Savant is like the boy who cries wolf. He slanders so many people as corrupt, that it becomes a meaningless label. Basically it just all comes over as hysterical rants.

His idiocy was picked up and blogged by Clare Curran, but even Clare worked out what weak ground he and she were on, and later did updates backing away “before David Farrar at Kiwiblog has a go”.

I will indeed have a go at such gross stupidity, and even worse effectively slander. Where do I start.

1. National holds every single seat outside the four main cities (which due to their size are more complex decisions) except for Palmerston North. So I guess the first contracts should have gone to Tasmania, to stop them including National held seats.
2. Six of the eight seats listed are very safe seats with majorities over 5,000
3. This is not a case of some areas getting funding, and some not getting funding. All medium to large urban areas will be getting fibre to the home. This is purely an announcement of the first two contracts. Other contracts will be announced in the near future – the difference between being announced first and second is absolutely minimal.
4. Ever heard of MMP?

Clare initially blogged:

Steven Joyce is a crafty fellow. But even he will overplay his hand one of these days.

Then later as she realised every non metro seat bar Palmie is national held:

Oh and before David Farrar at Kiwiblog has a go and points out that Labour holds only Palmerston North of the general electorates outside the metropolitan centres, that’s true. But it would have been smart for the government to think about this. Instead it doesn’t look so good.

So Steven in the one blog post goes from the too crafty manipulator of funding to National seats to being not very smart for not thinking about the look. He can’t win can he!

Frankly I am sure Steven didn’t spend one second thinking about electorate boundaries with the contracts, and am personally very pleased with that.

Oh and here’s one for the conspiracy nutters. 25% of NZers will not be covered by the UFB initiative. And pretty much 100% of them live in National held seats. So 100% of people in Labour seats will get UFB and only around 65% of people in National sears. Yes, obviously pork barrel politics.

Steven Joyce has announced:

The cities of Hamilton, Tauranga, Whangarei, New Plymouth and Wanganui will be among the first to benefit from the government’s rollout of ultra-fast broadband (UFB), says the Minister for Communications and Information Technology Steven Joyce.

Crown Fibre Holdings has concluded negotiations with two partner companies, following shareholding ministers’ approval of the deals over the weekend.

The partners are:

• Northpower Limited
• and Ultra Fast Fibre Limited, owned by WEL Networks,

The new companies will rollout fibre in Whangarei, Hamilton, Cambridge, Te Awamutu, Tauranga, New Plymouth, Wanganui, Hawera and Tokoroa.

Northpower will commence its roll out in Whangarei before Christmas with Ultra Fast Fibre expected to begin laying fibre early in 2011.  Both companies will have completed their rollouts by 2015.

These joint ventures represent nearly 16 per cent of UFB premises and a combined value of more than $200 million.

This is excellent news. It shows the regional approach has worked, in preference to one nation-wide contract.good to see there will be some fibre laid before the end of the year.

There was some suspicion that Northpower and WEL would not end up with the contracts, despite being announced as preferred bidders. People speculated that Telecom might grab it away from them in a negotiation for a nation-wide contract.

So good to see there will be some fibre laid by the end of the year.

CFH will shortly announce a list of parties with whom it will next elect to negotiate with in the remaining 25 UFB regions.

All eyes are on this.

My view is that Telecom/Chorus will be successful if their price is the same or close to the Regional Fibre Group – say within a couple of hundred million. There are long-term benefits to getting Telecom to structurally separate, and having Chorus as a stand alone infrastructure company.

But it is possible the Regional Fibre Group will have undercut Telecom. They have certain cost advantages such as current ducts and poles and resource consents. Over 70% of the cost of fibre is digging up the road, and the less of that you have to do, the cheaper you do it.

In an ideal world I’d have Telecom sell Chorus to the Regional Fibre Group – then you’d have an integrated infrastructure provider. However I’m not sure Vector and co could afford to buy it!

A guest post by Steve Rieger, Vodafone’s General Manager of Wholesale and New Business Development:

Rural Broadband – an easy answer

The Telecom-Vodafone joint bid for the Government’s Rural Broadband Initiative (RBI) has certainly got attention.  Who would have thought that these traditional arch enemies would entertain such a partnership?  Well, it’s the right thing to do to deliver a step change in connectivity for New Zealand’s rural community and moreover we think it’s the way of the future.

We think rural Kiwis deserve high speed broadband, wider mobile coverage and a choice of service provider.  That shouldn’t just be the preserve of the city-dwellers.  That’s why our solution – a new open-access network which combines fibre and wireless gives better bang for the tax-payer’s buck.  It equips New Zealand’s economic heartland, which accounts for 60 percent of New Zealand’s exports, for the 21^st century.

So what will we deliver?  Fibre to 97 percent of rural schools and a minimum of 5Mbps broadband service to 80 percent of rural households within six years and priority users with fibre-based broadband services.  That’s a minimum of 5Mbps.  In time we will deliver more.  And, we will deliver it faster than the government’s timetable.

The solution looks like this: Chorus will extend Telecom’s existing fibre infrastructure to key rural points of presence, including schools and hospitals.  Vodafone will expand its wireless infrastructure to deliver wireless high speed broadband.  Chorus will build the fibre and DSL network and Vodafone will build the mobile towers.  XT and Vodafone will put their cellular equipment on the towers and provide independent services to their wholesale and MVNO customers as well as directly to retail customers.

The key is open access.  Anyone will be able to offer a retail service over the new infrastructure, whether fibre or wireless, on an equivalent basis.  2degrees, XT and regional wifi operators will be able to put their equipment on the towers and provide independent services to their customers, competing on equal terms.  The result – strong retail competition and a real choice of retail solutions and providers for rural customers.

We think this model is the new state of the telecommunications industry.  We compete vigorously on one hand and cooperate on the other.  The design of this solution means we will continue to be fierce retail competitors – and have created a platform that enables other operators to compete with us.  Trying to deliver this as a sole operator just doesn’t stack up economically.

Our proposed solution delivers choice to rural customers: either fixed broadband, or fixed wireless broadband.  In delivering wireless broadband we provide additional social advantages by enabling wider use of mobile voice and text, two important communication channels for individuals and communities.

Why not fibre to the farm? The economics just don’t stack up.  International best practice for rural communities is to deliver broadband over wireless networks.  Ireland, Germany, the US and Australia have all gone this way.  It means rural families can stay connected at home and on the farm, reducing geographical and social isolation.

Wireless is also future-proofed.  It means next generation mobile technologies such as 4G (otherwise known as Long Term Evolution – LTE), can be rolled out to rural users at the same time it’s made available to urban customers.  4G will offer faster data rates, lower latency, shorter delays and loading times, and ultimately a better experience.

Vodafone and Telecom can bridge the urban/rural digital divide in New Zealand, give other players equal access to the infrastructure, and deliver choice to rural New Zealand.

The Minister expects to make a decision by Christmas.

I am a big fan of the open access nature of the proposal, and think it is a model for future mobile expansion.

Four recent Telecom 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.

Vodafone 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 broadband partner, releasing a poll on its website that says more Kiwis would prefer its network arm Chorus got the job of building the ultrafast broadband network than electricity lines companies headed by Vector. …

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 fibre 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.

Crown Fibre Holdings have just announced three parties who are entering prioritised negotiations for the fibre roll-out. This will come as a surpise to those who assumed that Telecom/Chorus will win a nationwide contract. The three parties are:

• Alpine Energy (Timaru);
• The Central North Island Fibre Consortium (Hamilton – including Cambridge and Te Awamutu – Tauranga, New Plymouth, Wanganui, Hawera and Tokoroa); and
• Northpower (Whangarei).

This is a welcome step forward, and residents in those communities should be pleased.

CFH note:

“All shortlisted parties remain important contenders for future negotiations of binding agreements.  CFH is open to either a Telecom, New Zealand Regional Fibre Group solution, or some form of combination for the balance of the UFB project.”

So Telecom (and the NZ Regional Fibre Group) can still win the rest of NZ. If they did, presumably they would co-operate with the winners in the above areas. There is of course a risk Telecom/Chorus will try to undercut, if they don’t win a significant portion of the business. That will lead to infrastructure competition which is good in the short term, but inefficient in the long term. Services, rather than infrastructure, is where you want the competition to be.

I’m somewhat staggered to see Frog has blogged against the Government’s fibre to the home programme, and hope that his view is not that of the Green Party.

I’m rather dismayed to see a Green blog repeating moronic nonsense such as fibre will only be used for faster porn.

There are many areas of policy I disagree with the Green Party, but generally I have found myself in agreement with much of their Comms/IT policies – they voted against the original S92A on copyright, they promote open source software, they have been against Internet filtering and censorship, and they supported the operational separation of Telecom.I’ve gone out of my way to praise them in the comms/IT areas I agree with them on – which have been many.

But I can’t believe Frog doesn’t see one obvious benefit (putting aside all the others) from fibre connected homes, and that is the massive impact this may have in having people work from home – this means less fuel consumption, less congestion and less greenhouse gas emissions.

There are two things that would enable people to work from home much more, both which fibre will help enable.

The first is being able to access your work files as quickly and easily as if you are in the office. Sure you can do remote access at the moment, but it is often painfully slow, and nothing like actually being in the office.

The second is near instant high quality video conferencing with multiple people. I don’t mean waiting five minutes as you start the program up, and everyone else does the same. I mean you go to your TV set, push three buttons, and hey two seconds later you have a four way video conference.

Once we have fast enough Internet to do the above, I predict that the number of staff who work at least half the week from home will grow exponentially. Obviously not in some areas such as retail, but some companies may end up with just a meeting room and server as their office, and all their staff working from home. In fact I know of a couple of firms already doing this.

The Dom Post reports:

Wellington homes and businesses will get ultrafast broadband under a plan submitted to the Government by fibre-optic company CityLink, matching a proposal Vector has unveiled for Auckland.

Vector chief executive Simon Mackenzie said all 450,000 homes and premises in Auckland would be connected by the lines company within seven years with fibre that could provide broadband speeds a hundred times faster than average speeds provided today.

The first third would be connected in the “first couple of years”.

“We are not talking about being constrained at 100 megabits a second down and 50 up. This is capable of gigabits and terabits beyond.”

CityLink managing director Neil de Wit would not disclose details of its proposal, but said it was comprehensive and covered the “whole of the four cities of Wellington”.

Vector has done s similar proposal for Auckland.

Tom Pullar-Strecker reviews the fibre investment plan:

Communications Minister Steven Joyce appears genuinely chuffed with the financial model for the ultrafast broadband initiative that he and his team of cerebral but experienced advisers have dreamt up.

The plan released on Wednesday is certainly ingenious.

The fact Steven is one of the very few MPs that has owned and run a major business, made him the ideal Minister for this portfolio.

The Government will, if necessary, foot the entire bill for rolling out fibre-to-the-street, minus any construction overruns, while private investors in local fibre companies (LFCs) will only buy back their share of the infrastructure as they connect up homes and businesses.

That could help nullify the “Catch 22″ that threatened to leave the initiative stillborn – private investors couldn’t guess their return without knowing how ubiquitous the national network would be, which would depend on other investors’ assessment of their likely return.

And Steven has first hand experience of the need for commercial investors to be able to estimate returns.

There is another reason to take the initiative more seriously.

Instead of injecting a “one-off” $1.35 billion into the public-private partnerships in the vain hope that would be enough to garner sufficient private investment to get the whole job done, the Government is now considering investing far more over time. Investment vehicle Crown Fibre Holdings will be to recycle receipts from private investors as they buy shares in LFCs, after the first fibre customers sign up.

The Government’s investment at any one time will be capped at $1.35b, but the total it commits over the life of the scheme could be double or triple that.

“$1.35b is what Crown Fibre Holdings will have access to in order to fund the infrastructure,” says Mr Joyce. “There is certainly the possibility that some or all of the money will be reinvested, but it’s simply too soon to say how much will be reinvested or how many times that might occur.”

Does this mean 75 per cent of people can be assured of getting fibre within 10 years? Hardly. But instead of scuppering the scheme, if $1.35b is not enough to get the job done, it might simply take longer.

This is the most critical part. The big question I, and others, have had, is what if the planned level of investment is not enough to get to 75% of NZ. Do you then scrap the plan, or do you accept a lower coverage target. The answer is neither – you just recycle the crown investment, so you get there eventually, even if it takes a bit longer.

I am going to be fascinated to see what offerings are made by the various telcos, ISPs, lines companies and local government.

Clare Curran has blogged at Red Alert:

Communications and IT Minister Steven Joyce has just told the House in question time that there has been no delay in rolling out ultrafast broadband.

It’s amazing how this government can tell a barefaced lie with a straight face. The election was almost a year ago. The $1.5 billion delivery of broadband to 75% of New Zealand homes was a core election promise. Supposedly ready to go!

If Clare is going to use terms like bare faced lie, I’m going to have to point out how that description is one which better applies to her own blog post.

John Key announced the ultrafast broadband policy in May 2009. I was there when he did it. So was most of the industry. And they know what John Key said. So they get very puzzled when Clare claims the broadband package was supposedly ready to go. Let me quote John Key’s speech:

Delivering on these five principles will require a carefully thought-through and negotiated investment and regulatory model. National will conduct these negotiations in our first year of government.

2009 is the first year of Government. If anything, Steve Joyce is three months ahead of schedule. Everyone in the industry knows that National said the policy was a policy about what they wanted to achieve, and they would take 12 months working out the best way to achieve it.

And frankly it is somewhat bizarre that Clare keeps demanding that decisions should have been made quicker, because she has also blogged what an incredibly complex area this is. If the Government had made decisions more quickly, I suspect Clare would criticise that. Being in Opposition does not mean you have to criticise everything.

Clare then compounds things by claiming:

They axed the previous Government’s programme which was poised to rollout and put everything on hold for months while they recast a plan which now looks remarkedly like the previous government’s. That’s taken all year.

Now I was a big supporter of most of what the previous Government did in the Communications/IT field. But it is not at all correct to claim the previous Broadband Investment Fund is the same as what National is doing. The previous fund was not for a national fibre network reaching 75% of New Zealanders. It was $325 million (compared to $1.5 billion) and was not for fibre to the home. It was for mainly broadband to businesses and MUSH (municipalities, universities, schools and hospitals).

Now that was a good fund and certainly better than doing nothing (from my point of view). But to be blunt National trumped that with a policy that was far more ambitious and with far more funding – around 400% more.

Personally I suspect the former Minister, David Cunliffe, would have loved to have matched or exceeded National’s policy – but the simple fact of the matter is he couldn’t get the extra funding out of Clark and Cullen.

So while there are of course some similarities between the former BIF and the current Government’s proposal (mainly that they both use a regional competive process which is hardly surprising) they are in no way the same plan. And again, most people in the industry know this.

This government talks about investing in infrastructure. It seems to think that infrastructure is purely the network of roads, wires or fibre required to create a physical structure. What Mr Joyce, who is also the Associate Minister of Infrastructure, doesn’t seem to get, or pays lipservice to, is that with broadband, you can just invest in the fibre. You’ve got to invest in what will pass through the fibre. Services that will benefit society. And that’s the government’s role.

I’m not sure what Clare is suggesting here but I don’t want the Government competing with telcos, ISPs, Sky TV etc etc as the applications and services level. The infrastructure level, which is inherently non-competitive in most cases, is where I want the investment to happen.

It’s unknown whether the private sector investment required to make up the shortfall between $1.5 b and $6 billion will manifest itself, because its unknown what level of public investment will be made in the health, education and enregy sectors which will stimulate demand. That’s the real question.

No it is not. Expecting the Government to declare today what services it might seek to deliver in ten years time over the network is incredibly naive – especially considering the pace of change in the Internet industry. Any declaration today is likely to be more inaccurate than a Treasury forecast of the deficit!

The private sector will make their investment decisions on the basis of international experience and their own market research. They will not make them on the basis of what the Government may do online in ten years time.

I’m very very happy with today’s announcement from Steven Joyce:

Communications and Information Technology Minister Hon Steven Joyce today released the details of the government’s $1.5 billion ultra-fast broadband investment initiative. …

Key highlights of the proposal include:

• An open, transparent partner selection process, which will be initiated in the next month.




• Government investment directed to an open access, wholesale-only, passive fibre network infrastructure.




• A new Crown-owned investment company (“Crown Fibre Holdings”), which will be operational by October, to carry out the government’s partner selection process and manage the government’s investment in fibre networks.




• Crown Fibre Holdings and each partner establishing a commercial vehicle, a “Local Fibre Company” (LFC), to deploy fibre network infrastructure and provide access to dark fibre products and, optionally, certain active wholesale Layer 2 services.




• Provision for national and regionally-focused proposals, as well as consortium and proposals aggregating any combination of LFC regions.




• Independence, equivalence and transparency requirements for LFCs.




• Expansion to 33 candidate coverage areas based on the largest urban areas (by population in 2021).

What is really good is the commitment to open access to dark fibre, and the regional approach to the issue. The Government has held firm to most of their draft proposal, with the main change being an increase in the number of coverage areas to 33.

Computerworld reports on positive reaction:

“This ushers in the biggest and most fundamental change to telecommunications in New Zealand since the privatisation of Telecom 20 years ago,” TUANZ CEO Ernie Newman said in reaction to the news.

“The paper builds very constructively on the work done previously,” Newman says. “It takes into account most of the key issues raised in submissions, and sets a timetable with milestones. It is an excellent blueprint on which to build.” …

InternetNZ also welcomed the plan, saying it is “delighted” with today’s announcement of a regionally-based approach to investment.

“This is a world-leading programme that can be expected to deliver the infrastructure New Zealand needs,” spokesperson Jordan Carter says.

“Steven Joyce and the Government have put in place a framework that over time can deliver a widespread fibre rollout across urban New Zealand.”

Those unsure about the benefits of ultra-fast broadband, might want to read the guest post from Rod Drury earlier this week.

Chris Keall (and Kelly Gregor) at NBR cover the proposal in detail. Keall highlights a new focus:

In the proposal document released today, the minister also flags that “The capacity and reliability of New Zealand’s international data connectivity will become increasingly important as LFCs’ [local fibre companies'] networks are deployed over the course of the UFB Initiative.”

The Commerce Commission recently identified slow international data as a roadblock to better domestic broadband performance, with testings showing that overseas pages take twice as long to load as those hosted locally – even with our current copper-dominated networks.

International bandwidth and data costs are often cited as a big issue also.

In a fit of good timing, Juha Saarinen has an article in Computeworld on dark fibre, and how you basically can not get it from Telecom or TelstraClear. Have a look at this price comparison and weep:

James Watts, who runs Palmerston North-based ISP Inspire Net, says the reason dark fibre is attractive to his customers is because they can “do whatever the hell they want with it.” Inspire currently charges $595 and $995 for intra-town dark fibre pair leases, depending on contract terms, and double that for inter-town unlit circuits.

To light the circuits, Watts says his company sells Gigabit Ethernet transceivers for $140 each.

A similar 1Gbit/s circuit from Telecom apparently costs $7000 a month, plus installation charges.It’s $69k a year according to Telecom’s pricing book.

Finally a focus on the issue of fibre providers being discouraged from also operating retail telecommunication services, both here and in Australia. Steven Joyce said in a Q&A:

Will Telecom have to structurally separate its network business to participate?

Any such decisions are up to Telecom.  The Government has made it clear that it will only invest money into fibre companies that are not controlled by shareholders who also operate retail telecommunication businesses.  The Government is also clear that potential partners who already own fibre assets can table options that involve those fibre assets being vended into any new fibre companies.

Preventing vertically integrated monopolies is crucial. This basically means Telecom can not be a majority shareholder in any regional fibre company unless they structurally separate (ie sell off Chorus). They can have a minority stake however.

In Australia, the Government has done similiar:

The government could also deny Telstra access to new spectrum for advanced wireless broadband unless the telco sells off its cable network and 50 per cent stake in Foxtel (25 per cent owned by News Corporation, owner of The Australian)

If you want to be part of the future, you need to be separated.

For those who think separation is not a big issue, think what it would be like if Air New Zealand owned the airports and could set access terms for other airlines. Or if Ford owned the roads and set the rules for what other cars could drive on them, and for how much.

So as I said, very pleased with the announcements today, and now working my way through the details.

A guest post from Internet entrepreneur Rod Drury.

Almost weekly I hear “… but that’s not a silver bullet”. Broadband and connecting New Zealand digitally to the rest of the planet IS the biggest silver bullet for turning New Zealand around that I’ve seen in my business career. Let me explain why.

New Zealand is the farthest country from anywhere in the world. Any business that wants to talk to a market size of more than four million needs to send the founder away on planes (often), learn to export, as well as have the funding and governance to be a sophisticated international entity. That’s a tall order. So in general we don’t do it. Instead we build great little businesses that allow us to fund the ‘three B’s’ lifestyle. We do services rather than manufacturing. We invest in property, not business.

Adding digital channels to business reduces international trade barriers. You can have a web site in many languages. You can show video of your product. You can do seminars to thousands of people all over the world from your home office. You can video conference local phone numbers in your markets.

International broadband levels the playing field for the 400,000 New Zealand small businesses, to get amongst it, with minimal upfront costs. Already thousands of New Zealanders are doing this from all over the country. They’ve worked out how to get around the technical obstacles and constraints and are building little export businesses. Ultrafast international broadband mainstreams this opportunity. Any one of our two million working people can participate. While there will be a few high profile businesses that will be successful, getting mainstream small businesses sending invoices every month to the US and beyond, is the productivity step-change that world class international broadband can create.

It’s not just about pushing New Zealand services out. It’s also about attracting investment in. If New Zealand is connected super fast to the US West Coast there are countless opportunities to attract very connected knowledge workers and investment down here. Silicon Valley is an overnight sleep from most places in New Zealand. The same marketing person at $US150k might work in NZ for $NZ120k and be able to go mountain biking after work. Affordable, high performance, international broadband gives us the opportunity to attract substantial inward investment.

How do we pay for all this? Well it’s actually free. International broadband can fund itself – we just have to get organized.

Traditional telco models rely on a big upfront costs and customer fragmentation. There are minimal margin costs for services, so pricing is for revenue maximisation not public benefits. Logically the market has woken up and various schemes are now aggregating demand so that the pool of money for broadband can be used to provide broader benefits to New Zealand. This allows the expensive infrastructure to be funded and paid for on a cost plus, open access model.

Older New Zealand investors got used to augmenting their income with high interest rates in recent years. Where they used to get 8+% on their money they now get 3%. Consquently there’s plenty of demand for higher coupon bonds. Income for those investors is the cost of capital required to connect New Zealand internationally. A billion dollars of investment may only require $80m per annum to fund. This is quite reasonable as Telecom received about that same last year as a dividend from it’s 50% share of Southern Cross – the monopoly international cable provider.

As a rough back of the envelope calculation, that $80m, divided by 2 million users who access the internet via their phone, home account and at work, is about the cost of a cup of coffee a month. So, connecting New Zealand to the rest of the world, and the resulting step-change in opportunity only requires coordination – not cash.

Everyone, even the incumbent telco’s, can win with this model. There has never been such an opportunity to step-change New Zealand’s productivity and connect our many small businesses directly into global markets. Here is a real silver bullet. They don’t come along often. Let’s not waste the opportunity.

The Herald reports:

Telecom is to offer an uncapped broadband internet deal but customers will have to trade off connection speed.

From next week a new $60 a month “all you can eat” plan will be offered with the compromise that downloads may be slower at peak times. …

Brayham said during peak hours – generally 3pm to 10pm – internet traffic “shaping” would target files consuming large amounts of bandwidth, which could include some music, movie and software downloads.

I think this is a great move. NZ is the only OECD country with no non data capped plans – finally we have one.

I have no problem with data capped customers getting priority speeds during peak times. File sharers often download overnight and are generally more worried about the data cap, not the speed – so long as it is reasonable.

Of course we have to see exactly how fast things go during both off peak and peak times, but if the service holds up Telecom could do well with this offering.