Nmbr 3 isn’t going 3G
Telstra has decided not to build a 3G mobile network in New Zealand, leaving it to Telecom and Vodafone. Computerworld reports:
[Chief executive Allan] Freeth says while the willingness to invest in New Zealand is there at a corporate level, problems in the short term with the regulatory regime means the money is not forthcoming.
“We spend $100 million a year simply maintaining the network we’ve got and we’re not going to be able to get Telstra to front up with $400 million or $500 million to extend that network without some significant changes in the environment,” he says.
While he maintains he will not be fighting on the regulatory front anywhere near as much as his predecessor did, he is willing to point the finger at government over the wholesale regime.
“The lack of a wholesale market and the kind of hijinks we’ve seen this week show us we’re reliant on the government, the minister and the Commerce Commission to make the changes necessary.”
The Greens have been calling for some time for the Government to stop protecting Telecom’s monopoly position. On the subject of ‘unbundling the local loop’, Sue K said last year:
“New Zealand and Mexico are the only OECD countries that have not taken the decision to open up telephone services to true competition.
“All other developed countries have already moved to unbundle their local loop, because competitive access to the copper wire network is considered vital in the development of an Internet economy.”
Green support for all IT is based on its democratising effect and that it is relatively less environmentally damaging than the transport and paper production it replaces, although this is tempered by our concerns about e-waste and, in the case of mobiles, the long-term health effect of over exposure.
Personally, I find it bizarre that the Government continues to protect Telecom’s market position. It’s almost like some sort of residual loyalty to a former SOE. They should get over it, as apart from the restriction of the Kiwi Share rule, it really is just another privately-owned corporation. (Or they could just re-nationalise it 
)
I’ve also found it strange that for the last few years we’ve had a telco largely owned by the Australian Government operating in NZ when our own government isn’t in the local sector. It now looks like John Howard will finally succeed in fully privatising it, but that’s not good news for Aussie citizens, workers or consumers.
November 16th, 2005 at 6:56 pm
Unbundling the local loop (LLU) is NZ a terrible idea. I’m time limited, so culling from something I wrote in March 2004:
a) The companies that want LLU unbundling want to “cherry-pick” the great places where LLU will work well, and deliver good profits. This means, effectively, Auckland, and the central bits of the other big towns. The last place I lived, there wasnt even the cost justification for one broadband line provisioner, let alone competition from several.
b) As the best areas will be cherry-picked, Telecom will be left with what is left. Prices will be driven lower. Which means Telecom they’ll have even less income and incentive to fix better (or indeed any) broadband provision to the ignored places, which is geographically most of NZ.
We dont need LLU; what we need is regulation “enabling” (ie enforcing) Telecom to offer better and more varied wholesale connectivity opportunities to ISPs. So xtra and every other ISP get their own chance to offer great competitive services to every customer in reach of ADSL on a level playing field.
Since I wrote that in March 2004, we now how UBS services. UBS could work today, and provide uncapped internet to every ADSL user in the country. But it doesnt fo two reasons, firstly because Xtra can still offer JetStream, a non-UBS service, which has a different bad=g of compromises to UBS, and secondly and much more importantly, because all the other ISPs are unwilling to invest in the infrastructure necessary to make it happen. They want LLU so they can make a killing as described above, whereas doing UBS “properly” would provide decent competitive services to us all.
Given that Orcon are now anti-LLU, I think they are in the process of preparing to do UBS “right” and will then use that as a competiutive weapon against all the other slacker ISPs, including Telecom.
At the moment, the best thing that officialdom can do is to force Xtra to operate arms length from Telecom, same as any other ISP.
LLU is just like nuclear power - the wrong option for New Zealand.
November 17th, 2005 at 1:32 am
DBuckley
I would have more sympathy for that viewpoint if Telecom weren’t sitting on its F’ing hands and vacuuming up every dime in our pockets. There’s a reason it’s had such WONDERFUL profits… and there’s a problem. Paying double the going rate anywhere ekse in the world for real Broadband access? Paying by the Megabyte?
You’re right, some folks want to cherry-pick. Nobody wants to run FO out to a town with a population in single digits… or a farm. It DOES cost money, and it will take time. However, in the areas where Broadband is already available, the speeds and prices on offer are ludicrous… Kiwis may be unaware of what the rest of the world mostly gets for its telecom dollars, but the more recent arrivals here are generally rather shocked. Then they get angry.
If Telecom is is keeping its monopoly its going to have to act like a government instrument rather than a wholly private corporation. That means the shareholders don’t get big dividends, the money gets invested in the infrastructure out in the sticks. If it is going to be a wholly private corporation it is going to have to compete in the cities on an LLU basis, as well as in the countryside AND the government is going to have to ensure the availability of access to the countryside using some other instrument besides pure private enterprise.. because you are right, the money out there won’t pay for it. It means and needs transfer of wealth from city folk to country… but should it mean transfer of wealth from the city phone and internet users to the country users? How is my volume of use related to how much goes to subsidise the installations outside the city?
What has happened has been Telecom milking the monopoly for all its worth, to get big profit numbers and pay big dividends and big salaries all around. What hasn’t happened is infrastructure and reasonable rates. LLU is one part of one answer. The other answer is to have the government take a far more active role in Telecom’s business.
LLU may have a place in New Zealand… the current Telecom situation does not.
respectfully
BJ
November 17th, 2005 at 9:37 am
Again the same old arguments being trotted out - “it’s all Telecom’s fault”. That is a gross oversimplification of the state of NZ broadband.
What shocks people who arrive here from USA and UK is not line speed, which has always been faster than these countries but the data cap.
There no longer needs to be caps, every ISP can offer truly uncapped services without Telecom restriction or cost, but they dont… Telecom are not the only bad guy here, all ISPs (with the possible exception of Orcon, on whom the jury is still out) are snakes.
We can have 21st century broadband today, theres nothing stopping anyone from providing it. But there is more money to be made emulating Xtra style services, so thats what ISPs do.
There is a level playing field right now for competitive services, and once most ISPs are acting competitively I might consider revising my stance on LLU, but the ISPs should have to earn that right. So far, they’ve not. All they’re proving at the moment is that they can act just like Telecom.
November 17th, 2005 at 11:37 am
The ISPs do not provide the DSL connection, just the login service and alternative plans, which they buy ultimately off Telecom. You connect to DSL using Telecom whether you like it or not, and as a result, YES, it is their fault. They are rorting us in the date. It is that simple, and it always has been.
I don’t know the solution, but the problem of a monopoly on broadband is exceedingly obvious, when you see the price of broadband everywhere but here.
I have personally suffered Telecom’s broadband rort for years, and kicked at least $20,000 their way as a result of their evil bandwidth caps. I finally went for one of their cheaper services with a higher cap, only to find VOIP has mysteriously become really shit all of a sudden. Surprised anyone?
Bastards.
November 17th, 2005 at 4:54 pm
Simply, no, but your mis-assumption is not uncommon, and is was the way that JetStream ADSL worked, but not the way JetStream Starter or UBS services work. ADSL and JetStream are sometimes the same thing, sometimes not…
Since Telecom have enabled UBS connectivity, ADSL here works in a manner compatible with most other countries, in that Telecom provide “last mile” services and concentration points (about thirty odd, if I remember correctly), to which all ISPs are welcome to connect. There is no limit on capacity within the concentrators, whatever backbone connectivity the ISP is willing to pay for and install can be connected to customers. There are no “plans”, there is whatever the ISP is willing to offer.
Obviously, building a nation-wide backbone network costs money, and ISPs dont want to spend money, so they use a Telecom provided Backhaul service, which is (for them) a cheaper but less capable option. So we get less capable services. They disguise them as being the same as Telecom plans, allowing folks to go on assuming that its all Telecom’s fault. Their press people say its all Telecom’s fault, and becuase historically it always was, people continue to think it it.
When ISPs get round to building their own backhaul networks, then we might get competition. They would need to do that for LLU anyway…
Dont get me wrong - Telecom are no angels, but holding up other ISPS as being any better is a mistake, they are all on the same cesspit together, whatever the PR may say.
November 17th, 2005 at 7:30 pm
DBuckley
“Two week’s after Orcon’s product release, Telecom have decided to change the specification by imposing a 10GB average traffic limit per user, and an agreement not to promote static IP addresses with the service.”
That doesn’t sound “uncapped” to me. It sounds like Telecom wants the ISP to take the risk that its customers will exceed the aggregate bandwidth allocated at the speed.
I am looking at the web for information, and that may be out of date now, but nothing else seems relevant. Telecom sets a cap on the ISP, the ISP passes it on to the customer. It looks pretty simple except that most people won’t touch a 10 GB/Month cap at these speeds. So the ISP could realistically expect to survive setting a higher cap…
Of course you CAN go faster and have no cap. The price you pay looks a lot like a car payment on a pretty nice car, but hey, money talks.
You haven’t really responded to the basic point, which is that IF providing rural infrastructure is the reason for the pricing structure for the cities, then there is a problem with the concept. Telecom is redistributing wealth from city to country but ONLY within the confines of the telecom user in proportion to their usage. I think that that is SUPPOSED to be managed by all the other phone companies making payments to Telecom. So the excuse goes by the wayside in any case. They ARE being paid to build infrastructure… but the manner of the subsidy is distinctly weighted against the heavy user of comms services, not distributed across the country evenly.
Are you seeing what I am driving at?
Maybe my ISP can do better than it does. I wouldn’t be at all surprised, but the LLU isn’t wrong on the back of that. I can’t afford the speed I used to have. I was shocked by the cap as well, but the speed offered at MORE than I used to pay for 1 MB/S unlimited services is the lowest speed on offer… period.
I’m from New York originally. I have a good sense for when someone’s hand is in my pocket and that sense is telling me that Telecom IS the biggest bad-guy in the market…. or does the phrase “follow the money” not lead you anywhere down here in NZ?
respectfully
BJ
November 17th, 2005 at 9:51 pm
The cap mentioned in your quote is on Telecom’s UBS backhaul network, which ISPs have the option to use for their UBS customers, or to not use; an ISP can (and should) provide their own backhaul network, like they do in most other countries. There is no cap per se on a user’s port, only an average per port limit on Telecom’s backhaul.
So to say “Telecom sets a cap on the ISP, the ISP passes it on to the customer” is simply wrong when referring to UBS services, however it was true with some earlier services.
Any ISP with the cajones can set up a truly unlimited broadband service today.
I understand “follow the money”, which is why in my first post above I said “At the moment, the best thing that officialdom can do is to force Xtra to operate arms length from Telecom, same as any other ISP”, as it is the cosy intertwined relationship between Telecom and their ISP that gives Telecom an unfair place in the market. Its not a technology problem, it just needs a little commercial relationship shaking about.
Following the money is my basic argument against LLU, the service follows the money, then the money follows the service, reinforcing the digital divide. I want everyone to get better internet, not just the big city dwellers.
The cross-subsidisation between telcos to which you refer I understand only applies to basic telephone services, not to other services. This is ‘cos telephone is a basic service which everyone has a reasonable right to require, but everything on top (even fax) is not “required” but is made availabe where required and possible. Rural customers would point out that Telecom cant even provide a phone service that works, but that is a bit self inflicted with the world’s most powerful electric fences running parallel to KMs of wire.
November 17th, 2005 at 10:42 pm
DBuckly
The service in the country will NEVER be profitable compared to that in the city. The LLU doesn’t speak to that one way or another, it just allows the city user and the heavy user to subsidize rural services which would otherwise be unprofitable and unprovided. I may have missed something here… but it still appears that the argument is that the LLU is providing the “cross-subsidization” effect and without it Telecom wouldn’t be able or willing to provide services in the rural districts… and surely nobody else would either…Otherwise, what’s that monopoly still there for?
Cause you’re right, the service will go first and foremost where the profits may be taken. My argument is that the costs here are crippling business and hampering uptake, and if the reason for it is the need to provide rural infrastructure then the wrong vehicle has been appropriated to do that.
We aren’t THAT far apart now. I’ve learned something here, but I still don’t see LLU as wrong… more like irrelevant.
I hadn’t heard about the power of the fences… brings a bit more bite to that old warning… “Never pee on an electric fence”
respectfully
BJ
November 17th, 2005 at 11:58 pm
well of course you can send data over the existing electric cables infrastucture, odd though it sounds, and plenty of power companies have been experimenting with this, e.g.
http://www.wave-report.com/tutorials/bpl.htm
http://www.wired.com/news/technology/0,1282,57605,00.html
but did you know some enterprising NZ academics tried sending data using IP over stock electric fences? I think the idea was to have different sensors out in the field and use the electric fences to get the data back to base.
November 18th, 2005 at 11:01 am
Well, how about a simple trade boycott of Telecom? I began my personal one 2 years ago, won’t use them for phone, isp or cell service. They are expensive, they provide poor service, and their attitude to service complaints sucks!!
I realise that this is a luxury option available to me as an urban service user. Sorry, my rural friends and relatives, but someone has to show them that they are still a SERVICE industry, and some complimentary courtesy wouldn’t go amiss!!