Fibre To The ______?

By Dan Ballard, in , posted: 11-May-2010 16:46

In the not too distant future most homes and businesses in major towns and cities in New Zealand will have access to ultra-fast broadband.  Thanks in large to the latest initial by the New Zealand government to invest 1.5 billion dollars into catching New Zealand up with the rest of the OECD nations in terms of national broadband speed.

My business is IT so having a bigger, faster and more secure internet connections is always a good thing for me and my clients.  However I can’t help but be a bit sceptical about Vectors latest advertising campaign around the issue. One of their statement says “Fibre to the door will help Auckland become a competitive global city, delivering huge leaps in business productivity, education, health and even lifestyle.”

Huge leaps in business productivity and even lifestyle – will it really? For a minority that come up with really innovative ways to make use of these super fast connections and can afford to pay a premium for it, they will no doubt make a killing but for the vast majority we will be able to watch that cat fall off the garbage bin in high definition on YouTube and check our emails faster.

Vectors main push is to deliver fibre to the door of 450,000 people around Auckland in 3 years, this is a very wise move for them as Auckland has the most people therefore is the most profitable area to focus on.  What about the rest of the country? And how many people are going to be willing to pay a premium for fibre? 

Only recently Telecom announced that they will be providing the newest version of DSL which is between 2 and 10 times faster than currently broadband speeds called VDSL2.  Telecom wanted to charge an additional $20 per connection and both Orcon and Vodafone had a whinge about customers having to pay this small premium for a faster service stating “people could not afford it in this economic climate”.  Fibre is going to be much more expensive than $20/month!

Telecommuting and video conferencing are technologies that Vector is stating that fibre will bring but anyone that is only vaguely familiar with current technology knows that these technologies exist now and they are mostly transported over the humble copper wire which Vector hopes to replace.

What really is wrong with Copper you may ask?  Well compared with fibre it is slower to transmit data over.  However it has a huge advantage over fibre which everyone seems to be over looking and that is the fact that it is in the ground right now connecting every single business and home together in New Zealand.

Another key point that appears lost with people is that Telecom currently has fibre running to most suburbs in New Zealand, a quick look on the New Zealand broadband map confirms this.  Now we all know that if Telecom becomes the monopoly on this technology the price will remain high but the other side of the argument is, is there much point in duplicating this resource?

One of the downsides to VDSL2 is the fact that to get the full speed you must be within 1km of the exchange or cabinet, which seems to fit nicely with Telecom having fibre to most populated suburbs around the country.  What this is called is ‘fibre to the node’ or in English ‘fibre to the neighbourhood’ and the last part is connecting to the consumer through copper using current ADSL technologies or VDSL2.

So Telecom have, at their own expense built a network that is capable delivering what the government are wanting or at least closer to what they are wanting and I am prepared to lay money down on the fact that it will be much cheaper than fibre to the door.

The last part of the puzzle is the cost of international bandwidth.  Currently there is only two cables supplying New Zealand broadband (small satellite operators excluded) and they are both owned by the Southern Cross Cables Limited with Telecom being the majority 50% shareholder.  The pricing is currently pegged off the Australia to US data rates but still that is higher than it would be if there were some competition in this market, like the rest of the world.

Fortunately our friends that brought us The Warehouse, Trade Me and Xero are working on that issue with one of their latest ventures - Pacific Fibre.  There has been talk over the last few year that Kordia was going to be building another cable and they have gone quiet on the issue.  Now that Sir Stephen Tindall, Sam Morgan and Rod Drury have taken up the mantle I am sure there will be some action.  These are the type of guys that make things happen, so watch this space. 

As soon as there is some competition in the international bandwidth arena coupled with the governments initiative and with Telecoms already built fibre to the node network, I believe this will help increase the overall speed of broadband in New Zealand and drive down the cost for the humble consumer.

Dan Ballard is the Managing Director of CyberHub and Auckland based IT company.

More information

Other related posts:
Broadband In New Zealand – Why So Slow And Expensive?
Why Is Some Broadband Providers Faster Than Others?
How Important Is It To Make Sure That Your Wireless Internet Is Secure?

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Comment by stuzzo, on 11-May-2010 19:38

I believe discussions of FTTH often take too short a view. Any fibre network is one that is looking to meet the needs of the next 100 years just as telephone and telegraph did for the last 150.

I really can't see the existing copper network being any part of that though I accept there are economic arguments about the speed of roll out. In even the next decade international and local bandwidth prices are sure to fall dramatically so I don't see consumers being costed out of these new services.

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Dan Ballard
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