Why nobody should be surprised about Jetstar’s expansion into regional routes.

By Steve Biddle, in , posted: 18-Jun-2015 18:57

“Air NZ shares down10% on rival’s bombshell” screamed the NBR headline this afternoon after Jetstar announced plans to deploy Q300 turboprop aircraft on regional routes in New Zealand. Up until now Jetstar has only focussed on main trunk routes using Airbus A320 jets.

If there was a word I would use to describe Jetstar’s announcement it’s not bombshell. It’s more like predictable. Any share market analyst or shareholder surprised by today’s announcement should really be looking seriously at their analysis and/or where they seek advice from.

In 2013 Jetstar poached former Air Nelson General Manager Grant Kerr to head up Jetstar operations in New Zealand. Despite the court ruling against Air New Zealand in a restraint of trade restriction in Kerr’s employment contract, the reasons for employing him were very clear – his intricate inside knowledge of Air New Zealand’s regional operations were just what Jetstar needed if they were going to successfully launch an offering.

Fast forward to 2014 and lots of rumours of Jetstar bring Q300 or Q400 aircraft across the Tasman to launch operations in New Zealand started. Rumours at the time where that that Jetstar were having a lot of trouble building a profitable business case for this, and at a time when parent Qantas was bleeding massive amount of money, it seems the project was put on hold because they weren’t willing to invest in something that wasn’t necessarily going to be profitable. If true, delaying the launch may ultimately turn into a bad thing for Jetstar.

Many people out there think Air New Zealand are a cash cow. Right now they are – but that’s not to say every aspect of the airline is. Under the current CEO Christopher Luxon and the current executive team the focus has been on cost cutting, with absolutely no part of the supply chain being immune from a goal to ensure the airline is as lean as it can be. Many (including myself as a high value customer) believe that this profit at all costs mentality has been taken too far, and that some aspects of the airline operations are now far too heavily focussed on profitability rather than customer satisfaction. Whatever you view, it’s safe to say that right now Air New Zealand are in a better position than ever to fend off competitors.

The rumoured delay has given Air New Zealand time to completely restructure it’s regional operations, which according to CEO Luxon saw many smaller regional destinations losing millions of dollars. In recent months we’ve seen the scaling back of the extremely inefficient and costly Eagle Air B1900 fleet before these aircraft are ultimately withdrawn, upsizing from B1900 to Q300 aircraft on some sectors (per ASK on a Q300 is significantly better than a B1900) which has seen pricing fall to fill seats, and the withdrawal of services from some regional routes where bigger aircraft such as the Q300 would have been unsustainable.

The delay has given Air New Zealand time to completely refocus and restructure, something that’s very bad for a competitor trying to launch services on routes. As many regional routes are marginal due to due to the much higher cost of flying passengers on a smaller plane versus a jet, it’ll be very interesting to see how Jetstar price their seats and to see the response from Air New Zealand.



Hotel review – Intercontinental Double Bay Sydney

By Steve Biddle, in , posted: 4-Jun-2015 08:52

During a recent weekend visit to Sydney in March I took to the opportunity to book an IHG reward night at one of Sydney’s newest hotels – the Intercontinental Double Bay.

The Intercontinental Double Bay opened in late 2014 after an extensive refurbishment of a building that for many years was one of Sydney’s most prestigious hotels. Opened in 1991 as the Ritz Carlton it was a popular haunt for celebrities and wannabe celebrities alike, in a suburb that is well known for it’s affluence. It’s also the hotel where former INXS lead singer Michael Hutchence tragically ended his life.

Double Bay is located around 4km from the Sydney CBD. There are plenty of transport options to get there, but the nearest train station to the hotel is around a 10 minute walk which is all downhill if you’re coming from the station, or uphill if you’re leaving the hotel. An Uber or taxi is going to be the quickest option.

Upon entering the hotel through the ground floor I was greeted by bell staff who directed me to reception on the 1st floor. If you’ve got bags you’ll probably head to the lift, otherwise you’ll enjoy the views from the grand staircase.

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Once on the 1st floor you’ll find plenty of open space leading to reception. Staff were friendly, and the check-in process was quick was nearly painless – the staff member who I dealt with was (I’m picking) French, and did struggle to understand a couple of my questions and I had to repeat myself. Staff recognised my IHG Platinum Elite status and welcomed me to the hotel.

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Once checked in I headed up to the room, noticing on the way that maintenance for such a new building did leave a little to be desired. Around a number of lifts and public areas damage from trolleys was already evident. This wasn’t a great look for such a newly renovated property.

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The room was a “Village view” overlooking the Double Bay village area. Walking into the room showed off the automation systems present in the room, with the TV turning on and curtains opening.

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Hidden behind the mirrored doors was the mini bar, something that was up to usual Intercontinental standards if you wanted to indulge in the luxuries of life and not have to even pick up the phone to order champagne!

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I headed into the bathroom and was suitably impressed. If you don’t like granite however, this probably isn’t the hotel for you!

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The room featured a modern IPTV system for all free to air and pay TV channels, with picture quality being superb.

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Also located next to the TV were USB ports and inputs for the TV. I had a play with these, but struggled to actually get them to work correctly. If you wanted to charge your USB devices, the ports will allow you to do this, but like 99% of USB ports that are located in public areas they won’t correctly charge most modern phones or tablets at full speed unless you have your own adapter to short the data pins, meaning you’ll be limited to a slow 450mA charge rate. Mounted inside the TV cabinet was a Ruckus dual band 2.4GHz/5GHz access point for in-room WiFi. Internet access is free for IHG rewards members such as myself, however you’ll be stuck paying the usual hotel prices if you’re not a member.

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The room featured a nice clock radio (which was a little bright for my liking), cordless DECT phone and a rather cool remote control next to the bed for curtains and all lighting.

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I headed up to the rooftop to check out the lap pool and bar. Rather than being your regular hotel pool, I get the feeling this was clearly a place to be seen rather than being a practical pool area. The bar was great, but pricing was very much on the high side. I got the impression from a few people nearby quietly drinking their cocktails that the kids playing in the pool were a rather big annoyance, and I guess that’s the problem you face when you’re trying to develop a concept such as this.

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I had a great nights sleep with bedding and pillows bring fantastic. The bed was a little hard for my liking, but it’s hard to really blame a hotel for that when so many people have such differing views of what defines a comfortable bed. While the room was quiet, I was however awoken during the night by loud cars racing down the street outside.

I didn’t get a chance to eat at the hotel, however the dining options looked great, and if you’re a gin fan the bar featured a huge selection. You’ll be spoilt for dining options nearby with a huge number of restaurants in the area.

Overall while I enjoyed my stay, I’d question whether I would go back. It’s a fantastic refit of the building that has maintained much of the old character, and while there the hotel and facilities were fantastic, I felt the hotel quite simply lacked atmosphere. I wrote a review of my stay the night before at the Hilton Sydney, and to be completely honest I much preferred my stay at the Hilton over the Intercontinental.



Hotel review – Hilton Sydney

By Steve Biddle, in , posted: 3-Jun-2015 08:18

I visited Sydney for the weekend in March so took the opportunity to stay at a couple of Sydney’s more upmarket hotels – the Hilton Sydney on a Friday night, and the new Intercontinental Double Bay on the Saturday night.

The Hilton Sydney is one of my favourite hotels in Sydney. It’s CBD location on Pitt St is only a few minutes walk from Pitt St Mall, and it’s only a few minutes walk to Town Hall and Museum stations for public transport connections including Sydney airport.

I’ve stayed at the Hilton here on a few occasions, and on every visit it’s impressed me. I’ve heard of a few complaints about wait times at reception in the past, but at 6pm on a Friday night there were no delays. I was checked in within a couple of minutes by an incredibly friendly staff member, and was on my way to the room having had all the benefits of the hotel and my status explained to me.

Those of you a Hilton Hhonors Gold members are treated to the full package of benefits at this hotel – upgraded rooms, Executive lounge access, and a free breakfast. Unlike customers simply purchasing Execute floor rooms who are only entitled to breakfast in the Execute lounge, Hhonors Gold lets you enjoy the buffet breakfast at Glass restaurant, something you’d be crazy not to take up.

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I made my way to the 28th floor room. While I wouldn’t describe the rooms as large, they’re a good size and the space is well utilised. Bathrooms feature the usual high quality Peter-Thomas Roth toiletries, along with a separate shower and bath. Two complementary bottles of water are on offer for Hhonors Gold members.

The TV system is a full IPTV (Internet Protocol Television) based system integrated into the hotel PMS (Property Management System) backend system. Picture quality was great and all channels were in the correct aspect ratio. I did however manage to crash the system a few times while watching TV, and this required physically turning the TV off and on again at the wall to get it going again. The room also features a Cisco VoIP phone that also offers some XML based interactive menus. This may have been somebody’s gimmicky idea when the hotel was opened (and as a VoIP engineer myself it’s probably something I would do myself!), but I can imagine it’s something very few people use as it doesn’t work very well at all, with some options no longer even working.

Controls for lighting and the blinds are located next to the bed. My only complaint about the system is that you have to hold the button for a long time to move the blinds fully up or fully down – there is no option to simply fully open or close them.

The room features a fully stocked pressure sensitive mini-bar, so don’t go touching things unless you want to pay for them!

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After spending a few minutes in the room it was time to check out the evening drinks and canapés in the 36th floor Executive lounge. This lounge is available for use throughout the day for all customers located on Executive floors, with drinks and snacks available outside the breakfast and evening service times.

For evening canapés beer, wine and spirits are complementary along with a great selection of food and desert options. While clearly targeted as a pre-dinner dining option, there is certainly enough food on offer to turn this into a dinner meal should you desire.

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You can probably call me a Hilton fanboy, but I love the beds that many Hilton hotels offer. The bed, pillow selection and sheets were all perfect, and is something Hilton have perfected. After a great night’s sleep I woke up ready to attack the buffet breakfast at Glass restaurant. This buffet breakfast is an amazing offering with an amazing selection of food, and certainly ranks up there as amongst the best buffet breakfast offerings I’ve come across anywhere in the world. If you’re not a Hhonors Gold member the full price of breakfast is a rather hefty A$42 per person, but it is worth it for what is an amazing food offering.

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Overall there isn’t much to really fault about the hotel, which is why it’s one of my favourites in Sydney. Check-in and check-out where both quick with super friendly staff at both reception and the bell desk where I stored my bag for the day. I’ll certainly be back!



UFB voice, power cuts, copper invincibility and mainstream media FUD.

By Steve Biddle, in , posted: 8-May-2015 11:08

There has been a lot of discussion in the media in recent days regarding the UFB (Ultrafast Broadband) fibre rollout and the issues surrounding both voice only plans and the availability of phone services over UFB during a power cut. Due to a large amount of misinformation that’s been spread surrounding this issue, primarily by mainstream media who seem to lack any technical understanding of the issue and instead focus on disseminating mistruths, I felt the need to write something to explain things that can hopefully be understood by everybody.

Last week the Dominion Post a story ran about brand new Wellington City Council flats in Miramar that in line with many new buildings was only capable of receiving internet and phone services over the UFB network. As no copper had been reticulated inside the new building, it was not possible for people living in the flats to receive a regular phone service over the copper PSTN network like most were used to. As many residents were elderly, they had no need for internet access, and found themselves having to pay more for an internet and phone bundle as they couldn’t have a phone only connection over UFB. Like the vast majority stories on Stuff these days where comments are enabled, numerous comments added nothing to the debate, or society as a whole. Aside from the name calling, bashing of big companies and some absolutely stupid suggestions, they showed how little the average person actually understands about the technology behind their day to day lives.

Some in the media were quick to jump onto the bang wagon bashing Spark (what anything has to do with them is a mystery), along with the UFB project as a whole. Many were also quick to make fools of themselves by jumping into the debate and laying blame while relying on misinformation to make judgements.

One thing needs to be made very clear – there is nothing stopping a phone only connection being delivered over a UFB connection. An ATA (Analogue Telephone Adapter) port is located on every ONT (Optical Network Terminal) which in installed in your premises to deliver UFB services, and an ATA only service plan is available to every RSP (Retail Service Provider) that offers UFB services. Why you might ask do none then offer a phone only plan? That’s both a business and a technical decision, both of which I’ll discuss in more detail.

To deliver a voice connection over UFB a RSP has two options – use the ATA port in the ONT, or use an ATA port on the RGW (Residential Gateway) that’s installed. The RGW is your router that plugs into the ONT and provides you with internet access via Ethernet and WiFi. Your regular corded or cordless phone simply plugs into the RJ11 ATA port on the ONT or RGW, or your existing home copper cabling can be wired into this port by a technician so all existing phone jacks will continue to work just like they did with a copper connection. Both approaches have advantages and disadvantages, and neither is a better or worse solution – they are simply two different ways to deliver a dial tone, and ultimately a phone service to the customer.

Currently there is a mix of RSPs using the ATA port on the ONT, and using the ATA port on the RGW. Both solutions are VoIP (Voice Over Internet Protocol) based solutions and connect back to a soft switch (a VoIP “phone exchange”) at your RSP or VoIP provider.

So why the two approaches? Quite simply this comes down to the hardware a RSP wants to deploy, and how they plan to provision the hardware. If a RSP uses their RGW for VoIP they can deploy the same RGW to deliver internet and VoIP phone services over both DSL and UFB – this means their backend provisioning system and processes are identical for provisioning hardware for a customer, regardless of the platform they’re on. If a customer moves from DSL to UFB, nothing has to change (not even the hardware) to deliver their connection. If a customer moves address, once again no changes are required as the RGW can simply be moved between premises and will continue to function once a DSL or UFB service is provisioned. One such example of this is Orcon who use the same hardware across DSL and UFB to deliver voice and Internet to customers.

For a RSP to use the ATA port on the ONT they need to support the auto provisioning of the ATA in the ONT, which may require building an entirely new provisioning platform, or significant changes to their exiting platform. There are also differences between the provisioning methods between the hardware used by Chorus and the LFCs (Local Fibre Companies), as Chorus are not the sole provider of UFB as many people mistakenly believe. Once you have built a provisioning platform you need to deal with the minor differences between the different ONT hardware used by Chorus and the LFCs – as each has slight differences in it’s SIP (Session Initiated Protocol) stack used in the ATA for the VoIP product. All of this requires testing, testing and more testing. Once this is all complete you then have to deal with day to day BAU (Business As Usual) processes – a customer moving address for example to another UFB address would need to have their voice service removed from one ONT and provisioned onto another ONT on a specific date to ensure continuity of service. If you’re going to rely on the ATA port on the ONT a customer move between different service types can become very complex – if a customer moved premises to a copper area they would need to have their phone number ported back to a regular POTS line, and if this involved a move of address outside the current exchange area, keeping the same phone number may not be possible at all without the added cost of a Customerlink which may mean the customer has to have a new number.

At the end of the day one of the biggest determining factors is quite simply going to be the hardware a RSP wants to deploy. If they’re going to deliver a voice service via RGW, they’re going to need to deploy hardware that supports this functionality. If a RSP opts to use the ONT ATA port they have a far greater choice of hardware as it does not need voice functionality.

From a technical point of view there is no difference in the quality of the end product that is delivered. If your phone service is delivered via the ATA port on the ONT it uses it’s own separate VLAN to connect to your RSP, and has guaranteed bandwidth to ensure that voice traffic can’t be impacted by other internet traffic. If your voice service is delivered via your RGW, it should use 802.1p tagging on the voice traffic so the voice traffic will be use the CIR (Committed Information Rate) high priority queue on your UFB connection, and will also be unaffected by other internet traffic.

If you’re a UFB customer right now you’ll be delivered your voice connection using one of those two delivery methods – with the exception being if you’re a Spark UFB customer. All Spark customers who have been provisioned with a UFB service are currently receiving their phone service over a copper connection in parallel with UFB, as Spark did not have a VoIP offering that was ready when UFB launched. Spark this week launched their VoIP offering, and will soon begin the task of moving every existing UFB customer across from their copper connection to the ATA port on their ONT, a process that will involve hooking the ONT up to the existing premises wiring so all phones and jack points on the premises will continue to function as they presently do.

So why don’t RSPs offer a phone only service over UFB at the same price as a copper line? To answer that it needs to be made clear that the only RSPs who could do this are RSPs who use the ATA port on the ONT. The price of an ATA only connection is significantly cheaper than that for an internet connection. If an RSP is delivering a voice product using a RGW they need to pay for a UFB internet plan rather than an ATA voice only plan, hence the higher cost. So why aren’t RSPs who are doing voice over the ONT ATA port offering a voice only plan? That’s something only they could answer – and the answer will purely be a business one as there is nothing technical preventing them. With Spark launching their VoIP product this week they have indicated they will offer a voice only connection over UFB at the same price as existing copper phone plans.

While the debate raged in the media over voice services over UFB, many also focused on the so called “reliability” of UFB, and the fact phone services would not function if there was no power in a premises. Unlike a copper phone line, your RGW and ONT require power to operate, so in a power cut you’re not going have phone or internet. In many countries where fibre services have been been deployed to the home, a UPS (Uninterruptible Power Supply)  has been fitted to ensure that the ONT and RGW still have power, and will continue to operate during a power cut. So why isn’t a UPS fitted as standard with a UFB install. Answering that isn’t as straight forward as it may sound.

Before the UFB project was rolled out, Chorus had already been rolling out fibre to many new subdivisions across New Zealand for a number of years, a project that was known at the time as BoF (Broadband over Fibre). Trials of UPS units were undertaken as part of this, and a lot of industry discussion occurred around the issue of whether these should be fitted as standard. In 2011 an in-depth review of the 111 Emergency service also discussed the issue and invited public comment. A key issue with the installation of a UPS is that it requires regular replacement of batteries every few years to ensure it will continue to operate in a power cut, and ideally requires monitoring to ensure that it is operational. One of the most significant issues raised was exactly who this responsibility should fall on, and who would be liable should an incident such as the inability to call 111 in an emergency should the UPS fail. If the burden of monitoring and maintaining the UPS should fall onto Chorus or the LFC, should they be able to charge extra for the service? If it was charged, would be be made mandatory, or optional? The discussions raised more questions than answers.

Some in the alarm industry saw this as a perfect opportunity for them to step in and provide a service, as many homes already have an alarm which typically has a battery backup, and an existing maintenance program to replace this every few years. In the end the decision was made to effectively leave the decision to the house or business owner and let them take full responsibility. If you want a UPS to keep your hardware going, it’s up to you to supply and maintain it, however as part of a UFB install, a technician will hook a customer supplied UPS up to ensure it is operating correctly.

One key aspect many didn’t discuss is the fact some anecdotal evidence after the Christchurch earthquake pointed to many homes (some put the figure as high as 2/3rds) only having a cordless phone which also requires power to operate. After the Christchurch earthquake the copper network remained largely intact and operating in most areas, however many people were unable to make calls because they had no corded phone at home and cordless phones could not be used with no power. If you have a copper connection and rely on a cordless phone and have no UPS, you’re really no different to a home with a fibre connection and no UPS.

To complicate matters slightly more, many people are also oblivious to the fact a copper phone connection is no longer necessarily delivered solely from an old school NEAX phone exchange. Many customers now receive their phone service over copper, but it’s actually a VoIP service delivered from a local roadside cabinet. These roadside cabinets contain a battery backup and connections for generators in a power cut, but emphasise the fact the copper network is not the invincible 100% uptime network that some may believe. It’s also worth keeping in mind that the current Spark NEAX exchanges providing copper phone services for most people will not be around forever – a few years ago 2020 was the planned decommissioning date for these. While that cut-off date is unlikely to occur, the future for New Zealand is fibre, and decommissioning of copper services will occur at some point.

Bashing of the UFB project has been pretty prolific, especially from some who’s political views do not agree with it - which is something that’s very unfortunate. By the end of the decade New Zealand will have one of the best broadband networks anywhere in the world, delivering fibre to over 80% of New Zealand residents. The benefits of fibre are already being seen, and rather than focusing energy on trashing the project, these people would be far better off focusing on how UFB can, and will make day to day life better for all New Zealanders. New Zealand is a country where tall poppy syndrome is alive and well – and it’s not solely aimed at people, but big business and infrastructure projects as well.



Qantas offering Qantas Gold status match for NZ residents

By Steve Biddle, in , posted: 22-Feb-2015 19:44

If you’re a frequent flyer you’ll be used to the benefits that some with status with an airline such as lounge access, priority boarding, preferred seating and so on. Qantas are clearly keen to target New Zealand based frequent flyers by offering a status match to Qantas Gold for New Zealand residents who have Gold or higher status with any other airline.

With somewhere in the vicinity of 50,000 Air New Zealand customers who are Airpoints Gold or Gold Elite, it’s certainly a great way of targeting  Air New Zealand customers, many of whom are unhappy after significant changes to the Airpoints program in 2014 that slashed status point earning rates.

This offer is currently only valid until the 9th March 2015, so you’d better get in quick.

For full details check the Qantas website - http://qantasgold.qantas.com/



New Zealand’s growing BUBA problem (AKA I feel sorry for you if you’re on a Conklin)

By Steve Biddle, in , posted: 17-Feb-2015 08:00

NZ has fantastic broadband. I’ve written about this plenty of times, and it seems that many NZers are finally beginning to accept that despite certain ISPs and political parties having bombarded us with propaganda telling us that we have “3rd world internet”, that we actually have both a world class copper network, and a fantastic future ahead with fibre currently in the process of being deployed to around 75% of premises as part of the Ultra-Fast Broadband (UFB) rollout. Right now well over half a million residential and business premises in New Zealand now have access to fibre, 100Mbps connectivity is quickly becoming the norm, and we’re not far away from the mass rollout of 1Gbps connections. Compared to many countries we like to compare ourselves to (such as Australia), we’re literally years ahead, and by the end of the decade will have one of the best nationwide broadband networks of any country, anywhere in the world.

The rollout of fibre fed cabinets delivered 10Mbps+ ADSL2+ connections to around 85% of the population, and VDSL2+ speeds of up to 70Mbps to around 45% of the population as part of Telecom’s cabinetisation project between 2007 and 2011. From 2011 onwards we’ve seen the rollout of UFB start, which will deliver fibre to around 75% of premises in New Zealand by 2020. The copper footprint is currently being expanded  with the Chorus Rural Broadband Initiative (RBI) delivering ADSL2+ and VDSL2 to tens of thousands of rural users,

While all of this is great, there are unfortunately still a small percentage of internet customers in New Zealand who are serviced by legacy equipment that will not receive the same level of broadband service as a user connected to newer xDSL equipment or fibre. The mass introduction of unlimited plans in New Zealand in recent months has seen a growing number of complaints from people in rural areas complaining about severely degraded broadband performance, particularly in the evenings where internet usage is at it’s peak. I’ll attempt to explain why this occurring, and what you can do about this.

Lets start by a history lesson. Wholesale broadband in New Zealand consists of a regulated product known as Unbundled Bitstream Access (UBA). Pricing for UBA is set by the Commerce Commission, and the product has some very detailed requirements that are set in place by the Ministry of Business, Innovation and Employment (MBIE) and the Commerce Commission. Chorus are responsible for delivering a UBA product that meets these requirements, and depending on your location your wholesale UBA connection will be delivered via one of two Chorus products - Basic Unbundled Bitstream Access (BUBA) or Enhanced Unbundled Bitstream Access (EUBA). The type of connection used will depend largely on your location and the type of equipment you’re connected to on the Chorus network.

Chorus Wholesale xDSL (ADSL,ADSL2+ and VDSL2)  Internet connections in NZ are all delivered by Chorus to your ISP using two different types of backhaul products. In the early says of ADSL in New Zealand all connectivity was delivered back to your ISP over the Asynchronous Transfer Network (ATM) network, and delivered to the customer’s premises using a Chorus wholesale product known as BUBA. ATM is now a very old technology and has many limitations, but in it’s day was cutting edge technology.  For the past 6-7 years or so we’ve seen a huge shift away from ATM to regular Ethernet, with most ISPs now being delivered most of their connections over a regular Ethernet connection using 1Gbps or 10Gbps fibre links, and the end service delivered to the customer using the EUBA product. The vast majority of connections in New Zealand are now EUBA, however customers who do not live in urban areas and remain on older legacy network equipment that does not support Ethernet backhaul are still on BUBA and connected via the ATM network. ATM is incapable of delivering the same level of speeds and product flexibility that Ethernet offers, but is still required due to the legacy equipment that does not support Ethernet backhaul.

One key thing to remember here is that the Commerce Commission UBA requirements (that Chorus have to meet) say that a UBA connection must deliver 32kbps to a user over a 15 minute average. For all intent purposes this means your broadband connection must be capable of delivering 32kbps to a user, a speed that is typical of a dialup connection. Up until a few years ago this this speed was enforced by traffic dimensioning between the ISP and Chorus (and prior to that, Telecom Wholesale), however with the growth of Internet traffic this speed has been increased by Chorus out of the goodness of their own heart, and right now they deliver a product offering that significantly exceeds their legal obligations. Currently BUBA connections are shaped to ensure 75kbps per user over a 15 min average, and EUBA connections are currently unshaped (any traffic dimensioning will simply be capacity constraints at 1Gbps or 10Gbps ISP handovers). At present Chorus statistics show that the average EUBA throughout is roughly 150kbps per user over a 15 min average that is expected to hit 250kbps within the next year. As part of their proposed announcement regarding new commercial Boost ADSL2+ and Boost VDSL2 product offerings in mid 2014, Chorus offered to increase the BUBA per user dimensioning from 75kbps to 150kbps (nearly 5x the regulated requirement) which would have meant a significant peak time speed improvement for many rural users. After negotiations with the Commerce Commission who deemed that there may be regulatory issues with the new Boost commercial offerings, both the new product offerings and BUBA dimensioning changes were put on hold. Many BUBA users would have benefited significantly from the increased handover speed, so it’s unfortunate for them that this will not proceed.

All of this poses a question that only the Commerce Commission can answer – why in 2015 do they continue to have a regulated product offering that was designed for the Internet of 2005, not the Internet of 2015? Many people mistakenly assume the role of the Commission is to deliver the best outcome and/or pricing for consumers, when in reality their role is to ensure that competition exists in a marketplace, that Government policy is effectively implemented, and to ensure that in monopoly situations that pricing is set that represents a fair price for both parties. None of this will necessarily guarantee the best end product for the consumer. Rather than simply focusing on the price of UBA, the Commerce Commission should be looking at the UBA product offering and reviewing the product requirements of their offering as 32kbps per user no longer meets the requirements of a modern internet. In a nutshell, if you’re in a rural area your BUBA internet is partly being crippled by the MBIE and Commerce Commission who continue to set product specifications for a sub standard regulated UBA offering. The Commission totally took a flawed approach in their recent UBA pricing decision by totally ignoring speed as an input which is something that really defies belief. As an engineer I look at their recent pricing decisions for both UBA and copper pricing and wonder about the technical knowledge that exists both in the MBIE and Commerce Commission as well as the 3rd parties that they rely on for advice.

Now that I’ve discussed the difference between the two products, we need to look at the technical difference between equipment used to deliver BUBA and EUBA services.

EUBA ADSL2+ and VDSL2 services are delivered to customers using an Alcatel Lucent Intelligent Services Access Manager (ISAM). This piece of kit sits in an exchange or cabinet and delivers broadband services to customers connected to it. Many are now fitted with ISAM-V Voice Over Internet Protocol (VoIP) cards to deliver voice services to customers. All ISAMs have Ethernet backhaul over a fibre connection. If you’re in an urban area of New Zealand, there is probably a 99% chance you’re delivered a connection via an ISAM.

BUBA ADSL1 services are typically delivered using an Alcatel Lucent DSLAM – known as an ASAM in the tech world. These are basically “1st generation” hardware. An ASAM typically only sits in an exchange and can only deliver ADSL1 services, not ADSL2+ or VDSL2. ASAMs have both a combination of fibre and copper E1 backhaul over the ATM network. Most ASAM’s are located in non urban areas and a number are still in the process of being replaced by an ISAM as part of the RBI rollout.

Customers who are on a EUBA connection connected back to an ISAM are not going to see their speed constrained or restricted in any way within the Chorus network, while  some customers who are on a BUBA connection may encounter issues with slower speeds at peak time due to congestion on both the hardware they’re connected to and the backhaul. What is important to remember however is that despite congestion occurring, your UBA connection will still meet the minimum requirements demanded by the Commerce Commission of delivering 32kbps per user over a 15 minute average. Speed issues will not occur across all UBA connections, and are primarily an issue with customers connected to a Conklin. What’s a Conklin you might ask? Lets start with another history lesson..

There are thousands of rural users who are still connected to a Conklin DSLAM, a device known by many in the industry as a “pizza box” DSLAM due to it being a small rack unit that’s around the size of a pizza box.

Conklin DSLAMs were originally designed to provide broadband service into rural areas where it was typically impossible to install the same equipment that was deployed in urban areas. A Conklin FM2000 could support 4 ADSL customers and support up up 7 expansion cards supporting 8 additional ADSL customers for a grand total of 60 ADSL customers. Some Conklin’s were in areas where the number of customers could be counted on both hands, so it was never cost effective to install the same equipment as urban areas that is designed for hundreds of users. As most cabinets or exchanges that Conklin’s are installed in don’t have any form of fibre connectivity, these units connect back into the Chorus network using copper E1 connections bonded together (a single E1 is capable of delivering 2Mbps). These units support up to 4x E1 connections delivering 8Mbps to the unit which has a maximum ADSL1 speed of 7.616Mbps.  In the early days many were only provisioned with 2 or 3 E1 connections, however most now have the maximum 4 E1 connections for backhaul. They were the perfect solution to deliver ADSL broadband to pockets of rural users who would have missed out on broadband entirely had it not been for the deployment of this hardware. Large numbers of Conklin’s were deployed around the country in the mid 2000s, many have now been replaced, but around 600 or so of these still remain, typically serving between 30 and in many cases a full 60 users.

While Conklin’s were a fantastic solution for their time, they are now an unfortunate headache both for Chorus, and for customers connected to them. They only support ADSL1 and with very limited backhaul, many users are now seeing slow speeds at peak times as they all fight for that limited backhaul. While the limited backhaul has never been a major issue, it’s suddenly become one with the mass introduction of unlimited plans which has seen data usage grow significantly. All it takes is a couple of users on a Conklin on unlimited plans to decide they want to download several hundred GB per month, and all users on that Conklin will suffer from a degraded experience as that 8Mbps backhaul connection is shared across up to 60 users. Fixing the Conklin problem isn’t an easy one however – many are being replaced with fibre fed ISAMs as part of the RBI rollout, but once that is complete hundreds will still remain. Why can’t they just all be upgraded? Ultimately that comes down to price, as many of these Conklin’s are in areas where there may be no existing fibre there is simply no way to upgrade backhaul connectivity to support newer equipment. Replacing many of these would cost in the vicinity of half a million dollars each, and it should be very clear to people after recent wholesale price cuts imposed on Chorus that they’re not in a financial position to continue to invest in fixed line infrastructure to upgrade what are largely unprofitable customers – I’m not sure whether any reasonably person would expect Chorus to fully fund upwards of $500,000 to run fibre and provide an ISAM for 60 users who would generate around $2000 per month in revenue. The Rural Broadband Initiative (RBI) wireless rollout was designed to target users in many locations where Conklin’s currently exist and provide them a regulated wireless offering to replace copper.

So what is RBI wireless? As part of the Government funding for improved broadband, the Ultra Fast Broadband (UFB) project received funding to deploy fibre into urban areas, and the RBI project received funding to improve rural broadband. Chorus are in the process of installing over 1200 fibre fed cabinets to deliver ADSL2+ and VDSL2 to rural users to whom copper will still be the primary connection, and are also involved in the delivery of fibre to hundreds of both existing and new Vodafone cellsites that are being upgraded to deliver RBI wireless services. To connect to the RBI wireless service a home owner will need an external antenna and 3G radio that will connect to the mobile network and provide WiFi and Ethernet access around the home with a standard router. At present RBI wireless supports speeds of up to 25Mbps downstream and 4Mbps upstream on a Vodafone RBI cellsite that supports Dual Carrier 3G. With the rollout of 4G services on the 1800MHz and 700MHz band in rural areas beginning to occur, new radios that supports 4G will ultimately be deployed to deliver even faster speeds to customers. While the service has not been without issues it is something that does work well, however uptake has been slower than many expected, in part because of the real world reality that many rural people seem unwilling to accept that delivering broadband to them in a rural area costs significantly more, and many are convinced that they shouldn’t have to pay more than an urban user for a broadband connection.

In many rural areas of NZ that there are many smaller providers providing wireless internet access typically using a combination of 5Ghz WiFi and licenced backhaul using carrier grade equipment. I’m going to miss names if I try and list them, but areas such as Taranaki, Hawkes Bay, Northland and the Central North Island are well covered. There are also many providers in the South Island who also provide such services. These providers will provide service by connecting an external radio on your house that connects back to their network, and will connect to a regular WiFi and Ethernet router inside your home.

If you’re in an area of the country that has service provided by a Conklin or a heavily loaded ASAM and you’re relying on ADSL, the real world reality is you’re not going to enjoy the same great end user experience that around 85% of the country that has a choice of fibre or copper services from a fibre fed ISAM has. Many (but certainly not all) rural users do have a choice of other providers and technologies but many chose to stick with their slow copper connections because they either oblivious to these other options, or quite simply unwilling to pay extra to receive a improved connection. It’s hard to have any sympathy for such users.

If you don’t have a choice of providers then I have plenty of sympathy for you, but delivering improved broadband to such a small percentage of the country doesn’t come cheaply. Many industry commentators and politicians have turned against Chorus in recent years and their financial state isn’t great. Chorus will suffer from slashed revenue due to Commerce Commission price cuts of copper services, and it’s hard to see where Chorus will find funding internally to continue to expand their copper network upgrades into highly unprofitable areas without further funding from the government. My personal view is that rural users should pay more for their services, and if this was the case many rural users would probably find they had a much improved service. Many thousands have access to improved services now, but many simply aren’t willing to move away from copper based ADSL services.

If you’re in an area whether there are no other options your best hope is to write to your local MP, local wireless provider, MBIE and the Commerce Commission asking what can be done to improve your service.If you’re in an area with RBI wireless and are unhappy with the pricing, once again contact the MBIE and Commerce Commission and your local MP to express your issues as RBI wireless is a Government funded offering. It’s also worth approaching Chorus and asking what community contributions may be required to improve services – Chorus are willing to engage with communities and share the cost of upgrades. And last, but not least, the solution for many small rural communities may be a community based network - there are plenty of providers around the country that could be interested in partnering with a community to deliver improved services that could easily be delivered over wireless. Rather than simply accepting the status quo, some of these communities need to look outside the square and adopt the Kiwi number 8 wire approach. Many rural communities have schools that already have fibre connectivity, and in many parts of New Zealand there is existing Chorus fibre infrastructure that can be used to provide services. There are a number of options that can easily leverage this to deliver improved broadband connectivity to entire rural communities for probably not much more than they’re paying now for an existing ADSL based copper connection. With communications Minister Amy Adams announcing a $150 million fully contestable fund for expansion of rural broadband services before the election, it’s also worth contacting her to express interest if you’re in a community and believe you could benefit or want to look at partnering with a provider to develop a community based solution. Solutions are out there – but some may require people to be innovative rather than a gold plated solution being delivered to them.



Air New Zealand’s latest profiteering scheme – charging extra for return airfares?

By Steve Biddle, in , posted: 21-Jan-2015 05:46

As a travel junkie I travel to Australia pretty frequently - often half a dozen times per year or more. While looking at flights this afternoon I noticed Air New Zealand now charge more to book a return flight to Australia on a single ticket than they do to book two one way airfares on separate tickets. The difference is only small, but the mere fact there is a difference is surprising.

What’s the logic behind that? As somebody who travels a lot and thinks they know a reasonable amount about airline booking systems, I can conclude there is no obvious reason for it – it looks like a simple case of Air New Zealand deciding they can make a few extra dollars profit as most people will be totally unaware of this.

Historically booking a one way flight from Australia to New Zealand redirected the customer to the Air New Zealand Australian booking site and quoted prices in A$ – around a year or so ago this was changed allowing customers in New Zealand to book one way fares from Australia on the New Zealand site using NZ$.

Lets look at a few examples:

(I have not included the pricing component for airfares from Wellington to Australia, as these do not differ)

If you book a one way fare from Melbourne to Auckland on the 21st June you’ll pay $277, $346 or $512 for those flights.

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   Book this as part of a return ticket including travel to Australia and you’ll pay $286, $356 or $521.

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Want a book a trip from Wellington? Booking a one way fare from Melbourne to Wellington will set you back $275 for a direct flight, or $379 or $384 for non direct flights via Auckland and Christchurch.

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Book this as part of a return ticket including travel to Australia and you’ll pay $284, $406 or $411

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Want a book a trip from Christchurch? Booking a one way fare from Melbourne to Christchurch will set you back $299 for a direct flight, or $382 or $384 for non direct flights via Auckland.

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Book this as part of a return ticket including travel to Australia and you’ll pay $311, $409 or $411

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It is worth noting that if you are booking a single flight from Australia to New Zealand that specials may not be available as the screenshots above show. This is to stop Australian customers booking flights in reverse while New Zealand based promotions are on. While I chose the date above at random as a comparison, this issue isn’t restricted to this date or just to Melbourne, it also occurs on flights to other destinations. It’s also interesting to note that you’re paying even more when the flight is not direct.

It’s also interesting to note the differences in the Works Deluxe fares – with some being cheaper as part of a return ticket than a one way ticket, despite these being the same booking class.

There are no logical reason why this should occur – security and airport taxes are a fixed variable at $45.46 to leave Christchurch or Wellington, or $50.64 to leave Auckland. Security and airport taxes to leave Melbourne is $98.15, and a total of $143.15 ($45.46 + $98.13) is charged when booking a return airfare ex Christchurch or Wellington, and $159.90 ($50.64 + $98.13) ex Auckland. The appropriate charge is applied correctly for both one way and return flights.

So what’s the story Air New Zealand? Do you have a logical explanation for this? Or is this a simple case of profiteering because you think nobody will notice?



Air New Zealand’s fuel hedging

By Steve Biddle, in , posted: 9-Jan-2015 21:35

With oil prices dropping we’ve seen many media in recent days ask why airfare prices aren’t dropping. Clearly they’re not smart enough to check the Air NZ annual report to see the current status of Air NZ’s fuel hedging so I’ve done this for you.

Most (but not all) airlines hedge fuel. With Air NZ’s hedging dropping to 50% it looks like somebody there took a gamble that has paid off! :)

hedging



Flight Review – Air New Zealand NZ412, Air New Zealand NZ119, Virgin Australia VA860 (AKA a guide of how to get from Wellington to Melbourne via Auckland and Sydney because it’s boring flying direct)

By Steve Biddle, in , posted: 9-Jan-2015 15:15

Anybody who knows me realises I love flying. Rather than flying direct from Wellington to Melbourne to spend a week over the Christmas holidays, I decided to fly from Wellington to Melbourne via Auckland and Sydney for a change. Why you might ask? Quite simply because I could. :-) The cost was minimal over flying direct and gave me the opportunity to use a recognition upgrade to upgrade to Business Premier between Auckland and Sydney as A320 aircraft from Wellington lack a Business class offering.

Turning up at Wellington airport at 7am on Boxing Day was a strange experience – I’ve never been at the airport at this time of the morning before and seen it so quiet. I checked in at the Air New Zealand kiosk and received by boarding passes for my 3 flights and a bag tag for my bag that was checked right through to Melbourne. Air New Zealand has a partnership with Virgin Australia for both Trans-Tasman and Australian domestic flights with airline status benefits such as lounge access available across both airlines. The check-in process was super painless and took all of a few minutes, and after dropping my bag I headed to the Air New Zealand Koru lounge to wait for my flight.

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If you haven’t been to the Koru lounge in Wellington before, you’re really missing out on what is truly a great lounge. Yes there are aspects of the lounge which are getting a little tired, and yes we could argue about points such as catering, but the lounge is big, has multiple different areas for work  as well as a few quiet zones, has a fantastic view of both the airport apron and runway, it’s own barista for coffee, plenty of showers, and in all my experiences, amazing staff.

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Breakfast consisted of a range of cereals, fruit, yoghurt, muffins, cookies, toast, scrambled egg, beans and sausages. I love the bircher muesli and highly recommend this. Air New Zealand also has a brilliant new system for ordering coffee from the barista – you order using a tablet (shown in the phone above) or from the Air New Zealand app on your phone. If you order it on your phone a push notification will appear when it is ready.

After enjoying a nice breakfast I headed down to the gate for my flight. It takes about 30 seconds to get from the lounge to the gates used by Air New Zealand jet services via an escalator, but it can take another few minutes of walking to reach the gates used by non jet services. Wellington airport lacks centralised screening, so each gate still has it’s own screening point with x-ray and metal detectors. This creates a large bottleneck at busy times as people leave it until the last minute to leave the lounge and proceed to the gate, and is something that will be resolved as the airport begins expansion of the pier that Air New Zealand operates from and moves to centralised screening before the lounge and gate, as is the norm at other airports.

The flight to Auckland was on an Airbus A320. Air New Zealand operate a fleet of A320-200 and Boeing 737-300 aircraft for domestic services, with the last of the Boeing 737-300 aircraft being planned for retirement towards the end of 2015 once the remainder of the new A320 aircraft arrive. Our departure time was delayed by around 10 minutes due to minor maintenance work. Onboard all domestic flights Air New Zealand serve complimentary tea, coffee and snacks consisting of vege chips or a Cookie Time chocolate chip cookie. On regular business days, ‘'Koru Hour flights” in the morning  also serve a light snack of a muffin, and in the evening beer, wine cheese & crackers are also available.

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On arrival in Auckland I had a few hours to spare before my  flight to Sydney so decided to sit outside and enjoy some sun for a little while. Auckland Domestic and International terminals are in two separate buildings, and it’s around an 8-10 minute walk between both terminals with much (but not all) of this walkway now under cover. Free buses are also available to take passengers between terminals. 

International departures can get incredibly busy at certain times of the day, but was very quiet when I went through immigration and security. Departures are on the upper level of the airport, however if you’re a Premium customer flying on Air New Zealand you can fast track immigration and security from a lift in the Premium check-in area which takes you to a dedicated immigration area and priority queue for security screening. Whether there are any benefits of this will depend on the time of day that you’re travelling.

Air New Zealand’s International Koru lounge is located on the upper floor of the international terminal. While it’s by no means a bad lounge, I’ve had some very mixed experiences in there over the past year. The lounge can get very crowded at certain times of the day, and a lot of the furniture is now getting quite tired. The lounge also lacks any real views of the airport due to it’s location. The good news is that Air New Zealand are building a completely new lounge that due to be completed later in 2015.

A good selection of snack food and sandwiches were available, with hot options for lunch appearing just before I left the lounge for my flight.

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My flight to Sydney was on a 777-200ER. Air New Zealand operate 8 of these aircraft, and are currently in the process of refitting these with new seats and upgraded In-flight Entertainment (IFE). While Business Premier and Premium Economy customers will benefit from this upgrade, economy customer will find themselves with much less space as the seating configuration moves from a 9 abreast 3-3-3 to a 10 abreast 3-4-3 configuration. My flight was on a non refit aircraft. Boarding started a little late and the gate staff seemed a little flustered over something, but once it was underway things seemed to run smoothly. I boarded and walked left to me seat, 2A, which is right at the front of the cabin (no 1A exists due to the way the seats are numbered).

 

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Air NZ use a Virgin Atlantic designed fully lie flat seat across it’s 777 fleet (both 200 and 300) and it’s 787 Dreamliners, the later of which use the same newer generation seat that is being fitted as part of the 777 refit. The layout is a 4 abreast 1-2-1 herringbone layout that gives every passenger direct aisle access.

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Seats include an ottoman / footrest that can also be used as a seat for another passenger during meals. Each seat also features a 10.4” screen and power socket. One tip for these aircraft is to be wary of booking seats 1K or 1J – these feature the ottoman near the curtain (as shown above) which is prone to being knocked by passengers going to the bathroom, or crew when moving around trolley carts.

All Business seats come with a bottle of water and “premium” noise cancelling headphones. While the headphones are a step up from regular economy headsets, they pale in comparison to my Bose QC15’s. No amenity kit and bedding (memory foam mattress, pillow and duvet) are available on these short haul flights – these are only available for long haul flights.

I sat down and was offered a pre flight bubbly or juice. While Air New Zealand serve champagne in Business Premier, this is typically not served on the ground. Orders were also taken for a drink to the delivered once airborne.

Once airborne the crew delivered hot towels and menus followed by drinks and a nut mix. I opted for the Charles Heidsieck Brut Reserve Champagne.

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Not long after this the meal service began. The crew set up the tray table with a tablecloth before delivering the starter. I opted for the Proscuitto which was washed down nicely by another top up of the Charles Heidsieck. The crew followed behind with bread with several options available. It’s great to see Air New Zealand haven’t followed some other airlines who now don’t have plates for bread.

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After enjoying the delicious starter it was time to decide on the main course. I opted for the chicken which was an absolutely sensational meal and incredibly tasty – the photo doesn’t really it justice. This was all washed down with another glass of Champagne.

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To finish off was ice cream was served for dessert. New Zealand makes some fantastic ice cream so it’s good to see this on offer. Crew also distributed Express Passes for arrival into Australia to Premium Customers.

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For the rest of the journey I relaxed and caught up on a few podcasts on my phone. The ancient Rockwell Collins IFE system in my seat was totally unusable with dropouts and stuttering which meant it was impossible to listen to or watch anything on the IFE system. The Airshow system was also unwatchable, displaying noise that looked like a badly tuned RF feed on a TV (in real life it was far worse than the picture).

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Aside from the poor IFE, the aircraft was certainly showing it’s age. Air New Zealand delayed the refit of these aircraft so the cabins are now around 7-8 years old, and this really shows. The leather seats are well worn with a lot of scuff marks both on and around the seats, and right in front of me I had the insulation between the hulk head hanging down. The 2J seat sign on the overhead bin was written on with a marker pen which looked very tacky.

Cutbacks on aircraft cleaning have become really evident across the Air New Zealand fleet recently, and I’ve encountered some pretty disgusting aircraft flying around with interior cabins with dirty, greasy handprint marks (presumably from maintenance), clogged dust vents in bathrooms and sidewalls and crumbs on seats. While the odd crumb isn’t the end of the world, dust and dirty handprints are simply inexcusable in my view.

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Overall the flight was a great one. The crew were sensational – they were super friendly and had constant drink refills on offer. Empty plates and cutlery were promptly cleared, and I was asked on several occasions if I needed anything.

Arrival into Sydney was amazingly quick due to the time of the day – the flight was the only international one at that time so the customs area and baggage hall was completely deserted. From the time I left the plane I was through the Smart Gate machine, collected my bags and entered the Virgin transfer area, all within about 10 minutes.

Sydney Airport Domestic and International terminals are on different sides of the airport, meaning that passengers need to transit between the two either by bus or train. I checked my bag at the Virgin transfer counter and received a pass to use for the terminal transfer bus which turned up about 5 minutes later.

As I had no bags to check at the Domestic terminal I headed straight for the Virgin lounge. This is accessible via a Premium entry area from the kerbside with it’s own dedicated security screening for eligible premium customers, or via the terminal for all other customers.

As I didn’t have long to spend in the Virgin lounge I opted for a quick snack and a beer (Fat Yak is one of my favourite Australian beers). There was a good selection of salads, sandwiches on offer along with numerous snack options. The lounge features a good selection of beers and wine, with staff on hand to serve these. The lounge was well laid out, and had a few themed areas along with work and quiet zones.

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The only disappointing aspect for me was the lack of any real view out the windows. I’m sure I’m not the only person who could quite happily sit in an airport lounge all day just to watch the planes outside!

It was about a 5 minute walk from the Virgin lounge to my gate. Boarding commenced not long after and as it was a fairly quiet day for flying the Boeing 737-800 was only around half full and pushback was right on time. In-flight service consisted of a petite sized sandwich along with a choice of coffee, tea, water or juice and a complementary view of the baron, dry, Australian landscape.

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Arrival into Melbourne airport was smooth, with my checked-in bag appearing pretty promptly despite the airport being fairly busy.

Overall all 3 flights were great – Air New Zealand’s business class product is great in terms of service and food, but the plane was looking a little tired, and the IFE was quite simply just atrocious. The Trans-Tasman alliance between Air New Zealand and Virgin makes transfers between both airlines pretty seamless, and makes the combination of flights all the more enjoyable. It’s certainly something I’d do again if time was no obstacle.



Vodafone NZ – increasing prices because profits are low.

By Steve Biddle, in , posted: 6-Jan-2015 11:06

I hope Russell Stanners had a good Xmas. My new years prediction is that it will be his last one as CEO of Vodafone New Zealand. I also pick 2015 as the year Vodafone could well exit the New Zealand market.

For many years Vodafone New Zealand was the Southern Hemisphere money tree. It was the jewel in the crown of the Newbury based global empire – New Zealand was a far off country where margins were good and the profits kept flowing back to the Northern Hemisphere most years. A blind eye was turned to the operation because it delivered results. Unfortunately that money tree now has a toxic illness. Following in the footsteps of Vodafone Australia which over the course of a few years lost it’s way and has now been haemorrhaging money with no light at the end of the tunnel, Vodafone New Zealand is now following Australia into the same tunnel. Before Grahame Maher was sadly taken from this earth way too early he set up both companies on their respective paths to success. He must now turning in his grave to see what has become of both companies.

In 2012 Vodafone New Zealand purchased TelstraClear for $880 million, a deal that made sense to many, but to others started ringing alarm bells. Telstra had been very frugal in the New Zealand market and their investment had seen traditionally low capital expenditure over a number of years, even when the New Zealand operation was clearly in need of it. Internally inside Telstra many looked at the New Zealand regulatory environment and saw that making inroads was going to be difficult, and that generating a return on large capital investment would probably not occur. Even their plans to build a mobile network were scuttled, part way through the construction of the network in Tauranga the plug was pulled.

It’s safe to say many at Vodafone through the purchase of TelstraClear was a bargain. They inherited a massive nationwide fibre network that would reduce their reliance on Spark and Chorus, a huge residential customer base (TelstraClear had more residential broadband customers than Vodafone) and a relatively large number of corporate customers. Somehow throughout the due diligence process, Vodafone seemed to miss the duct tape that held TelstraClear together. To some TelstraClear was  shambolic mess of different technologies, multiple CRM systems and products and services that simply didn’t deliver or work the way they were supposed to. Vodafone did however inherit some fantastic technology – the cable network in Wellington and Christchurch, and the IPTV playout system that now forms the basis of the UFB Vodafone TV offering. They could have done a lot more with this technology, but have chosen not to. They could have done a lot with their Vodafone TV set top box (aka the former T-Box) but chose not to as well. Making the guy who knew all about this redundant during the last round of restructuring before Xmas probably wasn’t the smartest move either.

In many ways however they were too slow at achieving any synergies that should have occurred as a result of the merger, and failed to predict the ruthless cut throat competition that was about to hit the Broadband market in New Zealand. The mass introduction of unlimited plans and price cuts in 2013 and 2014 that have seen retail margins plummet, with many plans only delivering very small margins. Orcon famously said in late 2013 that it took 27 months to make a profit from a customer signed up to a residential DSL based broadband connection.

Buying TelstraClear has certainly burdened Vodafone financially - October 2014 saw Vodafone New Zealand announce a $27.9 million dollar loss – it’s first in 13 years. In the good old days before the TelstraClear merger in 2011 it made a $151 million profit, and sent $130 million back to Newbury. Cost cutting and large scale redundancies have occurred within the company in the past year, and customer service now seems to be at an all time low. Posts of social media suggest average wait times when calling their call centre are often 1hr +, with many people talking about giving up after numerous calls with long wait times.

There have been plenty of rumours over the years about Vodafone pulling out of New Zealand and plenty of mainstream media who have been sucked in by these rumours and written speculative stories. These were all laughable as there was never a reason for Vodafone to want to pull out, but times have now changed. Vodafone sold their Fiji operation in mid 2014, and with Australia showing no sign of a turnaround and New Zealand now facing tough times, it has resulted in some market analysts in the UK now calling for Vodafone to consider it’s position down under. Vodafone Group CEO Vittorio Colao told investors in November that the company would consider selling it’s Australian operation. Logic would dictate that there would be little sense in Vodafone staying solely in New Zealand should it sell in Australia. There is however one major stumbling block – finding a buyer for one (or both) may prove incredibly challenging.

If you’re a Vodafone shareholder you’ll be happy to know Vodafone’s response to it’s financial struggles has been to announce an across the board price increase for most fixed line broadband and phone customers in New Zealand.

As you may have seen recently reported in the media, there have been changes in the industry to the costs of delivering broadband and home phone services for all providers in New Zealand. These cost changes affect the conditions that all providers operate under and unfortunately our prices will need to change to reflect these new conditions.

From 1 February 2015, most monthly fees for our broadband and home phone plans will increase by $4 per month.

People will know that over the past couple of year the price of wholesale access to the Chorus copper network and wholesale broadband services has been under review by the Commerce Commission. As of the 1st December 2014 the wholesale cost of these services was cut, but is still under review by the Commerce Commission who have recommend that the cut now not be as a great as it first recommended. Regardless of the final outcome, pricing will still be cheaper than it was prior to December 1st 2014. In the race to the bottom many ISPs claim they put pricing in the marketplace that factored in greater discounts and that the change will mean prices have to go back up. Spark have already announced some price increases across some of it’s products, but like Vodafone some of these changes are of a very dubious nature including combinations of services that have decreased, not increased in price.

The price of UFB services, and services delivered over their own cable network in Wellington, Christchurch and Kapiti are not affected by the Chorus copper price changes, yet Vodafone are increasing these prices. Adding on $4 per month to these plans and increasing data overuse charges is a pure profit making decision, and  to even subtly infer that this increased cost is a related to “industry changes” is quite frankly the biggest (excuse my English) load of bullshit I’ve ever read in a press release. If you’re a Vodafone shareholder it’s probably great news. For Vodafone customers it’s anything but.

If you’re a Vodafone customer wanting to see what your pricing will increase to, you can view it here.



sbiddle's profile

Steve Biddle
Wellington
New Zealand


I'm an engineer who loves building solutions to solve problems.

My interests and skillset include:

*VoIP (Voice over IP). I work with various brands of hardware and PBX's on a daily basis
  -Asterisk (incl trixbox, PiaF, FreePBX, Elastix and AsteriskNOW)
  -Polycom
  -Cisco
  -Linksys
  -Patton
  -Zyxel
  -Snom
  -Sangoma
  -Audiocodes

*Telecommunications/Broadband
  -xDSL deployments
  -WiMAX
  -GSM/WCDMA

*Structured cabling
  -Home/office cabling
  -Phone & Data

*Computer networking
  -Mikrotik hardware
  -WAN/LAN solutions

*Wireless solutions
  -Motel/Hotel hotspot deployments
  -Outdoor wireless deployments, both small and large scale
  -Temporary wireless deployments
   
*CCTV solutions
  -Analogue and IP

I'm an #avgeek who loves to travel the world (preferably in seat 1A) and stay in nice hotels.


+My views do no represent my employer. I'm sure they'll be happy to give their own if you ask them.


You can contact me here or by email at [email protected]

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Located in NZ and after a cheap way to call friends or family in Australia?

Faktortel VoIP offers plans from $0 per month that offer you the convenience of being able to call landline numbers anywhere in Australia from A$ 10c per call (yes *per call*, not per minute!). An optional Australian DDI number also lets friends and family call you and they will only pay the cost of a local call. Interested? Check out Faktortel for more details.