In late 2012 Fly Buys launched an interactive advertising campaign with advertising company Adshel. Bus stops signs, and a much larger display that was located in Wellington Airport for some time offered customers the chance to swipe their Fly Buys card and receive a free gum ball. You can see photos of these, and read more about the campaign here.
I’d never actually seen one of these in real life, but after seeing comments on Twitter on Friday about one of these not accepting an Air NZ Airpoints card (which it is supposed to do according to both the display and a Fly Buys rep on Twitter), I thought I’d have a look at one of these machines which is currently running in an Adshel bus stop in Manners St in Wellington with a few other Geekzoners.
The machine was broken and wouldn’t give us a gum ball, no matter what card we tried.
The Adshel sign welcomes me to swipe my Fly Buys card or my Airpoints card and receive a free gum ball. Innocent enough – until you consider the security implications of this.
A basic Fly Buys card has your 16 digit number printed on it, and the magnetic stripe on your Fly Buys card contains this number. The format of your Fly Buys number is identical to a credit card and uses the LUN10 algorithm – the initial 6 digits are a BIN range 6014 35 (unique to Fly Buys) followed by 9 digits which make up your Fly Buys number, and the last digit which is a check digit. The number is also present on a barcode on the back of your Fly Buys card in an EAN13 format. EAN barcodes normally start with the GS1 member country code, which you can see on goods manufactured in New Zealand which will typically start with a barcode in the range of 940-949. The 264 range is not allocated specifically to Fly Buys, but is one they’re permitted to use. After the 264 your Fly Buys number is shown, and the last digit as with all EAN13 barcodes is a check digit.
If you swipe your Fly Buys card through this mag stripe reader in the hope of getting a free gum ball, the risks are minimal. If somebody has maliciously tampered with the mag stripe reader and replaced this with a skimming device to capture card numbers your Fly Buys number isn’t going to be of any real use to a fraudster. Your Airpoints card however is another matter entirely.
Air New Zealand partnered with Fly Buys several years ago allowing Air New Zealand Airpoints members to accrue Fly Buys points directly to their Airpoints account. Not long after this Air New Zealand launched a new Airpoints card that used the Rev platform to offer a prepaid Mastercard Debit card capable of storing multiple foreign currencies, your regular Airpoints card, and Fly Buys card. The card is EMV compliant and supports Mastercard PayPass NFC technology as well as a chip , and can also be used at NFC capable Air New Zealand kiosks and gates to identify the card holder. Because the magnetic strip on the card has to be used for the Mastercard component, the Fly Buys number barcode has to be scanned at retailers, it can’t be swiped through a mag stripe reader like a regular Fly Buys card.
By now you’re probably starting to realise the security implications of swiping your Airpoints card through a random mag stripe reader attached to a bus stop. Rather than simply giving your 16 digit Fly Buys number away, you’re giving away your 16 digit credit card number, your name, and your Airpoints number. Anybody who decides to maliciously tamper with the mag stripe reader and replace it with a skimming device now has access to a constant stream of credit card numbers from unsuspecting people. Of course not everybody who swipes their card will have their OneSmart card activated, or have money in their account, but the security aspect is exceptionally scary.
With the number of recent cases of ATM tampering where skimming devices have been attached to machines, Air New Zealand and BNZ (who provide the OneSmart Mastercard product) should be terrified that Fly Buys is encouraging their customers to willingly swipe their card in a public place in a mag stripe reader that would require absolutely no skills to tamper with and replace with a skimming device. It really does makes a mockery of all the security messages that banks try and send to their customers about protecting their cards.
I had to dig out my mag stripe gear to show the data on the Airpoints/OneSmart card. I’ve PAN masked some of my personal data including my Airpoints number, expiry dates and OneSmart credit card numbers with a *.
It was also pointed out to me that the billboard will not work with a Kiwibank Airpoints Card by somebody who had attempted to use one in the past thinking that the reference to “Airpoints card” would include this card. I wonder what Kiwibank think of their customers swiping their credit cards through a mag stripe reader in a public area attached to a bus stop that could so easily be tampered with?
I’ve been a Vodafone customer for a very, very, very long time. I’ve also been a customer of their phone insurance product for a very long time (around 1999 from memory, not long after the product was launched). In that time I’ve made two claims, and the whole process in both cases was extremely simple and something I was very happy with.
In December 2011 Vodafone* made some significant changes to their phone insurance policy, cleverly hidden in a letter that made no mention of the key changes. The most significant change was that handsets that were not supplied by Vodafone were not covered, something you would have only picked up on if you’d read the fine print and ignored the big bold “nothing else has changed” that was mentioned in the letter.
I blogged about this issue at the time and spent a number of hours dealing with people from Vodafone and Marsh to gain clarification on these changes and whether existing customers who did not have Vodafone supplied handsets would suddenly find their insurance was worthless should they ever attempt to lodge a claim. It became very clear to me dealing with them that the relationship between both companies could really only be described as dysfunctional, with neither really wanting to take ownership of the product or answer the tough questions. In the end Vodafone ended up adding a comment to my blog clarifying the changes
The changes indicated in the policy document do not apply to existing customers who purchased their policy before 5 December 2011
For new policies purchased on or after 5 December we are no longer intending to provide cover for phones that are purchased from an unknown source.
And that was that. Everybody lived happily ever after.
Fast forward to November 2013 and I decided to change phone plan. I haven’t been on a contract with Vodafone for many years, and simply moved to a new on account plan with no contract term. Yesterday in the mail I received a letter from Vodafone welcoming me to Phone Insurance, something that struck me as strange as it was something I was already part of, and in my 14 or so years of having this insurance (and multiple plan changes) I’d never received such a letter before.
Being fully aware of the changes and conditions in December 2011 I wanted clarification as to whether I would be covered under my existing policy conditions, to which both Vodafone and Marsh have advised that I would not, and that I will be covered under the new post December 2011 terms and conditions.
As I do not have a Vodafone supplied handset this insurance is now worthless, which is something I’m extremely unhappy about through no fault of my own. I was happy to pay this monthly fee to be covered, but it seems I’m now stuck without insurance.
Vodafone did not advise me when changing plans that my insurance would be affected, and the only mention in the insurance terms and conditions that comes remotely close is the following condition:
Your insurance cover will also terminate on the date:
• The On Account contract for your mobile is
terminated for any reason;
I have never had a contract period for my existing plan, nor a handset that was purchased at a subsidised price as part of an On Account term contract so see no reason under which this would apply to my scenario.
Clearly this whole situation is something that has the potential to be affecting many others with Vodafone insurance. If you’re a long term Vodafone insurance customer who has changed plans and do not have a Vodafone supplied handset your insurance could quite likely be invalid. It’ll pay to check that you’re actually covered!
*While Vodafone brand and sell the insurance it’s actually a product backed by ACE Insurance and provided to Vodafone by Marsh insurance brokers.
Update: As of 11:30am Stuff have now updated their page with a red “OPINION” heading at the top of their article. This was not present initially.
Journalist Colin Espiner has written an article today on Stuff discussing the current topical debate around Chorus. The issue with Chorus is a highly complex one, and in reality most people have very little understanding of the actual issues at stake here. The Stuff article really is all the proof you need that a) mainstream media really can’t be trusted as an accurate source of factual information and b) the issue is a very complex one.
Rather than breaking copyright and including the whole story I’ll simply correct the inaccuracies and misinformed statements in the article, which you can read in full using the link below.
Chorus has claimed it'll go broke if it can't charge as much as it does now and has asked the government to step in.
Chorus have never claimed this. I challenge Espiner to provide a source for that claim or retract it.
What is Chorus?
Chorus is a private, NZX-listed company that owns the copper lines that connect your house to the telephone exchange
There is much more to Chorus than simply copper lines. Chorus is an infrastructure provider that owns the copper cables running to your home, known as a metallic path facility (MPF) in the telco world. Chorus also own hundreds of telephone exchange buildings around New Zealand, a nationwide fibre network (some of which is shared with Telecom still), and over 4000+ fibre fed roadside cabinets used to deliver phone and broadband services across the country. Chorus don’t own the actual NEC NEAX telephone exchange hardware that delivers telephone services to most customers (these are owned by Telecom), but they do own the equipment used to deliver wholesale broadband services to customers of every Internet service provider (ISP) in the country. This piece of equipment is known as an ISAM, DSLAM or ASAM.
What the heck is local loop unbundling?
Ever had a peek inside a telephone exchange? Seen all those thousands of wires in pretty colours? That's the local loop. When Telecom owned it, it could charge what it liked to provide access to internet providers. The Government legislated to put a stop to this by allowing any provider access to the copper wires.
So what's the Commerce Commission doing setting the price Chorus can charge? Good question. The problem with local loop unbundling is internet and telephone service providers complain the price they're forced to pay Chorus for access - $45 a month - is too high. The Government threatened to intervene and regulate the charges but the Commerce Commission got in first with its own determination, setting the price at $34.44.
Great, that means I'll soon get cheaper broadband? Yes, but only if providers decided to pass the cut on to customers rather than pocketing some or all of it. And assuming the determination isn't appealed by Chorus. And always assuming the Government doesn't step in and over-rule the commission.
This is plenty of confusion generated here by Espiner. What’s important here is that the current Chorus debate does involve local loop unbundling pricing, it’s not in the way Espiner has described.
Technically speaking the local coop is a term for the copper MPF that runs from an exchange or cabinet to your premises.
Local loop unbundling allows any ISP or telecommunications company to rent space to install their own equipment in a Chorus exchange or cabinet and use a Chorus MPF to deliver broadband and/or phone services to customers. A number of companies have chosen to install their equipment into Chorus exchange buildings and at present just under 50% of the total number of customers services by Chorus have the potential to be delivered an unbundled product. At present no 3rd party has any unbundled equipment in any of the 4000+ Chorus roadside cabinets as the business case for doing this simply doesn’t stack in, in part due to equipment costs and the smaller number of customers served by a roadside cabinet, and in part by the Commerce Commission regulated cost of backhaul from the cabinet which would see any additional provider having to share backhaul costs equally with Chorus which is not viable.
The current cost of an unbundled MPF is $19.08 for an urban area and $35.20 for a non urban area. In December 2012 the Commerce Commission set in place a move to average both of these costs out and from December 2014 a price of $23.52 will apply to both urban and non urban areas.
For an ISP to deliver Internet and/or phone services over an unbundled MPF they need to install their own equipment into the exchange and pay the associated fixed prices for extras such as rent, power and backhaul.
The $45 price referred to by Espiner is the cost of an ISP delivering a wholesale Unbundled Bitstream Access (UBA) product which is currently set at $44.98 per month. This price covers the cost of the MPF and a port on a Chorus ISAM, ASAM or DSLAM that is used to deliver Internet to the premises.
An ISP has two choices to deliver Internet access to a customer. They can pay the UBA cost to Chorus for a wholesale service, or they can choose to install their own equipment into an exchange and offer an unbundled service. Providers such as Vodafone, Orcon, Callplus and Compass have chosen to install equipment in major exchanges. Most other providers (including Telecom) rely on wholesale UBA services to deliver Internet access to their customers.
The current Chorus debate revolves around the price Chorus are allowed to charge for the UBA service from December 2014. This price will consist of the cost of the MPF which will be set at $23.52 from this date, and the cost of providing the Internet access from a port on the ISAM, DSLAM or ASAM. The Commerce Commission originally believed in it’s first draft document that this cost should be set at $8.93, giving a total of $32.45. On Tuesday the Commerce Commission announced a final decision and increased this cost to $34.44
A brand new Alcatel Lucent 7302 ISAM used by Chorus costs many tens of thousands of dollars. At the end of the day there are very few of us who are aware of what the true cost of providing this post actually costs.
Was it a smart idea for the Government to contract the provider of the copper wire network to also build the new fibre-optic network?
No, it wasn't.
Without providing any evidence to back such a claim it can be viewed personally as a matter of personal opinion. My personal opinion is very different - awarding Chorus the contract to deliver UFB was a very smart move.
New Zealand already has a world class broadband network (something I recently wrote about here) with over 80% of premises having access to 10Mbps+ ADSL2+ downstream speeds, and just under 50% of premises having access to VDSL2 delivering anywhere between 30Mbps and 70Mbps, but more importantly delivering up to 10Mbps upstream (ADSL2+ is only capable of delivering up to 1Mbps upstream). Telecom spent well over $1 billion deploying over 3500 fibre to the node (FTTN) roadside cabinets around the country to deliver this. This network was designed and constructed with a full fibre to the home (FTTH) network in mind, meaning that existing pits, ducting, fibre and equipment can be utilised as part of the UFB FTTH rollout and not unnecessarily replicated. Why reinvent the wheel (and pay for it) when you’ve already got many of the components for the wheel?
Ultimately fibre will replace copper, however unlike Australia who announced plans to decommission the copper network 18 months after fibre was deployed, no such plan was put in place here. With Australia’s nationwide fibre network now possibly on hold to to a change of Government, it’s likely that by 2017 Australia will have a FTTN network delivering similar capabilities as NZ’s FTTN network which was finished in 2011.
Chorus isn't exactly incentivised to drop its copper network prices because it wants to sign more customers up to its more expensive fibre system. Which won't happen if "traditional" copper network broadband is priced too cheaply.
The $37.50 entry level price for a UFB plan was originally set to undercut existing UBA copper services meaning their would be an incentive to move away from copper to fibre as the price would be cheaper. The $37.50 cost also included a voice port in the Optical Network Terminal (ONT) meaning that both Internet and voice services could be delivered to a customer at a wholesale cost around $20 less than a traditional copper MPF delivering UBA and a POTS phone service from a NEAX.
I'm happy enough with my current broadband connection. Do I really need UFB anyway? Well, that's the problem. Not only is UFB extremely expensive to install (the Government has budgeted $1.5b) and time-consuming to roll out (it'll take another 10 years or so to finish) but only 75 per cent of homes will be covered by fibre in any case - and none in rural areas.
The loan to Chorus was nowhere near the true cost of the UFB rollout. That’s still going to be somewhere in the vicinity of $2 - $3 billion dollars, with a true cost very difficult estimate at this time. Costs associated with the UFB rollout have escalated wildly, with costs currently running as high as $3000 per premise passed to deploy the ducting. There are then the costs of installing the fibre to the home, which in some cases is still topping $2000. The loan Chorus received from the Government is less than half of the actual cost of the UFB deployment.
The UFB rollout will be complete by 2019 and will cover around 75% of premises in the country. Many areas that did not receive fibre will receive upgraded services by way of the Rural Broadband Initiative (RBI) project delivering upgraded copper services and wireless broadband access to those where delivering fibre services is totally uneconomical.
Are there any disadvantages of going to UFB? Apart from the higher price per month, and not being in a big centre, there's likely to be higher connection fees associated with getting linked into the fibre network.
Plus, something that hasn't had much coverage - once you ditch the good old telephone lines, stuff you're used to like caller ID and using the toll provider of your choice will no longer be available. Telecom's fine print states if you're on fibre you can't use anyone else for cheap tolls.
As pointed out above the cost of fibre was set to undercut existing copper services. The argument against the Commerce Commission cutting UBA costs is that setting these below UFB costs will inhibit UFB uptake as many people will simply opt for the cheapest Internet plan available. With installs for UFB still free for most users until at least 2015, there are no “higher connection fees” associated with moving to fibre.
A user moving to fibre will find their regular phone service is replaced by a carrier grade voice over Internet protocol (VoIP) service. A provider offering UFB services has two ways of delivering phone services – using the voice port on the ONT, or by using voice ports in the ISP supplied router or residential gateway (RGW). This is the approach currently being taken by providers such as Snap and Orcon who deliver voice services using their Fritz!box and Orcon Genius gateways. The good news is that usual smartphone services like CallerID and voicemail will still continue to be available. Any such fine print about “cheap tolls” is also rather meaningless. If you don’t like Telecom’s products, services or price then don’t sign up with them.
In the meantime, you can impress your friends with how much you now know about the current debacle.
You might try and impress your friends, but if it’s using information from Epiner’s story you’ll probably just make a fool of yourself, especially around others who do understand the telco space, so be careful who you try and impress..
How competitive is NZ’s residential ISP market? This quote from Orcon’s recent submission to the Commerce Commission offers some insight:
Margins in the broadband world are incredibly slim. Currently, Orcon needs to retain a UBA customer for 27 months to recover setup and marketing costs, before it makes a single dollar off that customer.
A comment like that really does make a mockery of the recent claims by Axe the tax campaigners that any reduction in Chorus wholesale UBA costs would be passed through to consumers.
With margins this slim would any ISP realistically pass these through in full? Any smart business would be pocketing some (or even all) of the reduction in the hope of reducing that insane 27 month period down to something a little more realistic.
Anybody who knows where the town of Plzen is located is probably a bit of a beer geek. Plzen translates to Pilsen in German, and is the home of Pilsner beer. First brewed in 1842, the Pilsner style was a clear, slightly hoppy style beer that was very different to the much darker Ale that had been commonplace across Europe for centuries beforehand. If you’re a true beer fan you’ve possibly visited Plzen and been to the Pilsner Urquell factory – if you haven’t, it’s something that should be on the bucket list of every true beer geek as the factory tour is a fantastic experience.
Boundary Road is a brand of Independent Liquor, a company created by New Zealander Michael Erceg in 1987. Erceg was a true genius, who was sadly killed in a helicopter crash in 2005. Erceg pretty much created the ready to drink (RTD) market in New Zealand and in the late 90’s and early 2000’s Independent Liquor tightly controlled this highly profitable market with other players struggling to gain any traction in the market. In the early 2000’s beer became a growth area of the business as supermarket beer sales quickly took market share from traditional bottle stores that were at the time owned by industry giants DB and Lion Breweries. This allowed Independent Liquor jumped at the chance to gain traction in the beer market by aggressively pushing product in supermarkets, as they had previously been unable to do this in bottle stores owned by their much larger competitors. Some of this beer was terrible (Ranfurly anybody?) but as with the RTD market, they targeted price conscious consumers and quickly gained market share in the off premise market. The addition of some large imported brands such as Grolsch and Carlsberg gave them a portfolio of products that allowed them to compete head-on with DB and Lion offerings in the marketplace.
After Erceg was sadly killed in a helicoper crash with Grolsch executive Guus Klatte in 2005, Independant Liquor was ultimately sold to a private equity companies Unitas Capital and Pacific Equity Partners. It was then sold to Japanese company Asahi in 2011. In recent years they have continued with a strategy of flooding the market with products and hoping that large supermarket end displays and multiple facings of cheap beer would drive growth, and to some extent this has strategy has paid off. Whether the significant amount of money that would have been spent on Public Relations companies to drive this strategy was money well spent is a hot topic of debate, as attempting to grow the Ranfurly Brand failed miserably with what must rank as one of New Zealand’s worst ever advertising campaign. As to whether their beer is any good is also a hot topic of discussion – Boundary Road have numerous “craft” beer brands and consider themselves a “craft” brewer however many of their products are anything but unique. There is a significant market of price conscious customers who aren’t worried about the quality of their beer, and they are doing well in this category.
All of this leads to the horrible revelation that Independent Breweries don’t actually know how to spell Plzen. I was given a dozen Boundary Road Bouncing Czech beer a few weeks ago and yesterday decided to drink one while engaging in the great Kiwi tradition of cooking food on the BBQ. The beer was very average for a Pilsner style, but what was worse was the spelling. Where in the world is Pizen? One can assume that they actually mean Plzen (note the l rather than an i). Considering that the Pilsner style beer has only been brewed since 1842 their reference to the world “centuries” also seems a little strange.
I think a certain company is in need of not only a better Pilsner recipe, but also a history lesson and spelling lesson as well.
My blog has always traditionally revolved around technology because it’s something I love. What I do love even more however is travel, and with this in mind instead of writing yet another blog post with a technology focus I thought I’d write about travel since I am currently on holiday in the US at Astricon (ironically a tech conference!).
Air New Zealand have two remaining 747-400 aircraft in their fleet, both of which are used almost exclusively on the NZ7/8 route to and from San Francisco. To me the 747 is still the most amazing plane to grace the world’s sky and it is a shame that due to their age these planes are rapidly disappearing from airline fleets around the world. Both remaining Air New Zealand planes are due to be scrapped by October 2014. In all my previous 747 flights I’d never flown upper deck on a 747, so chose to head to the US via SFO in Premium Economy just so I could make possibly my final 747 flight and tick an upper deck seat off my bucket list.
NZ8 - 04/10/2013 - Seat 22A Premium Economy
My seat was an exit row window at the front of the upper deck Premium Economy area. I consider this one of the best Premium Economy seats due to the extra legroom, but others may disagree due to the proximity to the door which can be a colder area to sit. The upper deck is shared between Business Premier and Premium Economy, with 23 Premium Economy seats in a 3-2 configuration and 10 Business Premier seats in a 1-1 configuration. Another 16 Premium Economy seats are located on the main deck in a 2-2 configuration which offers a much cosier feel. These seats offer a seat pitch of between 38” and 40”.
Not being on the main deck gives this area a very different feel, which is clearly the appeal of sitting up there. Boarding for the service was a little late and the 7:15pm departure was a little late with pushback occurring at around 7:30pm. While boarding was underway the PA announcement apologising for the “jams in the aisle” were slightly amusing to me as the only “jam” was the crew delivering pre flight champagne to Business Premier customers.
The view from the top of the stairs of the upper deck showing the Premium Economy and Business Premier seats.
Looking forward to Business Premier from my seat.
Pre dinner drinks were served, with the same beverage selection being shared between Business Premier and Premium Economy. This means glass bottles of wine served in real glass, unlike the plastic bottles served in Economy. Wines and spirits are also of a much higher quality, and my glass of Mumm champagne (my favourite!) went down very well. Not long after this the meal service commenced consisting of an entree of prawns with wasabi mayonnaise, green tea noodle salad, nori and watercress. The flavours in this were great, with the wasabi managing to not overpower the other ingredients.
The Premium Economy menu.
Desert was a chocolate delice with blackberry creme fraiche.
The main is described as “being served with rocket” on the menu but no fresh rocket was served with this meal. Having had this main previously (with rocket) flying Business class to Honolulu in May I definitely feel the course did lack a little zing without the rocket. No bread roll was served in Premium Economy, which was strange as the tray contained a serve of butter. My assumption is that the crew simply forgot, as the bread roll basket had plenty of rolls in it after being delivered to Business Premier customers and sat on the wine storage area between Business Premier and Premium Economy during the service. The desert was delicious and washed with with a couple of glasses of Pinot noir served by a crew who were very generous with after dinner drinks. Not long after the meal trays were collected the main cabin lighting was dimmed. What is nice is a a range of snacks including Whitakers Chocolate, fresh fruit, muesli bars, vege chips and beverages are available from a self service area throughout the flight.
Breakfast was fresh fruit salad and yoghurt with optional cereal, and a croissant with a selection of preserves. I opted for the lemon scented brioche French toast with apricots, honey cream, toasted almonds and vanilla syrup as the hot option and found this to be amazing, and would have happily opted for more if it was on offer!
Despite the late departure time we were pretty much right on schedule landing in San Francisco. Clearing immigration at SFO seems to be a lot better than many of the horror stories I’ve heard at Los Angeles lately, and I had cleared immigration and collected my bags within 30 minutes of leaving the plane.
Premium Economy on Air New Zealand is a great offering, with the food and beverage selection being very similar to the Business Premier offering. Seating differs significantly between the different aircraft on the fleet, with both Boeing 747 –400 and 777-200 aircraft opting for a more traditional seat (which is slightly wider on the 747-400), whereas the Boeing 777-300 offers the newer Air New Zealand designed Spaceseat. Having not flown Premium Economy in the 777-300 I don’t have a view on this seat, but do know plenty of people who prefer the 747-400 seat over the Spaceseat.
Service is also a huge step up from regular Economy, however I do feel that the upper deck service may be slightly less attentive than my previous 777-200 Premium Economy flights. I put this down to the focus of the two crew on the Business Premier customers, however no matter how you look at it, the experience is a significant step up from Economy!
Did anybody tell the NZX?
According to the NZ Herald “Chorus is a business unit of Telecom NZ” … so it must be true.
Seriously folks, can the level of accuracy in the New Zealand mainstream media really get any worse?
If you’re a sports fan in New Zealand you’ll be aware of the acquisition of the New Zealand broadcast rights to the English Premier League by Coliseum Sport, a new start-up who’s goal is to break the stranglehold of existing broadcast TV by streaming games over the internet.
Unfortunately for Coliseum they’re already set themselves up to fail. Not because of their model, but the poor technological solutions that they’ve chosen to deliver their content. Delivery of video content over the internet is the future of media, and with the rollout of fibre optic cable to 75% of New Zealand homes by 2019 as part of the Ultra Fast Broadband (UFB) rollout, New Zealand homes will have the capability and bandwidth to enable broadcasters to bypass existing terrestrial and satellite delivery platforms – that’s not to say New Zealand doesn’t already have world class broadband, because we do - over 80% of premises are capable of receiving a internet connection of at least 10Mbps, and around 50% of those premises are capable of receiving VDSL2 which can deliver between 30Mbps and 70Mbps depending on your distance from your local exchange or roadside cabinet. What UFB does differently is enable guaranteed bandwidth to premises, and more importantly enables multicast delivery of content over the UFB network, something that is essential to deliver high bandwidth content to multiple premises. Delivering content over the internet is the way of the future, particularly as people move to replace viewing live content with watching On Demand content when and where it suits them.
Coliseum Sport’s failing isn’t the decision to deliver content over the internet – it’s the options that exist to view their streamed content. No matter how many internet enabled devices people may have in their home, the big screen TV is still the entertainment hub of the home. While tablets may be convenient for watching content in bed, nothing can match the experience of watching high definition content on a big screen TV. Logic would dictate that anybody looking at replacing the existing broadcast model would focus on replicating the experience, but it seems it’s the aspect Coliseum have chosen to ignore. Right now your only option for watching Coliseum Sport content is to use a PC as their content uses Adobe Flash for it’s streaming – although there are are Android and iOS apps in development to allow viewing content on these devices. If you want to watch content on your big screen TV your only option is to hook a PC up to your TV, something that’s not difficult if you own a laptop, but it’s still a very cumbersome task that simply shouldn’t be required. If you don’t own a laptop that you can move to near your TV it’s probably not even an option.
Coliseum’s have completely overlooked the fact that every home in the country that has a TV with Integrated Freeview|HD (known as an IDTV – Integrated Digital TV) or a MyFreeview|HD recorder already has the technology built in to solve their problem. Pretty much every IDTV sold these days is required to have internet connectivity to comply with Freeview specifications. While many so called smart TVs already have their own applications such as YouTube for viewing content from the internet, building applications for multiple brands of TVs is expensive and time consuming, and that’s where MHEG5 steps in to save the day.
MHEG5 is an open standards Application Programme Interface (API) that is mandatory on every Freeview|HD IDTV or Freeview Set Top Box (STB) sold in New Zealand. MHEG5 allows interactive applications to be run on the TV or STB, an example of which is the Freeview Electronic Program Guide (EPG). The EPG application is device agnostic, meaning it will run on every MHEG5 capable device and deliver the same consistent user experience across every device that it’s run on. One of the coolest features of MHEG5 is the interactive channel extensions and ICStreaming extensions – two extensions that allow interactive content on your TV using content that is sourced via the internet. Support for this is required on every Freeview|HD IDTV and MyFreeview|HD recorder now sold, and it means your TV can access streaming content delivered over a broadband connection without the end user having to install any software or change any settings - all that’s required is for the TV to be correctly connected to an Internet connection. Support for ICStreaming is not required on every standard Freeview STB, however some do support this capability.
MHEG5 ICStreaming is already used in countries such as the UK to deliver BBC iPlayer content to end users, and has also been chosen by Quickflix who will be launching a MHEG5 based service into the New Zealand market before the end of 2013. This will make viewing Quickflix content on your TV as simple as watching regular broadcast channels, and means Quickflix don’t have to develop applications for the different brands of smart TVs on the market.
The capabilities of MHEG5 are exceptionally powerful, and there is nothing to stop other broadcasters or ISPs from building their own MHEG5 applications and delivering content over the internet. What’s surprising so far is the lack of interest from existing players such as TVNZ and Media Works who both currently offer On Demand services, but make viewing that content on a TV far more difficult than it needs to be. The key is making content easy to access, and both of these players, along with Coliseum Sport, don’t yet seem to have grasped this simple concept.
There has been a lot of talk in the last year about Sky TV’s dominance of the Pay TV market, with many people concerned about their businesses practices around exclusivity of content and pricing. Whether or not you agree on Sky being evil, they’re ultimately the main source of entertainment for many NZ homes, and many people can’t wait for the day they face some competition and have a choice of Pay TV providers.
What if I told you that Sky’s competition already existed? That’s right. With the purchase of TelstraClear, Vodafone is sitting in a prime spot, ready to engage in a war with Sky TV if they so desire.
TelstraClear was formed with the merger of Telstra New Zealand and Saturn Communications. Saturn Communications started it’s life as Kiwi Cable and deployed a cable TV network on the Kapiti Coast before expanding into Wellington, and later Christchurch. Expansion into Auckland was stopped by politics – in particular the NZ Herald who did an an amazing job ensuring that TelstraClear were not allowed to deploy their network in Auckland. This ensured that Aucklanders were subjected to the early 2000’s monopolistic practices of Telecom rather than being given freedom of choice when it came to fixed line phone and internet providers.
On the Kapiti Coast, Wellington and in Christchurch, Saturn Communications deployed what is known as a hybrid fibre co-axial network, or HFC for short. This network also has a traditional copper network for phone services that was rolled out alongside the HFC network. The network has a fibre to the node (FTTN) architecture consisting of both fibre optic and coaxial cables, with fibre carrying data to node (the roadside cabinet) where it’s converted to a radio frequency (RF) signal and then carried over the coaxial cable to your home. Each cabinet will typically cover several hundred homes.
Inside your home the co-axial cable is connected to your set top box (STB) which uses the Digital Video Broadcasting over Cable (DVB-C) standard. This is very similar to the DVB broadcasting standards used for terrestrial (DVB-T) and satellite (DVB-S) broadcasts used by Freeview and Sky. In it’s early days Saturn Communications sourced much of it’s content independently, but lacking a sport offering meant it made sense to partner with Sky, ultimately resulting in TelstraClear essentially just reselling Sky TV over it’s network.
Now that you’ve grasped the basics I’ll now explain why Vodafone’s acquisition of TelstraClear was a smart move. Not only did it give them a fixed line network and a nationwide fibre network, it also gave them New Zealand’s most advanced internet protocol (IP) playout system for TV. Every customer watching TV via their Vodafone STB is actually watching content that started it’s life in the Vodafone network as an IPTV stream, however rather than being IP all the way to your home, it’s converted to RF to be carried over the co-axial cable. Since the signal is digital all the way, no loss of quality occurs along the broadcast path. What is important however is that every channel they offer already exists in an IPTV format within their network, meaning it can easily be delivered over any IP delivery network anywhere within New Zealand.
Those of you with a T-Box will have spotted the Ethernet port on the back that is currently only used for electronic program guide (EPG) updates. This Ethernet port is also cable of being the source of all content, with IPTV content either live or on demand streamed directly to your T-box with no requirement for the HFC network.
It doesn’t take a smart network engineer to realise that broadcasting high definition content over the internet currently is an exceptionally inefficient use of bandwidth and that both terrestrial and satellite do a far better job of this. In the xDSL world where speeds are limited by your distance from an exchange or roadside cabinet and your internal home phone wiring, delivering IPTV content is something fraught with potential issues. Just on 84% of NZ premises have access to broadband speeds of 10Mbps or greater, with around 50% of those having access to VDSL2 which will deliver average speeds of around 35Mbps downstream and 10Mbps upstream. When you consider that a single 1080i Full HD broadcast TV channel broadcast over terrestrial or satellite uses up to 10Mbps, you can already see the issues that are faced. Those issues are solved by the current rollout in New Zealand of ultra fast broadband (UFB), with the construction of a fibre optic network to 75% of New Zealand homes and businesses already underway and due for completion by 2019. With fibre speed no longer becomes an issue, and a home could easily have several STB’s streaming 1080i HD content with no need to worry about it significantly impacting their internet experience.
As the UFB network rolls out Vodafone are in the prime position to take advantage of the IPTV revolution. While the T-box may have had a chequered past with numerous software issues, it’s now a relatively stable product. More importantly however, the IP based playout system that Vodafone now own gives them a massive head start over anybody else contemplating such a product. Building such a system isn’t cheap.
Now that I’ve given you a technical rundown of delivering IPTV, you’re probably going to ask where the content is. This is the question everybody is asking, but the answer is quite simple. It’s already there. Vodafone already have an existing resell agreement with Sky that allows them to rebroadcast Sky content, along with sourcing several additional channels not carried by Sky. What needs to be remembered is that much of this content is not exclusive to Sky, and anybody who wants to rebroadcast many of the channels carried by Sky is free to do so providing they’ve got the money to pay the content owner. There is realistically very little in the way of Vodafone deciding to go it alone and acquire rights to somewhere in the vicinity 80% of the content that Sky offer – with one notable exception – sport. This very much puts the ball in Sky’s court (literally). Sport is very expensive to produce and it’s not clear if Sky actually break even on revenue from their sports channels or whether they are cross subsidised. If Vodafone went it alone without a sports channel they’re only going to have limited success in the market, but the effect on Sky could be significant. Would Sky then do the smart thing and resell sport to Vodafone? Or would they simply hope that sport is a big enough selling point to ensure differentiation in the marketplace? My money is on the former. I’d also put money on Vodafone allowing their IPTV service to in effect be bundled by other internet providers, ultimately putting them head to head with Sky, and hopefully delivering us a future with a much greater choice of content, both live and on-demand.
UFB’s going to mean an exciting future in the NZ marketplace…
It’s safe to say that the vast majority of New Zealanders think that broadband service in NZ is crap. Despite what they may think, we’ve actually got some of the best broadband connectivity in the world, and the harsh reality is that many of those with a poor service are probably suffering because they’re a) too tight to actually pay decent money for a decent service or b) completely oblivious to issues such as their home wiring impacting their broadband performance. Many people who fall into b) fall into a) once told of their problem – they expect somebody else to fix their problem, and don’t expect to pay for it either, despite wiring within the premises being owned by the property owner.
With the completion by Telecom of their Fibre to the Node (FTTN) cabinetisation project in 2011 over 3500 new fibre fed roadside cabinets were constructed across New Zealand. As the speed of xDSL based technologies decreases the further you are away from an exchange or cabinet, the installation of these roadside cabinets has meant that average attainable xDSL sync speeds have increased significantly. Over over 80% of premises in New Zealand have access to xDSL broadband with a minimum sync speed of 10Mbps using ADSL2+, a technology that is capable of delivering downstream speeds of up to approximately 18Mbps and upstream speeds of approximately 1Mbps. Over 40% of those premises also have access to VDSL2 which can deliver speeds of up to 70Mbps downstream and 10Mbps upstream if you’re within 300m metres of an exchange or cabinet, and speeds of between 30Mbps and 50Mbps downstream and 10Mbps upstream if you’re within approximately 900m from a cabinet or exchange. Due to the higher frequency range used by VDSL2 performance will degrade very quickly past 1km.
There are very few countries in the world that have such an advanced network that is capable of delivering speeds this high to such a large percentage of premises. xDSL broadband speeds in Australia for example pale in comparison, and despite Australia now being part way through a Fibre to the Home (FTTH) rollout as part of the National Broadband Network (NBN) it’s likely that a change of Government in September will result in the FTTH project being scaled back and replaced with a cheaper FTTN network using the existing copper for the last mile. If this happens by 2017 Australia could have a network replicating what New Zealand has had since 2011 – VDSL2 to those premises close to an exchange or cabinet, and ADSL2+ to those further away. In the UK BT’s Infinity project rollout is deploying in a large number of new fibre fed cabinets to deliver VDSL2 and ADSL2+ as a last mile technology. The facts don’t lie – New Zealand is literally years ahead of most of the world.
Not content with FTTN and copper for the last mile, New Zealand is currently progressing along the path of building a FTTH network to deliver fibre to 75% of New Zealand premises by 2019. Once again what NZ is doing is world class – based upon current planning very few countries anywhere in the world would have fibre to 50% of their premises by 2019, let along the 75% that New Zealand is aiming for. In those areas that aren’t receiving fibre, rural FTTN cabinets are being built and wholesale fixed wireless services being being deployed by Vodafone as part of the Rural Broadband Initiative (RBI).
Now that I’ve explained this all to you there are probably people out there wondering what sort of kool aid I’ve been drinking. The answer to this is that I haven’t.
Many people are receiving a substandard internet service, but the reasons for doing this aren’t because of the technology used to deliver the service,in many cases it’s because of their choice of ISP, and more importantly, their home phone wiring.
All ISP’s aren’t created equal. There are many factors that will heavily influence end user performance such as domestic and international transit (ie the amount of upstream bandwidth your ISP has purchased), backhaul inside NZ (the capacity your ISP has purchased to carry data between the Chorus network and their own), the location and performance of DNS servers (closer is always better), whether your ISP is caching data, and whether they may have their own content delivery network (CDN) node to deliver bandwidth intensive traffic from within their network, rather than from somewhere else in the world. Like a fine bottle of wine price ultimately becomes a deciding factor as building and running a network doesn’t come cheaply. In the real world a $10 bottle of cheap bubbly wine isn’t going to taste as a good as a $200 bottle of Vintage Champagne, but many consumers are oblivious to that. Many people in this country seem to want the expensive quality Champagne, but aren’t willing to pay more than $10 for it.
If you're receiving your internet via xDSL based technology your internal wiring within your home is the single biggest factor that will affect your internet speeds and performance. Over $1.5 billion was spent building roadside cabinets to deliver faster speeds, yet despite over 80% of premises being capable of receiving speeds of at least 10Mbps, the true number is below this. Why? Because the legacy phone wiring in many premises is simply incapable of delivering the performance required to deliver these speeds. The simple reality is that if you don’t have a master filter installed, or don’t have your xDSL connection terminated to a single dedicated jack point within your premises you’re probably receiving a degraded service. Rather than sounding like a stuck record I suggest you read my recent blog post here which talks in detail about this issue.
Last week the industry received a very significant announcement from Chorus announcing price reductions to the VDSL2 service that has now been available for a couple of years. With VDSL2 offering upload speeds that are 10x faster than ADSL2+, and download speeds that are up to 4x faster, the low uptake of VDSL2 (currently only 3000 people in NZ are using this service) really has been surprising. Unlike ADSL2+ which is a fully regulated offering with wholesale pricing set by the Commerce Commission, VDSL2 is a commercial service which maintained a $20 price premium over ADSL2+ to position it as a premium offering. While many larger ISP’s don’t currently retail VDSL2 as a product there are currently well over 20 ISP’s and resellers offering VDSL2 services and once again it seems that many people are either oblivious to the product offering, or merely not interested in receiving a faster service. Hopefully this price reduction will see VDSL2 uptake increase significantly – but remember that your wiring needs to be up to spec to support VDSL2, with a master filter or dedicated xDSL jack point being mandatory.
The ball really is in the consumers court… It’s just up to them to do something with it.