Why the Internet access is so expensive?

Forums › New Zealand Broadband › Why the Internet access is so expensive?

1 | 2 | 3 | 4 | 5 | 6

6434 posts

Uber Geek

#327671 7-May-2010 12:54

'expensive' is a relative term.
Exepnsive comoared to what? other countries? other lesiure acitvities?
compared to other countries yes we are more expensive (mostly) for the reasons already given.

compared to other lesiure acitvities I would say that given how much use I get out of the internet for each dollar I spend on it, compared to my other lesiure activities, I would say it is quite cheap.

I get a lot more 'value' out of each dollar I spend on the internet compared to, say, each dollar I spend on going to the cinema, going skiing, buying video games, etc etc.

magu

Professional yak shaver
1599 posts

Uber Geek

Trusted

BitSignal

Lifetime subscriber

#327681 7-May-2010 13:14

Local caching of big content services such as iTunes, Xbox Live and similars would be very welcome, provided the national traffic is unmetered.

I do think that a new undersea cable company will bring some competition and lower the price of bandwidth to the ISPs, which hopefully will mean cheaper and bigger data packs for international traffic.

I pay $160/month for 105GB from Orcon with a POTS line. I'm happy with the speeds I get and the quality of the service. I don't think it is expensive for NZ in general. But when you compare to other countries it is appalling.

"Roads? Where we're going, we don't need roads." - Doc Emmet Brown

webwat

2036 posts

Uber Geek

Trusted

#327734 7-May-2010 14:53

Obviously extra international capacity will improve things alot, but it may also put pressure on Telecom to improve bandwidth in their national network, and also on other infrastructure owners to upgrade as well, such as peering exchanges etc. But the move to FTTP will create more demand for international bandwidth, so i expect to see more than one submarine cable going ahead over the next 5 years.

Really I cant understand why Southern Cross hasnt been upgraded already, delaying has just created opportunities for new cable operators. How many wavelengths can it carry? How many active repeaters would need to be replaced before we can see terabit speeds on it?

Time to find a new industry!

Ragnor

8222 posts

Uber Geek

Trusted

#327739 7-May-2010 15:08

@webwat

SXC has plenty of spare capacity, can upgrade speeds through new tech and is planning to build additional cables.

They are a business not a charity so they naturally price their services at a point that maximizes their profit gives the best ROI for their owners/investors.

Pricing has been falling over time naturally:

It's worth noting that SXC pricing is the same for NZ and AU and in AU there is competition from other cables: PIPE and AJC.

However, pretty much all ISP's in NZ apart from Telecom and Telstra buy through resellers (Pacnet, Global Gateway International, Alternet etc) because they do not have the scale to buy direct from SXC.

Pacific Fibre will obviously increase competition which will have a some effect on prices, however they will still have to price at a level that allows them to make a profit and pay back debt required to build the cable(s).

kyhwana2

2566 posts

Uber Geek

#327746 7-May-2010 15:29

Ragnor: @webwat

SXC has plenty of spare capacity, can upgrade speeds through new tech and is planning to build additional cables.

They are a business not a charity so they naturally price their services at a point that maximizes their profit gives the best ROI for their owners/investors.

Pricing has been falling over time naturally:

It's worth noting that SXC pricing is the same for NZ and AU and in AU there is competition from other cables: PIPE and AJC.

However, pretty much all ISP's in NZ apart from Telecom and Telstra buy through resellers (Pacnet, Global Gateway International, Alternet etc) because they do not have the scale to buy direct from SXC.

Pacific Fibre will obviously increase competition which will have a?some effect on prices, however they will still have to price at a level that allows them to make a profit and pay back debt required to build the cable(s).

Why is that graph showing US$ per gigabyte? ISP's don't buy chunks of data from the resellers, they buy gbit/s pipes..

Ragnor

8222 posts

Uber Geek

Trusted

#327756 7-May-2010 15:47

To get a price per GB they probably took the price for x Gbit/s per month worked out how much data could be used a month at that rate then divided the cost by the amount.

Most NZ isp's simply don't have the scale to have international capacity in x Gbit/sec.

1080p

1332 posts

Uber Geek
Inactive user

#328273 9-May-2010 19:57

This is something I have been interestred in for some time now. It seems to me that New Zealand's broadband speed issues could be solved via an increasing the international capacity given to each customer.

I would be interested to know what kind of contention ratios the different ISPs give to each customer (the number of customers per 100Mbit/s uplink for example). Obviously this is probably sensitive business information but it'd be interesting to know nonetheless.

I am unsure how fibre to the home/premises will assist in our international speed issues as ISPs will still have to purchase transit from international suppliers...

This is obviously a very complex problem. As for my opinion on New Zealand internet prices I would not agree that they are too expensive for what they promise but for what is provided they are far too expensive.

Another member mentioned his cost per gigabyte and synch rates and said they were fairly cost effective. I would agree but ask how often you actually are able to achieve the promised rates to even popular international sites?

Quic Broadband

Move to New Zealand's best fibre broadband service (affiliate link). Free setup code: R587125ERQ6VE. Note that to use Quic Broadband you must be comfortable with configuring your own router.

insane

3240 posts

Uber Geek

ID Verified

Trusted

#328328 9-May-2010 23:45

1080p:
I would be interested to know what kind of contention ratios the different ISPs give to each customer (the number of customers per 100Mbit/s uplink for example). Obviously this is probably sensitive business information but it'd be interesting to know nonetheless.

It would vary greatly based on the ISP, some would rely on their caching and prioritisation to create the customer experience they feel is good enough, while others will simply purchase enough to get them through the day and accept that there will be a short peak time where congestion will be present. And then other ISPs will purchase enough to cover even the peak periods of the day to ensure there is little to no congestion whatever over.

I guess the best approach for the user would be for the ISP be to make use of traffic prioritisation, content caching, have ample transit capacity and forcast growth accuratly. Now the ISP just has to pull the coup de grâce and provide the above for less than everyone else to be the new flavour of the month.

So far I've only seen one ISP manage to do this in NZ, and unfortunatly for Xnet it was not sustainable beyond maybe 2 years.

Ragnor

8222 posts

Uber Geek

Trusted

#328339 10-May-2010 03:14

Xnet is/was a sad tragedy from an ex customer point of view.

Back in 07 when performance hit the skidz they had neither PeerApp/Oversi/etc "media" caching, nor were they using transparent web proxy/caching, no google/youtube caching.

I think they had akamai and a steam content mirror (recoil)...however no real traffic management per class/type of traffic. They only brought in different bandwidth pools when they created the torrential plan.

No sure what they have now but we switched our home ADSL from them right before the torrential plan came out as it was obvious it was going to be a disaster without aforementioned stuff in place.

Zeon

3916 posts

Uber Geek

Trusted

#328379 10-May-2010 09:02

I'd say the number 1 reason is Telecom Wholesale. Their backhaul pricing/massive over subscription means its difficult to do things like offer free local traffic which are the transformation which FTTH is touting.

TBH I've said it before but rather than spending 1.5billion on fibre - do something to encourage a competitor to Telecom wholesale who has equipment in every cabinet/exchange and has their own dark fibre for backhaul. It would remove the port problems and the 32kbps Telecom Wholesale CIR could be competed on to the stage where triple play becomes viable.

Speedtest 2019-10-14

ojala

188 posts

Master Geek

#339206 8-Jun-2010 02:51

(I'm still in the process of moving to NZ so I don't know all the glory details..)

Are you saying that the data caps include national traffic as well? Wow! Even back in the days when the international capacity cost diamonds (almost 20 years ago) we didn't charge for national traffic.

There must be some competition at national level? Cartel with the pricing? Incumbent telco's making a joke out of the ISP's and de-regulation? The current technology gets so much out of existing fiber that national NZ capacity shouldn't cost much.

Competition for SXC is expensive for sure but why don't NZ, or even NZ government with their fiber plans, build capacity and competition from NZ to AUS and use the growing capacity in AUS. The competition in AUS seem to be near the point that data caps will be history. Latency is important but higher latency sounds less painful than ancient caps. Data caps are a serious threat to innovation and new services, and will bring the whole IT and ITC industry behind everyone else. What are the government and regulatory efforts to bring the barriers down?

Looking at this map http://manypossibilities.net/african-undersea-cables/ you'll soon get better connectivity in Madagascar.

kyhwana2

2566 posts

Uber Geek

#339323 8-Jun-2010 11:57

ojala: (I'm still in the process of moving to NZ so I don't know all the glory details..)

Are you saying that the data caps include national traffic as well? Wow! Even back in the days when the international capacity cost diamonds (almost 20 years ago) we didn't charge for national traffic.

There must be some competition at national level? Cartel with the pricing? Incumbent telco's making a joke out of the ISP's and de-regulation? ?The current technology gets so much out of existing fiber that national NZ capacity shouldn't cost much.

Yep, even national traffic is included in our traffic caps.

It's mostly because DSL is sold through telecom wholesale, although there are a few big cities that have a few unbundled exchanges, but you'll find ISPs (orcon, vodafone, etc) still have the same data caps even on their ULL offerings.

It's mostly because SXC is the only data pipe in/out of NZ atm and ISP's buy bandwidth through resellers, sometimes being locked into year contracts. (Or at least that's what i've heard elsewhere, not sure how true that is)

freitasm

BDFL - Memuneh
79288 posts

Uber Geek

Administrator

ID Verified

Trusted

Geekzone

Lifetime subscriber

#339327 8-Jun-2010 12:13

ojala: There must be some competition at national level? Cartel with the pricing? Incumbent telco's making a joke out of the ISP's and de-regulation?

There are some national backbones. But the last mile is still a problem. Where TelstraClear has their cable network prices are lower.

ojala: Competition for SXC is expensive for sure but why don't NZ, or even NZ government with their fiber plans, build capacity and competition from NZ to AUS and use the growing capacity in AUS. The competition in AUS seem to be near the point that data caps will be history.

That's what Pacific Fibre is coming for. The problem is that most ISPs contract for months ahead and may be locked for now. Also this is a $700 million investment, and they are in the planning stages, before the money raising point. Perhaps they could have this ready for when ISPs are getting out of their current SXC contracts?

ojala

188 posts

Master Geek

#339626 9-Jun-2010 00:31

Ok. It's quite clear that SXC folks want to keep their profitable business and it goes all the way to the consumer bills. What if Pacific Fibre started with just the AKL/WLG-SYD legs, with NZ government support from the FTTH money? Or NZ government did the new NZ-AUS leg to give the ISP's an option to go directly through SXC, PF, or any of the routes available through AUS.

What is the regulatory view on the charge by the usage on the local loops and buying the DSL access through Telecom Wholesale? Is there a regulator that can actually make things happen?

The capacity from the Wholesale DSLAM's to the core networks cannot be expensive to justify volume charging there.

I'm basicly trying to understand why things don't start to move gradually, it will take time to solve the lack of reasonably priced international capacity, but there shouldn't be any expensive barriers to start things happening at other levels. I liked the idea of cabinetisation to shorten the local loops (what's the quality of local loop cables overall?) but I was a bit worried that "we'll do cabinetisation for the next five years and then do the next step when we're finished". NZ with all it's DIY attitude should be pretty creative, flexible and innovative about these things!

Perhaps someone could also share the light on why it takes years to actually make LLU happen? (Compared to making a price list for rack space at the exchanges and regulator creating some basic requirements for the other telco's so that things stay in control.)
And what's the story behind DSL ports not being available and people queueing for them? If there's more demand than supply, simply install new DSLAM's to match the demand and make business!

simcore

68 posts

Master Geek

Trusted

#339735 9-Jun-2010 11:36

And what's the story behind DSL ports not being available and people queueing for them? If there's more demand than supply, simply install new DSLAM's to match the demand and make business!

Well, this is hypothetical, but if there are only 10 people in an area that have to be on a port waiters list, and the population or potential customer numbers are not growing beyond those already serviced and the remaining ten, installing a new DSLAM to match the demand of the 10 remaining people doesn't come across as a sound business model or investment (unless the government was there to subsidise that)

Reasons could be along those lines.

1 | 2 | 3 | 4 | 5 | 6