Why the Internet access is so expensive?

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#339786 9-Jun-2010 13:45

Lol speaking of expensive - just got a quote from ICONZ on international bandwidth (prices per month excl. GST):

128k (2 Channels) will be $200 per month

256k (4 channels) will be $400 per month

512k (8 Channel) will be $800 per month.

Speedtest 2019-10-14

crazed

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#340070 10-Jun-2010 08:33

Just for those comparing Phone prices etc with overseas, here is an example of current prices for phone services in California, US. Prices are USD

And DSL Prices:

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Byrned

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#340089 10-Jun-2010 09:45

Why oh why do we keep on comparing ourselves to overseas countries and expect things to be the same? As has been discussed in this thread any many others, one of our costs (which is not insignificant) is the cost of getting the data here. At the very least compare us to someone with a similar geographical disposition. Australia is probably the closest in rough terms i.e. distance, type of data.

Having a look at Telstra (ok, not the cheapest, but it makes for an easy baseline) a FS/FS 2GB plan is approx. AUD$20 per month, or roughly NZ$25. Or, their 25GB plan is AUD$60 per month, or roughly NZ$75 per month. So we're not too far off here. Plus you'll need to add a calling package on top of this to get these prices.

Calling packages are a little more difficult to compare, as they don't have anything like the kiwishare obligation where they have to have free local calls. Budget homeline is approx. NZ$26 per month plus approx. NZ$0.40 per local call. Or for a plan that compares roughly to Telecom's Anytime plan, approx. NZ$60 per month.

So, in conclusion, for a package that is similar to Telecom's Totalhome in Aus, you would be paying NZ$110.

And the costs of doing this interweb thing aren't getting any cheaper with demand for data, and how we use it going up and changing significantly. Video is set to replace P2P as the bulk of IP traffic, but P2P is slowing down, its just that video is growing faster. So we want our torrents to come down fast, whilst not interfering with our youtube, and I want to pay half the amount. Oh, and I want more of it!

Lets try to compare apples with apples, or at the very least, fruit with fruit.

ronindanbo

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#340099 10-Jun-2010 10:05

Byrned: Why oh why do we keep on comparing ourselves to overseas countries and expect things to be the same? As has been discussed in this thread any many others, one of our costs (which is not insignificant) is the cost of getting the data here. At the very least compare us to someone with a similar geographical disposition. Australia is probably the closest in rough terms i.e. distance, type of data.

Having a look at Telstra (ok, not the cheapest, but it makes for an easy baseline) a FS/FS 2GB plan is approx. AUD$20 per month, or roughly NZ$25. Or, their 25GB plan is AUD$60 per month, or roughly NZ$75 per month. So we're not too far off here. Plus you'll need to add a calling package on top of this to get these prices.

Calling packages are a little more difficult to compare, as they don't have anything like the kiwishare obligation where they have to have free local calls. Budget homeline is approx. NZ$26 per month plus approx. NZ$0.40 per local call. Or for a plan that compares roughly to Telecom's Anytime plan, approx. NZ$60 per month.

So, in conclusion, for a package that is similar to Telecom's Totalhome in Aus, you would be paying NZ$110.

And the costs of doing this interweb thing aren't getting any cheaper with demand for data, and how we use it going up and changing significantly. Video is set to replace P2P as the bulk of IP traffic, but P2P is slowing down, its just that video is growing faster. So we want our torrents to come down fast, whilst not?interfering?with our youtube, and I want to pay half the amount. Oh, and I want more of it!

Lets try to compare apples with apples, or at the very least, fruit with fruit.?

+1

I would add that we are doing pretty darn well considering we cant really compare Aus to here because of the economies of scale.

crazed

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#340131 10-Jun-2010 11:38

Byrned: Why oh why do we keep on comparing ourselves to overseas countries and expect things to be the same? As has been discussed in this thread any many others, one of our costs (which is not insignificant) is the cost of getting the data here. At the very least compare us to someone with a similar geographical disposition. Australia is probably the closest in rough terms i.e. distance, type of data.

Having a look at Telstra (ok, not the cheapest, but it makes for an easy baseline) a FS/FS 2GB plan is approx. AUD$20 per month, or roughly NZ$25. Or, their 25GB plan is AUD$60 per month, or roughly NZ$75 per month. So we're not too far off here. Plus you'll need to add a calling package on top of this to get these prices.

Calling packages are a little more difficult to compare, as they don't have anything like the kiwishare obligation where they have to have free local calls. Budget homeline is approx. NZ$26 per month plus approx. NZ$0.40 per local call. Or for a plan that compares roughly to Telecom's Anytime plan, approx. NZ$60 per month.

So, in conclusion, for a package that is similar to Telecom's Totalhome in Aus, you would be paying NZ$110.

And the costs of doing this interweb thing aren't getting any cheaper with demand for data, and how we use it going up and changing significantly. Video is set to replace P2P as the bulk of IP traffic, but P2P is slowing down, its just that video is growing faster. So we want our torrents to come down fast, whilst not interfering with our youtube, and I want to pay half the amount. Oh, and I want more of it!

Lets try to compare apples with apples, or at the very least, fruit with fruit.

I completely agree, don't get me wrong here, I only posted those images just to give an example of US pricing for DSL and Phone services, because people seem to think we should be trying to match those prices. The simple fact is we can't, for several reasons.

I too actually think we are doing rather well, cost wise, my only grump is that companies don't seem to be competing with each other, like how it was sold to the public by the government.

CraZeD,
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Byrned

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#340163 10-Jun-2010 12:57

I don't think the current environment that we have is conducive to competition.

1. Margins are tight because of ever increasing demand for cheaper prices and better interwebs.
2. If you try to innovate and expand you are hit with regulation that works in favor of those that sit around and complain.
3. And the market is effectively controlled by 1 company because of point 2.

I think a major problem for NZ is that we don't have a firm 10 - 20 year plan for communications. Regulate the heck out of everything if you think you need to but put it in place now, let them know what it'll be in 3, 5, 10 yrs time.

I certainly wouldn't buy a dairy if the government had shown that it may or may not, depending on the whim of the people, tell me how much I could charge for milk. Extreme example but it serves in making the point clear. Who'd want to be a (major) telco these days?

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Ragnor

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#340207 10-Jun-2010 14:10

You only have to look to Singapore to see a small country with a decent plan.

We should really be looking at what they are doing (in many areas like health and education not just telecommunications) and adapting their approach for our market (ie: we have lower population density).

ronindanbo

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#340212 10-Jun-2010 14:22

Ragnor: You only have to look to Singapore to see a small country with a decent plan.

We should really be looking at what they are doing (in many areas like health and education not just telecommunications) and adapting their approach for our market (ie: we have lower population density).

Singapore had the benefit of being a Police state therefore could enact groundbreaking policies without political opposition, thier standing in Information Technology was earned over a matter of about 30 years. In the 80's they identified thier current main market of shipping as not being enough to carry them through to the future so they instigated a government driven plan where they did everything from instigate IT curriculums in thier schools from an early age to the govenrment building the infrastructure to souit costing billions of Sing.

The thing they had in thier favour was a considerably compact country therefore the infrastructure buy was manageable, vast monitary resources from being a shipping hub in the indian pacific ocean area and a fully regulated and restricted market.

These reasons are why NZ will never be able to emulate the Singapore succes story, for one thing we are a democracy and have a welfare state(which works against us, EVERYONE in Singapore is expected to pull thier own weight), we only have the farming dollar behind us and if we continue to have that as a major contributor to our GDP as (well as a political influence) we will never get anywhere, and above all we have an open market where overseas competitors call the shots.

Nice thoughts though

Byrned

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#340225 10-Jun-2010 14:43

Maybe what we should be focusing on as a country then is getting the major centers infrastructure in place, and leave the rural markets for 5 - 10 years; fill them in later? Perhaps subsidise a satellite or wireless solution in the mean time, but focus on getting the majority of the population to where it should be.

A bit like the Freeview proposition... but then I guess that the farmers will complain that their cows can't stream youtube clips properly!

Ragnor

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#340246 10-Jun-2010 15:29

ronindanbo:

Singapore had the benefit of being a Police state therefore could enact groundbreaking policies without political opposition, thier standing in Information Technology was earned over a matter of about 30 years. In the 80's they identified thier current main market of shipping as not being enough to carry them through to the future so they instigated a government driven plan where they did everything from instigate IT curriculums in thier schools from an early age to the govenrment building the infrastructure to souit costing billions of Sing.

Having visited several times and having good friends living and working for many years (both ex-pats and locals) there I don't agree with such a broad sweeping statement.

Well whether Singapore is a police state is a really an argument for a whole other thread though!

ronindanbo:

The thing they had in thier favour was a considerably compact country therefore the infrastructure buy was manageable, vast monitary resources from being a shipping hub in the indian pacific ocean area and a fully regulated and restricted market.

They have higher population density for sure, no dispute there.

They are spending about 1 billion per year for 10 years to achieve their iN2015 plan/goals.

For comparison here's what we spend on welfare in one year (2008):

Total welfare spend on benefits: $11,908,084,000.
- Super $7,571,533,000
- Invalids $1,245,464,000
- Widows $72,797,000
- Sickness $652,576,000
- Orphans $80,966,000
- Veterans $140,686,000
- Unemployment $508,334,000
- DPB $1,635,728,000

Lets not even look at the other areas/holes the NZ government is throwing money into (health, eduction, special interests etc).

I'm sure we can find a spare 1 billion per year for critical infrastructure for that we're going to use for the next 50 years, no?

oxnsox

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#340262 10-Jun-2010 16:02

The question "Why the Internet access is so expensive" is far simpler than the answer, because the answer is a mix of all the issues folks have highlighted here.

Firstly lets not forget that with every company involved in the process, who or wherever they are, it's about them running a profitable business into the future, the cuddly days of providing any service because it's something we need are long gone. Welfare state or not.

Beyond that in no particular order, it makes sense to have another fibre coming/going from NZ whether just to Oz or from America. If for no other reason than to provide a redundancy option should the sxc fault. (And of course it'll give the ComCom another com. issue it deal with.)

But before that, and to improve user pricing, it would make sense for Chorus to be broken off from TCNZ and be enabled as an independent infrastructure provider. New Zealands diverse topography and distributed small population base mean that the legacy copper networks are expensive to maintain. Replacing them with modern technologies is no low cost option either... there is no real win-win scenario, it's simply the cost and maintenance of the infrastructure. If anything should be in public ownership it's the backbone.

This doesn't prevent other players from investing in their own network infrastructure options, but it would enable a stable structured platform, in terms of technology and cost from which they could launch their platforms. It would also remove many of the smudged lines of responsibility associated with 'the last mile', 'cabinets', 'equipment colocation' and the Commerce Commission. And getting rid of the time wasting litigious side of the ledger gives the players more profit to either invest in performance improvements or compromise for the benefit of lowing costs to the customers

With another offshore cable the incoming Fibre options available to local ISP players should allow competition for bandwidth and routes. It may allow new pricing opportunities to be developed based not just on bandwidth but also on route times and perhaps location. Hell we may even be able to offer more Hosting options locally, as a diversity option for offshore users??? (Though in these shakey isles that may not be a realistic 'option' to put into the justification planning for a new cable.)

With more transparent pricing on the inland side, thru Independent Chorus, we should see direct price improvements to the users and a general improvement of locally available speed options as the infrastructure isn't curiously bent to the advantage of major players. It should also allow for improvements in backhaul provisions for Cellular operators enabling faster speeds, lower costs, and user enhancements on their networks. Certainly it would remove the ability for operators to spin their own network limitations into some disassociated reliance on each others network.

But having said all that, with most of the content we access based at the other end of the ocean, and that not really likely to change, we will always be an expensive bit of distance away from wherever the data is. And we're a relatively small population to solely justify the expense of expansion on. But put us part way down a new pipe from USA to Oz, that offers speed advantages to those big players at each end of the cable, and we'll be able to quietly take advantage of their benefits. Bring it on.

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ojala

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#340353 10-Jun-2010 18:38

Byrned: Why oh why do we keep on comparing ourselves to overseas countries and expect things to be the same? As has been discussed in this thread any many others, one of our costs (which is not insignificant) is the cost of getting the data here. At the very least compare us to someone with a similar geographical disposition. Australia is probably the closest in rough terms i.e. distance, type of data.

Personally, I'd prefer an approach "we want this, how do we do it?" compared to "let's compare ourselves to X, they don't have it either". We see the latter a lot here in Europe, there's always another european country that is worse. Not to say that the geographical location isn't a big issue, it is.

Looking at the new fiber coming into Australia, I'm very surprised if capped internet access will not be history there in the next 18-24 months.

Even if one compares the different countries in Europe, packed next to each other with more than humanly possible fiber everywhere, there are huge difference in availability, performance, and pricing for Internet access. It's not that many years ago when we used to joke to our friends living in the UK about their data caps. The differences are huge -- and mean that there's a lot more behind getting the uncapped, as fast as reasonable internet access than just the location and market size. NZ seems to have gathered many of these obstacles with no clear plan how to solve them.

NZ needs to get the competition working for itself. It will not give rural areas and small town much of options but it will work for the bigger cities and thus benefit all. The farmer in France, US, UK or any other country, small or big, doesn't really have many options either.

ronindanbo

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#340520 11-Jun-2010 08:27

Ragnor:
ronindanbo:

Singapore had the benefit of being a Police state therefore could enact groundbreaking policies without political opposition, thier standing in Information Technology was earned over a matter of about 30 years. In the 80's they identified thier current main market of shipping as not being enough to carry them through to the future so they instigated a government driven plan where they did everything from instigate IT curriculums in thier schools from an early age to the govenrment building the infrastructure to souit costing billions of Sing.

Having visited several times and having good friends living and working for many years (both ex-pats and locals) there I don't agree with such a broad sweeping statement.

Well whether Singapore is a police state is a really an argument for a whole other thread though!

ronindanbo:

The thing they had in thier favour was a considerably compact country therefore the infrastructure buy was manageable, vast monitary resources from being a shipping hub in the indian pacific ocean area and a fully regulated and restricted market.

They have higher population density for sure, no dispute there.

They are spending about 1 billion per year for 10 years to achieve their iN2015 plan/goals.

For comparison here's what we spend on welfare in one year (2008):

Total welfare spend on benefits: $11,908,084,000.
- Super $7,571,533,000
- Invalids $1,245,464,000
- Widows $72,797,000
- Sickness $652,576,000
- Orphans $80,966,000
- Veterans $140,686,000
- Unemployment $508,334,000
- DPB $1,635,728,000

Lets not even look at the other areas/holes the NZ government is throwing money into (health, eduction, special interests etc).

I'm sure we can find a spare 1 billion per year for critical infrastructure for that we're going to use for the next 50 years, no?

You may have visited there but some of us have lived there AND have relatives who live there, AND have a relative who goes there regularly to work on high profile Tech jobs AND had do do a dissertation on Singapores Tech aspirations (primarily because they lived there), yes the statement is general but dosent make it false.

As for the extra billion a year, you will find that is tagged for more critical spends like windfarms. Our government also has a standing policy to borrow to build infrastructure under the premise that the cost should be spread out over a number of generations of New Zealanders as users of the infrastructure.

raytaylor

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#340728 11-Jun-2010 17:40

I say scrap fibre to the home in the suburban areas - let it be rolled out into business areas and rural backhaul.

That 1.5billion should be invested into pacific fibre.

Why would we want to bother with delivering super fast last mile broadband when there are bottlenecks up the line like international capacity that need expanding - through cheaper wholesale costs.

Our ISP's cant even deliver speed anywhere near our DSL line rates to most of us, so after getting fibre to the home, its pretty much going to be the same.

Ray Taylor

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insane

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#340826 11-Jun-2010 22:57

raytaylor: I say scrap fibre to the home in the suburban areas - let it be rolled out into business areas and rural backhaul.

That 1.5billion should be invested into pacific fibre.

Why would we want to bother with delivering super fast last mile broadband when there are bottlenecks up the line like international capacity that need expanding - through cheaper wholesale costs.

Our ISP's cant even deliver speed anywhere near our DSL line rates to most of us, so after getting fibre to the home, its pretty much going to be the same.

I dissagree, we need to fibre to the node/home to replace the old aged infrustructure which will only become harder to maintain. Its one of those do it now for x$ billion or later for xx$ billion.

Pacific fibre.... the truth is that while international bandwidth is a fair bit more expensive than international bandwidth and very expensive on a global scale, its certainly not driving ISPs into bankrupcy. If an ISP is short on bandwidth it is by choice or poor DSL plan option planning, not on price or availability alone, not at this stage at least.

The last mile and backhaul in the country is a lot more congested than many will like to admit. Even with the low 32bkps backhaul per user limits there are areas where congestion is a problem/becomming a problem with all the extra cabinets being installed. Simply removing this limit or raising these dsl backhaul per user limits will cause all manner of pain for everyone if the network is not robust enough to handle the ever increasing amounts of data being consumed. Every DSL user only needs to use 10GB per month on average to completly saturate their ISPs DSL backhaul.

Fix the backhaul and last mile networks and the ISPs will be forced to invest to provide services over this.

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