How to make NZ internet better, cheaper and with bigger caps.

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#542857 8-Nov-2011 21:55

Kordia have been trying to raise funding for NZ leg of PIPE
Pacific Fibre have been raising funding to build their cables

If SXC is overpriced and a cash cow, surely these cables would of had a solid business case and been built by now?

DonGould

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#542871 8-Nov-2011 22:39

Ragnor: Kordia have been trying to raise funding for NZ leg of PIPE
Pacific Fibre have been raising funding to build their cables

If SXC is overpriced and a cash cow, surely these cables would of had a solid business case and been built by now?

Agreed. But the problem is risk. The problem as I see it is that there isn't currently a second/third last mile solution that is independent enough of the carriers to give funders some security they need to ensure they can get capacity to customers.

The problem with the DSL network is that Telecom could cut a deal with ISPs for international capacity with national transit and tails. Sure, ComCom may dummy spit, but it doesn't reduce the risk perception currently.

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DonGould

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#542872 8-Nov-2011 22:43

37. Set up free wifi for your staff in the supermarket tea rooms - get people using more internet all day and in turn they'll use more all day when they're not at work. Give them tablets. Inspire them to learn something, anything, while they're at work... get them using YouTube to learn something.

We need to get focused on making the net free and easy to use anywhere you sit down. Even the local fish and chip shop should have free nets.

Yes, I know that it's not free to deliver, but the more people use the net the more it drives out IT market place. So making more access free means that we can then grow more of the commerical market place.

38. Stop buying the news paper!!! Stop buying any publication on a bit of paper. Don't even pick it up. Don't read it. Just say NO!!!

We don't use telex machines any more or send telegrams. We don't use horse and cart either. At some point we just have to say no to paper and go digital. Every cent we spend on paper is a cent we should be putting in to the digital space to pay for more capacity.

Put a no junk mail sign on your letter box. Say no to community news papers. Read their content on line on a tablet.

39. Get involved in industry regulation.

As a consumer, do as much as you can to understand the regulatory space and push back in a positive way. The more we empower regulators to do useful things the more useful stuff they will put out there.

Many teleco people hate regulators and some love them.

To the guys who don't like regulators, I invite you to present what positive things are happening that mean we need less regulation. Win consumer support with good actions.

40. Use your unmetered sites as much as you possibley can

It has been argued that the current barrier to larger caps is the ability to move data nationally. Even if providers buy more capacity from SXC, they can't move it to you... ok... so now most of us have some free sites, so we need to use them to drive up national use so that our 20% international traffic becomes 20% of 1tb not 20% of 10GB.

41. Stop using wires. Use wireless as much as you can.

There are only two companies with wires currently and they're both carriers.

Air is free. Look for wireless solutions, even for your fixed solutions. The technology just keeps getting better and better. Use it. In may cases it's now faster than the wired solutions and cheaper.

42. Never sign for more than 12 months!

Market prices change every year. There's always Christmas deals. Don't tie yourself in for more than a year.

Make providers retain your business by giving you more value more often.

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lucky015

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#542873 8-Nov-2011 22:44

Ragnor: Kordia have been trying to raise funding for NZ leg of PIPE
Pacific Fibre have been raising funding to build their cables

If SXC is overpriced and a cash cow, surely these cables would of had a solid business case and been built by now?

I'm inclined to wonder if the reason behind the lack of competitors in the market is not actually due to lack of potential profits but rather due to there being no possibility of certain companies buying their services due to things like Telecom ownership of SXC and various other restrictive long term business deals already signed.

Also I would expect a lot of the problems with raising funding for a new cable would be due to lack of interest in investments in new developments in NZ in general, Especially for something in the Billion dollar range with potential delays in returns and a large number of environmental and legal hoops to jump through across multiple countries and states...

DonGould

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#542876 8-Nov-2011 22:51

lucky015: Especially for something in the Billion dollar range with potential delays in returns and a large number of environmental and legal hoops to jump through across multiple countries and states...

PPC-2 is only a $60m investment.

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#543217 9-Nov-2011 16:32

DonGould:
lucky015: Especially for something in the Billion dollar range with potential delays in returns and a large number of environmental and legal hoops to jump through across multiple countries and states...

PPC-2 is only a $60m investment.

That's AU-NZ though isn't it? I'd say there would be a lot of hesitation from everyone about bulk traffic being routed through AU, I'd expect a lot of potential for undercutting and it would be preferred for secondary traffic only and also battling with the existing and probably fairly underused (As it has primarily unused backup capacity) SXC AU-NZ capacity.

Ragnor

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#543359 9-Nov-2011 21:40

lucky015:

I'm inclined to wonder if the reason behind the lack of competitors in the market is not actually due to lack of potential profits but rather due to there being no possibility of certain companies buying their services due to things like Telecom ownership of SXC and various other restrictive long term business deals already signed.

Ok first Southern Cross Cable not part of Telecom, it's a separate company which is ~50% owned by Telecom with Singtel owning ~40% and Verizon owning ~10%

Secondly SXC is the transmission from NZ/AU to US... you need interconnection/peering/backhaul at each end with other providers and cables which SXC doesn't provide.

ISP's in NZ have the choice of buying from:
Vocus, Pacnet/Asianetcom, Verizion, Orcon's transit company (forget what it's called), Telecom GGI, Reach (Telstra) which provide a transit service using SXC with interconnection at the ends.

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Ragnor

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#543362 9-Nov-2011 21:42

lucky015: probably fairly underused (As it has primarily unused backup capacity) SXC AU-NZ capacity.

NZ'ers are primarily consuming US content not AU content. Additional AU-NZ links may not really help reduce end user pricing and definitely wouldn't help performance (NZ > AU > US) vs NZ > US).

SXC pricing for AU - US is the same as NZ - US.

What we really need is pacific fibre, which looks to be proceeding well with getting funding and signing founding users.

http://pacificfibre.net/news/

lucky015

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#543369 9-Nov-2011 21:48

Ragnor:
lucky015: probably fairly underused (As it has primarily unused backup capacity) SXC AU-NZ capacity.

NZ'ers are primarily consuming US content not AU content. Additional AU-NZ links may not really help reduce end user pricing and definitely wouldn't help performance (NZ > AU > US) vs NZ > US).

SXC pricing for AU - US is the same as NZ - US.

Yeah, My point is that there's a lot of unused capacity sitting there which could be utilised for NZ to AU at will because it exists as a backup path to the US via AU should the standard NZ-US path fail.

DonGould

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#543371 9-Nov-2011 21:52

Ragnor:
lucky015: probably fairly underused (As it has primarily unused backup capacity) SXC AU-NZ capacity.

NZ'ers are primarily consuming US content not AU content. Additional AU-NZ links may not really help reduce end user pricing and definitely wouldn't help performance (NZ > AU > US) vs NZ > US).

SXC pricing for AU - US is the same as NZ - US.

What we really need is pacific fibre, which looks to be proceeding well with getting funding and signing founding users.

http://pacificfibre.net/news/

What we really need is both.

A duopoloy isn't going to help.

We had VF and T for years... how did that pan out? Then we got 2D... how's that panning out?

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#543382 9-Nov-2011 22:06

DonGould:
Ragnor:
lucky015: probably fairly underused (As it has primarily unused backup capacity) SXC AU-NZ capacity.

NZ'ers are primarily consuming US content not AU content. Additional AU-NZ links may not really help reduce end user pricing and definitely wouldn't help performance (NZ > AU > US) vs NZ > US).

SXC pricing for AU - US is the same as NZ - US.

What we really need is pacific fibre, which looks to be proceeding well with getting funding and signing founding users.

http://pacificfibre.net/news/

What we really need is both.

A duopoloy isn't going to help.

We had VF and T for years... how did that pan out? Then we got 2D... how's that panning out?

I don't know if 2D has really done that much for the Mobile market, They have pushed things along a bit but they haven't really changed thing all that much...

kyhwana2

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#543485 10-Nov-2011 09:30

lucky015:

I don't know if 2D has really done that much for the Mobile market, They have pushed things along a bit but they haven't really changed thing all that much...

The prices for data and prepay calls/txts has certainly come down, thanks to 2ds..

Fraktul

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#543509 10-Nov-2011 10:03

Many of your points come back to the same premise - more users using more data will result in lower prices.

That is simplistic and just not true, the same economies of scale of producing widgets for the widget manufacturer does not apply to the cost elements of broadband service provider. Your cost per GB may come down but your average users total cost of their broadband service is not going to decrease in some sort of linear relationship to the increase in their usage as they are consuming more GBs.

The relationship between a service providers subscribers base usage profile and their cost of providing is complex due to the many cost elements which are not identical for each service provider. The service providers tariff structure also comes into play as service providers use this to maximise margins, market share and other organisational goals.

DonGould

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#543550 10-Nov-2011 11:01

Fraktul: Many of your points come back to the same premise - more users using more data will result in lower prices.

Yip, you've got it.

Fraktul: That is simplistic

Yip, you've sumerised it in very simple terms.

Fraktul: and just not true,

Also agreed (as strange as that might sound).

When you attempt to take my 40 odd point and simplify it down to 10 words then you've suddenly lost so much resolution that the simplification is just untrue and doesn't stand on its own merit.

The mistake here is to try and over simplify the answer.

As you rightly point out, it's complex, there are many many factors and anyone with any real clue on the subject could see that there are lots of issues I haven't really touched based on or explained very well - a point you eluded to I think, and you're right.

If you want to talk in terms of a widget factory...

If we design a new spade to replace an old model, it costs us $1,000,000 in development, we have 1000 potential customers, the spade cost has to be $1000, just to recover costs. If 500 customers just replace their spade with the one from the guy who's making the old spades still, then our cost has to be $2,000 per spade. If only 100 people replace a spade every year then it will take 5 years to recover our development cost, so we need to factor some interest charges on borrowings, say $500 per spade, so our cost is now $2,500. If we want to make 20% margin then our spade cost goes up to $3,000 per spade. If we want to allow for CPI then our spade price starts at $3k but will be $3,500 after 5 years.

But we just can't compare spades with BB because as I'm sure you'll agree there are just way to many other factors that impact our price... even if we factor these...

1. We'll reuse the spade handles on 20% of the spades --> price down by $20 per spade
2. We'll recycle the iron from the 100% of the old spades --> pride down by $100 per spade

But what I'm mostly arguing here is that we need to focus on getting 800 people using the new spades and stop using the old spades and upgrading them.

What I'm also arguing is that keeping the old spades in service is meaning twice the resource has to be maintained, which costs a lot of money for a small country such as New Zealand.

People keep bashing on about how fantastic NEAX exchanges are, for example. Never have a read anywhere any costs for keeping one running. What does a tech cost who knows how to manage all the systems on that platform? Hence why I talk about moving away from old POTS/PSTN.

Never do I read about what field techs cost to fix cables. Earlier in the year I watched while 4 guys fixed 85 pairs, over 4 days, that service 1 customer with 2 pair.

If that customer was all "IP" then I could have just moved him from one network to another and just abandoned the damaged 60 year old network.

Sure, it gave those guys a job for 4 days, but we would have been better investing in putting conduit down while we had the road open and pulling a new fibre in and it could have been done faster.

Yes, there are many complex reasons why costs are high and I've only touched on a very few.

The motivation in this thread is to highlight issues and average joe can think about and relate to that might help improve things as well as draw out some of the issues such as you've highlighted. :)

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DonGould

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#544429 11-Nov-2011 22:42

insane: Yup, please follow Don's advise, ISPs love selling you data (up to a point), it's once of the only areas an ISP can make some margin so go hard!

ISPs making profit is really important to bringing down the costs, improving services and getting bigger data caps.

Having a good range of vibrant ISPs that are making money means that they'll compete with each other by installing new faster equipment that empowers better service delivery and more data, in my view.

insane: The reason we're slowly seeing larger data caps now being implemented is nearly solely down to increased caching of international content and the removal of the handover limits previously imposed on ISPs. The price of international bandwidth does have some part to play, but honestly not as much as you'd think.

Totally agree with those comments.

The problem with telecommunications is we're paying for way to many legacy systems...

* POTS/PSTN
* ISDN
* DSL
* Fibre

We're using way to much infrastructure - fax lines being just one example.

We're all paying the price to keep those old exchange buildings in the suburbs running.

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