Why the Internet access is so expensive?

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188 posts

Master Geek

#342518 17-Jun-2010 01:16

ajobbins: I see seveal issues contributing to cost and speed in New Zealand

1) Population & Population Density - New Zealand is not a particularly (densely) populated country. This drives up costs as you end up running longer cables, having under utilised equipment etc.

It's an issue but there are a lot of countries who have managed to solve it. In fact many small countries have managed to do much better than bigger countries. Smaller countries are supposed to be - and can be - dynamic, fast and flexible.

There is one thing though -- timing. When you one goes the wrong way, you may end up paying the price in the long run. When everyone is already connected, albeit capped and for high price, the competition is very different to a market where everyone is fighting for the same customers at the same time. (Did I say CDMA? ;-)

2) Poor peering

Is this something that the ComCom should enforce? In a small country, with expensive international bandwidth, national peering should be de-facto.

I don't remember seeing any other country the size of NZ with so many peering points, though. Just for comparison, our NZ-sized country has one city iX (just a few local members) and one national IX that is available in three locations (two mandatory (in the same city), one is voluntary). Simple GE or 10GE ports (the biggest ISP's have 2-3 ports per site, Brocade/Extreme), traffic peaks around 25 Gbit/s.

Ragnor: One thing I have found is that local/national performance on Big Time has largely been exceptional. I can max line rate on national traffic even in peak time no worries.

Time to leave the national traffic out from the data cap, right? Cap on the national traffic must have a huge effect on the development of NZ internet services (proven by the fact that TradeMe is the top source of traffic).

I can fully understand why the "Big Time" failed. I know that in the UK they love their plans but in the ICT sector overall the plans have just one function -- to raise the average revenue per user. If one looks at what is happening in other countries, the same size as NZ, the market is moving towards "one size fits all" -- full-rate ADSL or ADSL2+ or 10/10 or 100/10 or something, no caps, a simple monthly fee.

As long as "Big Time" is offered next to the dozen other plans, it will continue to fail. It will attract the "best customers", the customers that already paying the highest price for their access with the existing capped plans. They will use a lot of bandwidth and statistics will never work. To make "Big Time" work they need to drop the cap on the other plans as well to get a mixture of users. Considering the full picture and making transition easier, it might be a good idea to move from capped plans to plans based on speed..

rhy7s

625 posts

Ultimate Geek

#347967 5-Jul-2010 11:55

ojala: Cap on the national traffic must have a huge effect on the development of NZ internet services (proven by the fact that TradeMe is the top source of traffic).

ojala: Considering the full picture and making transition easier, it might be a good idea to move from capped plans to plans based on speed.

You'd think free national traffic would be mandated by government as an initiative to boost home-grown services, and thus make the fibre plans actually useful.

With the increased stratification of service, I'd like a return to speed based plans as I pay the same as ADSL2+ users for a conklin connection.

michaeln

238 posts

Master Geek

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#348016 5-Jul-2010 14:32

New Zealand is an expensive place to cable. It's long and thin. It has lots of mountains. The population centres are scattered all over the place, and are relatively low density---we are not a nation of apartment dwellers.

Trenching in many areas is expensive relative to world-wide norms. In Auckland you've got scoria, which is hard and abrasive. In Wellington you've got greywacke, which is hard, tough, and shatters drills with depressing frequency. The South Island has alluvial soils, which is better, and lower population density, which is worse.

All in all, building access networks in New Zealand costs more than many overseas countries, so comparing just on the basis of size or population density is apt to generate misleading comparisons.

raytaylor

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#348114 5-Jul-2010 18:03

I was just reading somewhere that telcom charges for the ISP's main connection into the telecom dsl network - so they have to pay per customer tail, plus the connection from the telecom network to the isp's office itself. This connection could be where problems happen with giving away national bandwidth for free because p2p will take off again locally.

Are there any local DC++ hubs still running?

Ray Taylor

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ojala

188 posts

Master Geek

#348142 5-Jul-2010 18:40

michaeln: New Zealand is an expensive place to cable. It's long and thin. It has lots of mountains. The population centres are scattered all over the place, and are relatively low density---we are not a nation of apartment dwellers.

Trenching in many areas is expensive relative to world-wide norms. In Auckland you've got scoria, which is hard and abrasive. In Wellington you've got greywacke, which is hard, tough, and shatters drills with depressing frequency. The South Island has alluvial soils, which is better, and lower population density, which is worse.

All in all, building access networks in New Zealand costs more than many overseas countries, so comparing just on the basis of size or population density is apt to generate misleading comparisons.

But still better than comparing to UK and US, I'd think.. but you bring several very good points. Now that cabinetization is half way through, isn't a lot of long-distance digging already done? Is the cabinetization actually benefitting people already, double-triple speeds with ADSL2+ (Where NZ local loops particularly long before?) ? VDSL2 widely available?

Lack of apartment dwellers does bring the local loop and infrastructure costs up for sure. It should also mean that whenever a street is opened, future infrastructure goes in as well. A bit like building a new house with empty cable conduits for future needs -- or to make it easy to replace a cable. Learnt that painfully in our current house..

If you compare the situation to average well funded, educated customer (read: could pay for premium service), how is the situation today compared to what is was three years ago? Five years ago?

CBSYS

133 posts

Master Geek

#352425 16-Jul-2010 19:12

when is the fibre coming to home? want to know how much that would cost?

raytaylor

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#352469 16-Jul-2010 21:22

CBSYS: when is the fibre coming to home? want to know how much that would cost?

It will be over the next 5-10 years.

One of the issues is that so many properties here are based on the quarter acre dream.
So many of our houses are so far away from the road, which means that you could be paying $500+ to get fibre installed. It will also be more expensive than DSL because it is still a premium product.

Digging / trenching crews are expensive.

The only way I can see it getting installed cheap is if the local fibre co offers to send a crew in to install drops into every house in the street over 2 days and did them in big whole lots.

I forget where the telecom ownership stops on their network- i think its the demarc point on the side of your house, and i doubt telecom would open up the ducting to the demarc that existing telephone cables run through on your property.

Ray Taylor

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mgcarley

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Master Geek
Inactive user

#352670 17-Jul-2010 14:19

There are a lot of factors coming in to play here, some of which have been covered in this thread. However, there also seems to be some... laziness... on the ISPs part whereby they've just gone and used the already available Telecom network, instead of building anything new (well... some are now... finally... only about 10 years late).

I'm sitting here on old Telecom copper, I'm 50m from one cabinet and 250m from another cabinet (the one that I'm actually connected to)... my line speed is supposed to be about 16mbit/s, though if Chorus moved me to the new cabinet I could probably get >20mbit/s - my actual download speeds are closer to 12-14mbit/s. I can't complain, but I will :)

Part of the reason our access is so expensive in NZ is similar to the situation in India (where, by chance I happen to own and operate an FTTH ISP).

Firstly, expensive international bandwidth (going by the prices I pay in India, not all too dissimilar from what has been asked of me here)

Secondly, lack of peering. In NZ it's because Telecom doesn't want to peer with anyone, in India, it's because they charge Rs25/NZ$0.80 per GB at the peering exchange (twice the price of international bandwidth), rather than being basically free like it is in NZ, so traffic often goes to Singapore and back even if the other IP is in the same city.

Fiber is definitely not a panacea for the broadband problem in NZ, but it will help a lot because then broadband can finally bypass the Telecom/Chorus copper network and the charges associated with using that. This is partly why even Naked DSL is so expensive and why most providers will give you a discount if you get tolls... the more you buy, the more they save. Phonelines might finally come down to $15-20 a month. I can say that only because I'm building such a service myself.

I would, however, suggest that most of all, international bandwidth prices must come down a lot (or even if they sold in smaller chunks), so that it would be easier for ISPs to provision the bandwidth in the way that they see fit, rather than how it is dictated to them - because most smaller ISPs seem to just pay per GB and resell at a margin.

sbiddle

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#352690 17-Jul-2010 15:26

mgcarley:
Secondly, lack of peering. In NZ it's because Telecom doesn't want to peer with anyone, in India, it's because they charge Rs25/NZ$0.80 per GB at the peering exchange (twice the price of international bandwidth), rather than being basically free like it is in NZ, so traffic often goes to Singapore and back even if the other IP is in the same city.

I'd suggst you have a lot to learn about the NZ market if you're still making statements like that.

Peering or lack of peering happens for many reasons. Telecom certainly do peer with people in NZ.

freitasm

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#352692 17-Jul-2010 15:28

sbiddle:
mgcarley:
Secondly, lack of peering. In NZ it's because Telecom doesn't want to peer with anyone, in India, it's because they charge Rs25/NZ$0.80 per GB at the peering exchange (twice the price of international bandwidth), rather than being basically free like it is in NZ, so traffic often goes to Singapore and back even if the other IP is in the same city.

I'd suggst you have a lot to learn about the NZ market if you're still making statements like that.

Peering or lack of peering happens for many reasons. Telecom certainly do peer with people in NZ.

Telecom New Zealand has 30+ POP for peering in the country. They decided to charge for peering for many reasons - including small ISPs using the free peering as a way to get free national traffic. It's not like they don't peer. They charge for it.

Both myself and Steve Biddle attended a meeting at Telecom where they explained why and how... Interesting things happen in the ISP world.

mgcarley

93 posts

Master Geek
Inactive user

#352739 17-Jul-2010 17:16

sbiddle:
I'd suggst you have a lot to learn about the NZ market if you're still making statements like that.

Peering or lack of peering happens for many reasons. Telecom certainly do peer with people in NZ.

They are the #1 national carrier. Most ISPs rent the last-mile infrastructure from them, and in some cases, international capacity. Others still are more-or-less VISPs. And why is national traffic not free or at least cheap anyway?

All peering costs, no doubt, but how much is the question, and Telecom peering isn't particularly cheap. And have you seen the peering T&C lately??

mgcarley

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Master Geek
Inactive user

#352740 17-Jul-2010 17:19

freitasm:
Telecom New Zealand has 30+ POP for peering in the country. They decided to charge for peering for many reasons - including small ISPs using the free peering as a way to get free national traffic. It's not like they don't peer. They charge for it.

Both myself and Steve Biddle attended a meeting at Telecom where they explained why and how... Interesting things happen in the ISP world.

I can deal with a couple-grand a month per GigE link - that's what everyone else charges. But I can't substantiate much more because in reality it's not really going anywhere.

Using India as an example, if you peer at NIXI you basically have to have some international capacity of your own anyway and so on.

Zeon

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#352749 17-Jul-2010 17:35

mgcarley:
sbiddle:
I'd suggst you have a lot to learn about the NZ market if you're still making statements like that.

Peering or lack of peering happens for many reasons. Telecom certainly do peer with people in NZ.

They are the #1 national carrier. Most ISPs rent the last-mile infrastructure from them, and in some cases, international capacity. Others still are more-or-less VISPs. And why is national traffic not free or at least cheap anyway?

All peering costs, no doubt, but how much is the question, and Telecom peering isn't particularly cheap. And have you seen the peering T&C lately??

Telecom have been split into 3 companies who operate independently by the government of NZ:

Chorus: maintain the lines and physical infrastructure of the network including copper, fiber, Exchange buildings & cabinets (I think?). They however do not have any network gear that is attached to those lines

Telecom Wholesale: provide all ISPs including Telecom with networking equipment which is connected to Chorus' fiber/copper. Virtually anyone is allowed to compete with Telecom wholesale and has been encouraged to do so by LLU. However as it turns out the economies of running against them with only a small user base is near impossible. Thus virtually all ISPs use Telecom wholesale to provide port access and backhaul to their closest POP

Telecom Retail: Sell consumer level connections which provide internet access, phone services etc.

So lets in most instances its:

Chorus Lines -> Telecom Wholesale -> ISP

e.g.

Chorus Line -> Telecom Wholesale DSL -> Telstra internet
Chorus Line -> Telecom Wholesale DSL -> Orcon internet
Chorus Line -> Telecom Wholesale DSL -> Telecom Retail internet

but with LLU, people don't have to use Telecom wholesale (although most do as it doesn't make financial sense to put equipment in much of the country unless they get large market share which won't happen). Anyway you could have

Chorus Line -> Vodafone DSL -> Slingshot internet
Chorus Line -> Vodafone DSL -> Vodafone internet

It seems stupid for all ISPs to duplicate last mile infrastructure which is why Chorus was moved to being an independent entity. In fact with NZ's FTTH scheme there will only be a single "physical line" network run at any single physical location bar a few competing networks such as wireless, in some places other carrier's fibre etc. The fact that virtually ever ISP uses Telecom wholesale to provide backhaul/ports at the moment also shows that even providing your own equipment to connect lines into your company isn't worthwhile.

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ojala

188 posts

Master Geek

#352830 17-Jul-2010 22:41

It seems stupid for all ISPs to duplicate last mile infrastructure

Exactly.

.. however, considering the earlier remarks about 32 kbit/s per subscriber allocations and lack of working competition, the scheme isn't working too well right now.

A common, low level last mile infrastructure is a great idea when it works -- your x Mbit/s bandwidth is x Mbit/s up to the ISP, you will get the line installed in a few days, and the technology is kept updated.

NZ Government has split the Telecom but who is making sure that the split is actually working?

Over here if you order an ADSL line, you will receive a SMS text message saying that the estimated delivery date is d.m.y. On that date you will receive another message saying that the line has been connected, please connect the DSL modem to it -- which you have received by mail if it comes with the ADSL service. The whole process takes from a few days up to a week. The process in the background is made to match the majority of installations that can be done fast (at the exchange/cabinet) and without installer visiting the customer.

In smaller cities the wholesale model is in works, or there are couple of carriers with their own DSL infrastructure. In the bigger cities there are 3-6 carriers with their own DSL equipment. There are some differences in the offerings, not everyone is offering VDSL2, Annex.M on ADSL2+, or bonding two ADSL2+ lines or something other than the basic ADSL2+ rates.

mgcarley

93 posts

Master Geek
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#352848 18-Jul-2010 00:02

There are both good and bad sides to the argument for a single line (copper or fiber) running in to each premises. Generally speaking, in many areas there is nothing overly wrong with the last-mile copper, although the same is not without it's complaints.

For: The infrastructure stays "clean" and presumably, fairly well maintained.

Against: The lack of choice or competition caused a lower-limit to pricing because the copper is controlled by a single private entity. NZ missed out on having cable TV and cable Internet as is available in many other countries which is a perfectly acceptable delivery method in my experience - and cable modems being little more than media converters are cheap to provide and usually support automatic provisioning.

Against: Without installing their own equipment in the cabinet, consumers in some areas will experience services which are below par as compared to other areas. Vodafone is the perfect example. The Red Zone is only available in Auckland, Wellington and Christchurch - anywhere else, you're stuck with non red-zone and therefore 128kbit/s upload which in turn limits the line speed to about 4-5mbit/s (as was the case with my parents house). The story I got from Vodafone is that they are not *allowed* to install equipment in the new cabinets. Of course, such things are to be taken with a grain of salt. By contrast, Telecom, Orcon, Maxnet and Xnet were all able to provide FS/FS ADSL2+ connections allowing the line to operate now at somewhere between 12 and 14mbit/s - and my mother enjoys the noticably faster upload speed when she's uploading photos to Trademe and Facebook.

I agree with the fact that duplication of last-mile infrastructure doesn't make sense, but the fact that for the most part, new infrastructure was squahed back in the Saturn days - as I understand it, by Telecom - and never became widespread for either TV or Internet. I think that if a cable network were available utilizing the DOCSIS standards, we might well have already achieved the 100mbit/s milestone and we could concentrate purely on bringing the cost of data down.

Judging by my own running around talking to Chorus, my old ISP, my new ISP and Telecom, I might hazard to guess that the split is a little bit... anti-consumer? Chorus shifts the blame to the ISP, the ISP shifts the blame to Chorus, who claim they aren't part of Telecom.

Chorus advertises both on TV and in Google ads, appearing to the average joe to be some new FTTX ISP, when in reality, they are more-or-less just a network operator but they can't really help you if you want to get connected (either as a consumer or a service provider) - please call Telecom or whoever, and in reality, there are something like 12 neighbourhoods in all of NZ with FTTH and chances are, you don't live there.

In that respect, it more or less creates an illusion that things are being done, when really, things are barely being brought up-to-speed by world-standards. But average joe has no idea about any of this, will likely get frustrated and just call Xtra, Telstra, Vodafone or Orcon to get an overpriced broadband plan which will be either way too much (and thus too expensive) or way too little (because as it turns out, average joe downloads some tunes now-and-then or subscribes to podcasts or something).

I may appear biased. Maybe I am a little bit... but I understand both sides of the argument - good clean infrastructure is infinitely more beneficial than a birds nest of wires, but consumers need a choice, and at the end of the day, with a single entity controlling all the copper *and* more or less monopolizing the international bandwidth market... it's not really there as much as we may have been led to believe.

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