Statistics and ARPU, average revenue per user. And if you go from 100 Mbit/s to 1 Gbit/s, you don't 10x your costs. A lot of costs in ICT don't grow linearly.
Back in the early 90's when dial-up was the king we had a pricing scheme where you paid per minute to access the Internet, like everywhere else. We had something like a 15 nzd/month minimum charge, if you used less you would be charged 15 nzd anyway.
Looking at the usage as a whole, we could have had a flat rate around 20 nzd/month, slightly above the median. A lot of people paid the minimum, many people paid slightly above and a small portion paid a lot. With the flat rate the usage would have increased perhaps 25% but the flat rate would also have attracted new users to compensate. Bandwidth and everything else was damn expensive that time but the math would still have worked, our revenue would have been the same or most likely, higher. However there are a huge number of examples where simplified, less restrictive pricing actually increases both the revenue and profit.
NZ most definetly does have a chicken and egg problem. Telecom's Go starts from 41 (+10 ?) nzd/month and goes up from there, double the price and you have 10x data cap. I guess get an average of 55 nzd/month from their customers, many pay less, some pay more but that's the average. If they introduce a flat-rate at 70 nzd/month, none of the customers with lower fees move to it. A lot of customers from the above 70 nzd/month plans move to it, so at the end they just lower their average revenue per user. Not good.
It would be interesting to brainstorm the options. I don't really see much other alternatives than put all the customers in the same basket and charge a flat rate at the target ARPU. Differentiate the customers by speed and other value added services, that's what other carriers do elsewhere. Bundle mobile and fixed broadband to please the customers that were happy with the smaller than DVD disc data cap.
(The same logic is here, ordinary broadband is from 23.90 €/month at 1/1 mbit/s to 29.90 €/month for full-rate adsl2+. Not much of a difference, they want to get about 25 € (45 nzd) from each customer. This pushes the low-end users into mobile broadband, where the infrastructure costs are different and a low-volume user fits there perfectly -- and gets the service for third of the price.)
LLU got started a lot earlier in Europe, the government delayed it here too long and the timing was pretty awful for ISP's deciding to invest in equipment as the government gave Telecom a requirement to achieve 10Mbit sync speed to 80% of the country which lead to an aggressive cabinetisation schedule from Telecom.
There would be much stronger competition now if we'd gone ahead with LLU sooner.
Is there much cabinetisation in Finland, how do they deal with Sub Loop Unbundling in Finland? Here the regulator set a much higher price for Sub LLU than LLU, probably because it's still being built.
The good news is that by the start of next year at home we will be <1km from a cabinet (instead of 4km from the exchange), the bad news is there is only going to be Telecom wholesale equipment in the cabinet (no ISP's have taken up Sub Loop Unbundling yet due to the high price set by the regulator) and there is only going to be Telecom wholesale backhaul from these cabinets.
For many people (like myself) 5Mbit (or less) with no limit or 100GB, 150GB, 200GB is much more useful than 10Mbit with 10GB-60GB ish limit for the same price. Yet no ISP's are offering this, even ISP's with gear in the exchanges and their own arranged backhaul aren't offering a low speed high data plans.
They must have decided they are better off with the status quo, like Telecom did when they cancelled their second attempt at a unlimited plan (Big Time, Go Large was their first attempt a few years ago).
There are a very large amount of users who only do web, email, facebook and youtube and use <5GB.. these people prefer 10Mbit with small limits for the same price.
I willing to pay around $150 / month for my phone (barely use fixed line at all ever), internet and mobile connections.. I'm currently pretty much against having tv/media services bundled with my connectivity services.
There would be much stronger competition now if we'd gone ahead with LLU sooner.
Yes, timing does make a big difference. If the LLU and ADSL boom happened at the same time, every ISP could build their infrastructure, and there's demand for the regulation to work efficiently. If the incumbent can take advantage of the ADSL boom by themselves directly or through wholesale, competitive infrastructure isn't built and it's much harder to do afterwards -- probably not even worth it without some new technology.
Here LLU happened back in 1997 and it was deployed pretty fast, the timing was pretty good for the ADSL boom. Bitstream access is not mandatory but is available. I believe our telco structure was one reason why LLU wasn't objected heavily or implemented over-slowly like in many other countries. The disagreements what's a fair price were just normal.
Is there much cabinetisation in Finland, how do they deal with Sub Loop Unbundling in Finland? Here the regulator set a much higher price for Sub LLU than LLU, probably because it's still being built.
None, no cabinetisation, no SLU. Although wholesale is available, it's not widely used. The terms to install equipment to the exchanges are reasonable and most ISP's install their own on commercial grounds. For example years ago when I wanted to become a customer of a certain ISP, they told that they want 5 customers in this exchange area to install their equipment. There are no requirements to have a phone, nor do you pay any extra if you don't have one. For example I asked my DSL to be put on a separate copper, no extra fees.
In the cities (our cities are roughly the same size as in NZ) it works reasonably well, most have 3-6 consumer ISP's available. I think I've used 4 or 5 ISP's in the last 10 years. Cable TV and fiber are alternatives in some areas. The biggest telco's are installing fiber and there are a number of local, communal projects. A friend moved from Germany to a city of 10,000 people in the middle of nowhere, near Russian border. He got 100/10 fiber to this rental house and he is building a new house -- and they are digging fiber right now. (Our telco history is pretty unique, can you imagine 800+ telco's in NZ?)
The prices for LLU and exchange access are public and a quick look would say that it costs less than 200 nzd/month to get a small DSLAM there (8U), including power. The local loop costs 15 nzd/month, so if you're selling it at 45-55 nzd/month that's about 20-30% for the LLU. Using the wholesale model one would pay 24 nzd/month for a full-rate adsl2+ line (I'm not 100% if you need the local loop cost as well), plus a 960 nzd/month to get a gigabit access to the DSL network in the region.
I wonder if cabinetisation is really happening anywhere but UK and NZ? When I first read about the cabinetisation in NZ I thought that's a great, albeit a bit slow, idea -- bring the local loops down in length right away, practically unlimited fiber bandwidth upstream, cheaper and easier to install FTTH in the neighbourhood when the time comes, VDSL while waiting for the FTTH. But I guess my vision is a bit different from what's really happening with the cabinets. Are there FTTH initiatives to utilize the cabinetisation? What's taking so long with VDSL? Years wait to go from ADSL to ADSL2+, seriously? (I'm skipping the data caps here ;-) A 5-year cabinetisation plan is quite a tool to keep the competition away, and keeping the SLU/LLU access expensive also keeps the other infrastructure from happening. Great for Telecom to maintain the status quo, less great for the competition and users.
AFAIK, SLU isn't really being discussed here. I know it's being researched in some European countries if it's commercially viable, personally I think in a competitive market FTTH will overrun it for a big part, and FTTH will build some infrastructure to support cabinetisation as well (FTTC+VDSL instead of FTTH).
I willing to pay around $150 / month for my phone (barely use fixed line at all ever), internet and mobile connections.. I'm currently pretty much against having tv/media services bundled with my connectivity services.
Agreed, I'm not for triple play or any other bundling. I prefer to select my voice, TV, mobile, mobile broadband and fixed broadband from the carriers of my choice. If they happen to be bundled and I see the benefit, I'm ok with that like I've been happy with the IPTV/IP PVR that hasn't cost me anything extra. It's the same with mobile in general, I'm not a fan of subvented phones or 12-24 month contracts either. It slows down the development.
I noticed NZ Statistics has a new ISP survey data out, interesting to compare to our local figures..
Are there any actual traffic and usage statistics available for Internet and web sites in NZ? *IX traffic statistics? Statistics for mobile data traffic? Statistics for the most popular web sites?
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