Key facts: New Zealand's International Cable Connectivity

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#1014327 28-Mar-2014 08:33

I do believe a second cable will benefit consumers, and there is a self serving element in the above but for the most part Chorus has taken over most of the "Evil Empire" role from Telecom/Spark. Chorus got all the infrastructure from Telecom and the absolute worst of the "profits first, fvck the customers" thinking. Just look at the massive waaaaah they had when they got told the commerce commission was going to do the best thing for consumers rather than their precious profit margins.

I honestly don't think the problem will go away until we get a government with the balls to legislate chorus to death. Either through legislating so that it only generates minimal profits, or simply outright nationalise it as a not for profit SOE.

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#1015064 29-Mar-2014 13:41

Anyone find this tidbit the most interesting?

Tasman 2 is an old cable of which Telecom owns 50 percent. It is low capacity (it can carry only 1 percent of the company’s trans-Tasman capacity), however it is used to provide redundancy for some services which are latency sensitive, including corporate traffic and voice.

While i assumed it would be used for redundancy, i'm surprised to even see it mentioned.

Also its interesting to note that the media have largely ignored subpartners proposal for APX East.
http://www.subpartners.net/cables/apx-east.html
APX West AFAIK is going through. It'd be interesting to see if APX East does, they seem to still be working through the proposals for it.

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#1015074 29-Mar-2014 14:26

Telecom said exactly the same thing about UCLL, and look how that changed the market place.

Its just pure spin from a monopoly.

Bring on the new cable systems I say!, give us ISP's choice!

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#1015125 29-Mar-2014 18:12

Ragnor:
plambrechtsen: But definitely not a direct NZ<->US link.

SXC has like a 10% ROI returning a dividend of $80-90 million USD per year.

I'm still amazed Pacific Fibre couldn't pull off raising the funds needed to build it.

10%? That's a great ROI. Go to the bank put your money in and the best they will give you is 5.5% for 5 YEARS

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#1015173 29-Mar-2014 20:49

Sounddude: Telecom said exactly the same thing about UCLL, and look how that changed the market place.

Its just pure spin from a monopoly.

Bring on the new cable systems I say!, give us ISP's choice!

It has?

Last I saw there were only just over 100k UCLL connections in the market, that's less than 10% of all connections.

ETA: http://www.chorus.co.nz/annual-report/management-commentary-1/revenue-commentary

"At 30 June 2013, approximately 128,000 access lines were being used by retail service providers to deliver unbundled services to consumers. The total comprised 122,000 UCLL lines and 6,000 SLU lines (offered in conjunction with Chorus’ commercial SLES)"

that is after around 6 years of unbundling.

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#1015176 29-Mar-2014 20:53

timmay556:
Ragnor:
plambrechtsen: But definitely not a direct NZ<->US link.

SXC has like a 10% ROI returning a dividend of $80-90 million USD per year.

I'm still amazed Pacific Fibre couldn't pull off raising the funds needed to build it.

10%? That's a great ROI. Go to the bank put your money in and the best they will give you is 5.5% for 5 YEARS

the difference is Risk. A term deposit with a reputable bank is about as low risk as it is possible to get.
Investing in large infrastructure is not, so the return for success should be much higher.

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#1015179 29-Mar-2014 21:09

NonprayingMantis:]

It has?

Last I saw there were only just over 100k UCLL connections in the market, that's less than 10% of all connections.

Sure has. It allowed ISP's to sell Broadband at true cost, rather than Telecoms retail minus (which was the Wholesale pricing before unbundling).

It created compeition in the market and was the starting point for the Chorus/Telecom split.

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#1015184 29-Mar-2014 21:23

NonprayingMantis:
Sideface:
Additional NZ-US cables will not substantially reduce the cost to internet users

More BS from the part-owner of the SX cable.

how is it BS? Most of the cost of broadband is Chorus cost, which has nothing to do with international.

International makes up less than $10 of the total cost of broadband for ISPs, probably more like $2-3 on average. So even is southern cross was free, you would save absolute max $10, and in most cases much less, on your $80-100 broadband bill.

Depends on the ISP.

When you break down our $99 residential fibre product, the three biggest cost components are:

- Fibre tail (local exchange to end-user)
- Staff
- International bandwidth

...and the international bandwidth component is over $10. We don't skimp in this area.

EDIT: Bring on a second cable. It won't result in reduced charges for end-users, but we'll be able to buy more bandwidth at the same price which the end-user will benefit from (especially as Full HD streaming becomes more popular).

SteveON

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#1015185 29-Mar-2014 21:24

Sounddude:
NonprayingMantis:]

It has?

Last I saw there were only just over 100k UCLL connections in the market, that's less than 10% of all connections.

Sure has. It allowed ISP's to sell Broadband at true cost, rather than Telecoms retail minus (which was the Wholesale pricing before unbundling).

It created compeition in the market and was the starting point for the Chorus/Telecom split.

True cost? You are aware ISP's aren't not for profits aye?

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#1015193 29-Mar-2014 21:39

SteveON:
Sounddude:
NonprayingMantis:]

It has?

Last I saw there were only just over 100k UCLL connections in the market, that's less than 10% of all connections.

Sure has. It allowed ISP's to sell Broadband at true cost, rather than Telecoms retail minus (which was the Wholesale pricing before unbundling).

It created compeition in the market and was the starting point for the Chorus/Telecom split.

True cost? You are aware ISP's aren't not for profits aye?

Worded that wrong. Should be said Allowed ISP to source DSL ports at true cost.

NonprayingMantis

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#1015195 29-Mar-2014 21:43

Sounddude:
NonprayingMantis:]

It has?

Last I saw there were only just over 100k UCLL connections in the market, that's less than 10% of all connections.

Sure has. It allowed ISP's to sell Broadband at true cost, rather than Telecoms retail minus (which was the Wholesale pricing before unbundling).

It created compeition in the market and was the starting point for the Chorus/Telecom split.

and yet despite all major ISPs except telecom (50% market share) unbundling, there are still only 120k (less than 10% share) unbundled connections.

NonprayingMantis

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#1015201 29-Mar-2014 21:47

myfullflavour:
NonprayingMantis:
Sideface:
Additional NZ-US cables will not substantially reduce the cost to internet users

More BS from the part-owner of the SX cable.

how is it BS? Most of the cost of broadband is Chorus cost, which has nothing to do with international.

International makes up less than $10 of the total cost of broadband for ISPs, probably more like $2-3 on average. So even is southern cross was free, you would save absolute max $10, and in most cases much less, on your $80-100 broadband bill.

Depends on the ISP.

When you break down our $99 residential fibre product, the three biggest cost components are:

- Fibre tail (local exchange to end-user)
- Staff
- International bandwidth

...and the international bandwidth component is over $10. We don't skimp in this area.

EDIT: Bring on a second cable. It won't result in reduced charges for end-users, but we'll be able to buy more bandwidth at the same price which the end-user will benefit from (especially as Full HD streaming becomes more popular).

Well yeah, I was talking about averages, and most ISPs have far more DSL customers than fibre, so of course your cherry picked high bandwidth connection is going to be different. But even if you are spending, say, $15 on int for an unlimited ufb connection on bandwidth, that still means a saving of only that much even if it was totally free, which of course it isn't. So even if the price drops by half because of competition, that's a saving of $7.50. Not a lot.

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#1015203 29-Mar-2014 21:50

This isn't news for anyone in the ISP game, but probably wasn't not common knowledge for the average internet consumer due to all the poorly written articles by the NZ Herald about the cost of international bandwidth.

What it does inadvertently do however is place the spotlight directly onto Chorus, their access fees and back-haul costs. What their press release really is conveying is "Chorus are the reason for the bulk of your internet bills". And "Any investors looking at funding a new cable, don't bother, we beat you to it, have already paid back our loans, and have the ability to make your investment's returns deduce at will"

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#1015207 29-Mar-2014 21:57

NonprayingMantis:
and yet despite all major ISPs except telecom (50% market share) unbundling, there are still only 120k (less than 10% share) unbundled connections.

Your point?

Telecom are not allowed to unbunble. If they could, I bet you they would.

Cabinets are not viable to unbundle, as the regulated fibre backhaul are far from realistic. It would be much higher if it was realistic.

NonprayingMantis

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#1015211 29-Mar-2014 22:04

Sounddude:
NonprayingMantis:
and yet despite all major ISPs except telecom (50% market share) unbundling, there are still only 120k (less than 10% share) unbundled connections.

Your point?

Telecom are not allowed to unbunble. If they could, I bet you they would.

Cabinets are not viable to unbundle, as the regulated fibre backhaul are far from realistic. It would be much higher if it was realistic.

So how many connections are covered by cabinets? 50%? Leaving 50% of connection within exchange boundaries.

That still means that only 20% of connections that could be unbundled, have been. If it was such a major impact to the market, then that number would be much higher surely.

It doesn't feel like overall pricing has dropped very much becasue of unbunding. The biggest impact has been when telecom and chorus split, and all of a sudden the retail minus construct didn't apply, allowing telecom to add bigger datacaps without being penalized for it.

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