Your thoughts on 1.5 bn FTTH proposed by National Party?

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andysh

177 posts

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# 126169 24-Apr-2008 16:08

Yea true the TV thing may not work, but I just trying to put across that John Keys plan might be thinking more then just interent, or he is not and just trying to win votes with words about faster internet. Who truely know heh.

Because personally I think FTTH is future, with satellite being a backup to rural customers. I say this is becuase it is hard to travel faster then light, and since there is a fix connection to the house you are going to get a very good service. And with satellite being a backup due to latency.

Tho I think what the 1.5bil should be spent on is either helping out with international connectivity, and a better backhaul with cabinetism. Then with more houses being closer to cabinets it will help speed and max out those existing copper wires. Its about making the most of the existing technology while upgrading around it. Then in the future worry about the FTTH when the government makes the return on the first 1.5bil.

slipmat

26 posts

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# 126189 24-Apr-2008 17:46

sbiddle: Biddle Internet (NASDAK:BI) has today announced it will be rolling out a FTTT (Fibre To The Toilet) network in New Zealand.

Sorry, Google beat you to it: http://www.google.com/tisp/index.html

maverick

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WorldxChange

# 126203 24-Apr-2008 19:04

Yes international capacity is a consideration and folks I'm sorry you have to understand that we are geographically exposed, we are thousands of miles away from main hubs, the cost of the cables delivering capiacty is 1000'sf mile long this won't change we will never have the same prices due to the length of the fibre cables...pure and simple!

How much does it cost to fly to LA ? the same principle applies here the further the distance the the higher the price no difference for international capacity, would love for the government to subsidize my flights to LA as well

but it won't happen so don't expect it to happen for international bandwidth ....cost's have to be recovered you may see specials from time to time but the cost's have to met and due to our distance our cost's are higher than other places...you can not ever get away from this fact, its the cost of living in NZ I'm afraid,

Air Travel and International capacity have a lot in common so think about it from that angle and you will have a better understanding.

I think a lot of people actually have no real appreciation of the cost's invloved and it is very easy to say lower cost but unless you have the figures in front of you you are only taking a guess. if this was your buisness and your saw the commercial realities of the costs of International capacity you would be singing a differnt song

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Screeb

671 posts

Ultimate Geek

# 126204 24-Apr-2008 19:21

maverick: Yes international capacity is a consideration and folks I'm sorry you have to understand that we are geographically exposed, we are thousands of miles away from main hubs, the cost of the cables delivering capiacty is 1000'sf mile long this won't change we will never have the same prices due to the length of the fibre cables...pure and simple!

How much does it cost to fly to LA ? the same principle applies here the further the distance the the higher the price no difference for international capacity, would love for the government to subsidize my flights to LA as well but it won't happen so don't expect it to happen for international bandwidth ....cost's have to be recovered you may see specials from time to time but the cost's have to met and due to our distance our cost's are higher than other places...you can not ever get away from this fact, its the cost of living in NZ I'm afraid,

Air Travel and International capacity have a lot in common so think about it from that angle and you will have a better understanding.

I think a lot of people actually have no real appreciation of the cost's invloved and it is very easy to say lower cost but unless you have the figures in front of you you are only taking a guess. if this was your buisness and your saw the commercial realities of the costs of International capacity you would be singing a differnt song

This is so wrong it hurts my brain. The cost of flying a plane a longer distance is in the greater amount of fuel required. Generally speaking (for long haul flights), flying twice the distance takes twice as much fuel. Having a longer fibre optic cable only means you need to use more power, however, it is not linear. A cable twice as long does not require twice as much power to operate. The plane analogy is utterly incorrect.

In fact, New Zealand is well placed for cheap access to the US compared to Asia, for example, simply because A: It's closer, and B: for mainland areas in Asia, the traffic has to go through possibly many networks on its way to the ocean, whereas for NZ, it's a simple link straight to the US. The only reason we DON'T get cheap international access is simply a lack of competition. Someone wake me up when there's a direct alternative to the SCC.

freitasm

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# 126206 24-Apr-2008 19:35

Nope... Take this in consideration: China is now the country with most Internet users at 220 million people connected. They have critical mass to make intercontinental cables cheaper than an intercontinental cable from NZ to the U.S.

Japan and South Korea are in the same boat: they have a huge number of users when compared to New Zealand, It means the costs can be diluted and spread between more people than here.

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maverick

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WorldxChange

# 126209 24-Apr-2008 19:52

Screeb:
maverick: Yes international capacity is a consideration and folks I'm sorry you have to understand that we are geographically exposed, we are thousands of miles away from main hubs, the cost of the cables delivering capiacty is 1000'sf mile long this won't change we will never have the same prices due to the length of the fibre cables...pure and simple!

How much does it cost to fly to LA ? the same principle applies here the further the distance the the higher the price no difference for international capacity, would love for the government to subsidize my flights to LA as well but it won't happen so don't expect it to happen for international bandwidth ....cost's have to be recovered you may see specials from time to time but the cost's have to met and due to our distance our cost's are higher than other places...you can not ever get away from this fact, its the cost of living in NZ I'm afraid,

Air Travel and International capacity have a lot in common so think about it from that angle and you will have a better understanding.

I think a lot of people actually have no real appreciation of the cost's invloved and it is very easy to say lower cost but unless you have the figures in front of you you are only taking a guess. if this was your buisness and your saw the commercial realities of the costs of International capacity you would be singing a differnt song

This is so wrong it hurts my brain. The cost of flying a plane a longer distance is in the greater amount of fuel required. Generally speaking (for long haul flights), flying twice the distance takes twice as much fuel. Having a longer fibre optic cable only means you need to use more power, however, it is not linear. A cable twice as long does not require twice as much power to operate. The plane analogy is utterly incorrect.

In fact, New Zealand is well placed for cheap access to the US compared to Asia, for example, simply because A: It's closer, and B: for mainland areas in Asia, the traffic has to go through possibly many networks on its way to the ocean, whereas for NZ, it's a simple link straight to the US. The only reason we DON'T get cheap international access is simply a lack of competition. Someone wake me up when there's a direct alternative to the SCC.

Really Geoffrey ...so obviously in your current role you are aware of the costs per MB /GB of international capacity on anyone one of the major capicity providers to get to the major Interconnect hubs of the world, so could you then please explain to the users how the costs of the capicity would / could be the same as connections in the major continents, would also love to hear how you would offset the annual mantience cost's when you own capacity on fibre networks, we used to own a resonable amount of capacity ourselves a few years ago before we became a private company and used to compare the varying cost's of capacity and maintenenace with our sister companies around the world, London, France , Amsterdam Aussie and even Quatamala, and funnily enough our charges were a significant deal higher....pure and simple the longer the distance the higher the cost's...much like long distance Air Travel

I would very much like to hear how having 10,402 km of fibre cable to LA and having 1GB of International bandwidth could have the same costs to SP as a 1GB connection from San Diego to LA as an example , hopefully your brain isn't hurting to much because if you could solve this issue every SP in NZ would be knocking on your door and I might even hire you myself.

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Screeb

671 posts

Ultimate Geek

# 126219 24-Apr-2008 20:56

maverick:
Screeb:
maverick: Yes international capacity is a consideration and folks I'm sorry you have to understand that we are geographically exposed, we are thousands of miles away from main hubs, the cost of the cables delivering capiacty is 1000'sf mile long this won't change we will never have the same prices due to the length of the fibre cables...pure and simple!

How much does it cost to fly to LA ? the same principle applies here the further the distance the the higher the price no difference for international capacity, would love for the government to subsidize my flights to LA as well but it won't happen so don't expect it to happen for international bandwidth ....cost's have to be recovered you may see specials from time to time but the cost's have to met and due to our distance our cost's are higher than other places...you can not ever get away from this fact, its the cost of living in NZ I'm afraid,

Air Travel and International capacity have a lot in common so think about it from that angle and you will have a better understanding.

I think a lot of people actually have no real appreciation of the cost's invloved and it is very easy to say lower cost but unless you have the figures in front of you you are only taking a guess. if this was your buisness and your saw the commercial realities of the costs of International capacity you would be singing a differnt song

This is so wrong it hurts my brain. The cost of flying a plane a longer distance is in the greater amount of fuel required. Generally speaking (for long haul flights), flying twice the distance takes twice as much fuel. Having a longer fibre optic cable only means you need to use more power, however, it is not linear. A cable twice as long does not require twice as much power to operate. The plane analogy is utterly incorrect.

In fact, New Zealand is well placed for cheap access to the US compared to Asia, for example, simply because A: It's closer, and B: for mainland areas in Asia, the traffic has to go through possibly many networks on its way to the ocean, whereas for NZ, it's a simple link straight to the US. The only reason we DON'T get cheap international access is simply a lack of competition. Someone wake me up when there's a direct alternative to the SCC.

Really Geoffrey ...so obviously in your current role you are aware of the costs per MB /GB of international capacity on anyone one of the major capicity providers to get to the major Interconnect hubs of the world, so could you then please explain to the users how the costs of the capicity would / could be the same as connections in the major continents, would also love to hear how you would offset the annual mantience cost's when you own capacity on fibre networks, we used to own a resonable amount of capacity ourselves a few years ago before we became a private company and used to compare the varying cost's of capacity and maintenenace with our sister companies around the world, London, France , Amsterdam Aussie and even Quatamala, and funnily enough our charges were a significant deal higher....pure and simple the longer the distance the higher the cost's...much like long distance Air Travel

I would very much like to hear how having 10,402 km of fibre cable to LA and having 1GB of International bandwidth could have the same costs to SP as a 1GB connection from San Diego to LA as an example , hopefully your brain isn't hurting to much because if you could solve this issue every SP in NZ would be knocking on your door and I might even hire you myself.

As I said, competition. The SCC is pretty much the only choice for most situations for traffic to the US from NZ, and thus they charge more than they would if there was decent competition. It's simple economics.

As for wanting to hear how a 10,402 km cable costs the same as one from San Diego to LA - I never said this was the case. Of course the cost is higher. What I said was, it can't be compared to the cost of air flights, because the cost is not linear in proportion to the distance, unlike fuel consumption.

You seem to be under the assumption that I'm attacking ISP's - this is not the case. I'm well aware of the costs to ISP's and I sympathise with them. My gripe is with the lack of competition in terms of undersea cables from NZ, nothing to do with ISP's.

Mauricio:

Yes, good point. Mainly what I was getting at though, was that it shouldn't cost as much as it does. (ie, that distance is the only factor (aside from size, of course) we need to overcome, and as per my argument above, I believe it's mostly irrelevant and certainly not an excuse for $2/GB).

mushion22

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# 126252 25-Apr-2008 06:58

I don't agree with you maverick. The cost of a flight for you or me is a function of the distance, fuel cost, competition and utilisation.
The marginal cost of a flight to the airline depends on the size of the plane, amount of cargo on board, number of passengers (ie weight), fuel consumption, fuel price, and of course distance. A flight that uses a bigger plane, with more cargo and more passengers that is less fuel efficient and travels a longer distance will cost more than another. Add to that overheads/transaction costs (maintainence, travel agents, administration blah blah).

Now to get from that to the price we pay for a flight is a matter of economics - demand & supply. If there is no competition and lots of demand, Air NZ can essentially charge as much as they like and make a killing out of it. It means if they incur extra costs, they can pass it directly to the customers. Also it means they can restrict capacity to demand to ensure a nice marginal cost function. If there is less demand, they can charge even more for the priviledge of making the flight, untill they get to the maximum price people are willing to pay that ensures at least 1 full plane load there and back. If they can't do this, then they look to code-share with others, and we end up getting connected through multiple carriers' hubs, thus making our flights longer. Of course, demand is going to be a function of population, wealth, and culture (at a simplistic level). Wealth x Population x Travelbugs = demand.

However, they have competition. Now, there is increased capacity that they have to woo customers for. To do this they have to make their price competitive. Theres two ways this can go. If you get someone like Mr Branson as a competitor - then a company like Air NZ has problems, because Branson is going to undercut them, gain all the customers, and then increase his prices slightly to make a margin but they will still be lower than what Air NZ was charging before. This is what happens with Trans tasman flights, national major city flights, same thing in Europe with discount airlines etc etc. However there might be competition from someone that can't back such big risks that will simply compete with capacity in which case Air NZ can probably blow them away by undercutting them and wearing the loss for a little while (cough Origin Pacific).

Hopefully this is reminding you of the many examples in the Airline industry of where this has happened. It brings to mind "And then you have corporations, and, well, they're all corporationy."

Compare this to international fibre links.

Putting one in is very expensive, granted, just like buying an airplane or building an airport. It obviously costs more to lay a fibre between NZ and USA than San Diego and San Francisco. However, after the initial investment, there are no marginal costs associated with sending packets to the USA on a fibre until capacity has been reached, at which point a new fixed cost is incurred to install a new one. In terms of the cable itself, it costs the same to send 1 packet as it does to send 10 billion. There are maintenance costs, but these should be fixed-per-capcity, and I suppose there would be some administrative costs but these should also be fixed-per-customer. The price they (SCC) charge is related to their prediction of market demand and their greediness. They essentially have a monopoly on the capacity - just as there is on the Local Loops. Telecom and their Cohorts can charge whatever they like and restrict capacity as much as they like to make their returns faster and fatter. This is business.

Its different to air transport because
a) there are relatively low barriers to new entrants in air transport
b) there are many alternatives between air transport carriers (albeit that maybe we need to take alternative routes),
c) the cost metrics of a fibre cable are different. The marginal cost (to SCC) of sending another packet between here and the USA is $0. The marginal cost of sending another passenger on a plane is >$0. They might charge you as if sending another packet costs more, but it doesnt untill they have reached maximum capacity.
d) competition law stops Air NZ from restricting capacity by agreeing to be non-competitive with another company,
e) airplanes dont have unchangeable routes. They can be moved around and reutilised to wherever the demand is, and they aren't overly specific investments - the cost of using them in another role is low, thus they can easily be sold or used elsewhere, unlike a fixed fibre cable.

It is similar in that going through multiple hubs increases latency (flight time) but beyond that they become quite different.

Aside from analogies, I would agree that competition should reduce the cost to ISPs for international capacity, especially if you can find a way of providing it with a lower investment cost than SCC (eg, Kordia piggy backing into Guam). So long as you can offer the same quality, this would mean you have the ability to undercut your competitor. Whether they will do that or not I do not know. It could just end up the same as Telecom/Vodafone who have a duopoly and dont realllly have to compete very much on price. Its kinda like txt messaging really - it costs them nothing, but they charge you for the priviledge to use their network investment. I'm sure if vodafone lowered prices then telecom would too, but theres no real incentive because they would just both end up making less.

And please don't get me wrong here, I'm not suggesting that international bandwidth is cheap (its not!), I'm just pointing out that its not the same as air transport, and also that competition is probably the best way to reduce the cost to ISPs and, depending on what causal-demand model you subscribe to, could in fact encourage an increase in demand towards a critical mass for increased investment in the future. Chicken and egg type thing.

I think a better analogy would be railways, if you can imagine them to be inter-continental, and if you can assume that adding a new train costs $0.

maverick

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WorldxChange

# 126272 25-Apr-2008 10:03

Okay I hear what you are saying and I think I have made it a too simplistic point /analogy , but the general idea was the greater the distance the greater cost involved , which is simple economics.

I could use petrol or should I say Liguid gold as an example I suppose, the cost in Auckland is lower than say Turangi...why ? becasue of the cost of transport, the cost of the time taken to deliever , the roaduser charges on the vechile being used etc, the further away they have to deliver the higher associated cost's involved with that product or service...that was my point.

Yes I agree having competion here would be good, I hope kordia do put more in, but the cost's are huge for this so it has to be a demand for this and a few million users in NZ may not stackup for huge investment in new capacity to the the Main Hubs of the world, we may see some NZ - Aus ones but I for one would welcome it but am not expecting much in the short term.

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Goosey

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# 126274 25-Apr-2008 10:17

maverick: Forward thinking as far I'm concerned , why have outdated technology like dsl when you can start looking forward to the advanatges of Fibre, so judging by this the only people in NZ that could realisticlly roll out a national fibre network were only ever going to be Telecom and possibly one other government backed so now we have 2 wholesale fibre networks and this can only be a good thing.

And hopefully when they get in they will roll this out faster than what we see LLU happen, And I for one know that a fibre connection is far better than a DSL one, trust me I know I will post shortly the current speeds over the pilot ones we are working on now and it dosn't matter how far away you are from the exchange and every one of them are fater than any DSL / DSL2 offerings now

Be interesting to see what the LLU guys think, that is if they havn't started slitting there wrists yet

Reality is that this is an election pledge, just like all other election pledges, it has to be put thru its paces @ select committee which might take a year or so after whoever wins the election (or it could be a longer term plan that is not implemented until 6 years later). One has to think where the money is comming from. Labor has 'unbundled' telecom with the view that they will invest in their infrastructure more. Is fibre the answer when everyday wireless technology evolves more and more.

Wheres the money comming from? Real lack of substance in this pledge card item. Im neither for or against both labor or national and there has to be a real solid plan of attack shown rather than just say "this is what we want to do".

In the land of democracy we live in, why hasnt National already submitted this for disccussion while they have been sitting in the benches for all of this time.

When the current government proposed to unbundle the loop, how come such a positive idea wasnt touted then? Whoever comes up with the idea and follows it thru will always get the brownie points...

ahh politics and the people of NZ who get sucked into it. hahahaha

peejayw

1336 posts

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# 126287 25-Apr-2008 12:24

Fibre-to-cabinet is a sop.
If Telecom, rather than the Government of the day, had installed our original copper network, it would have terminated in pigeon-roosts in the streets!

paragonOfGeek

95 posts

Master Geek

# 126323 25-Apr-2008 16:07

I have to say i hate the political system that we adhere to; democracy sucks....yet if there is a better system i don't know what it is. every few years there is an election, the ploitical leaders tell the voters what they want to hear and then 'do their best' to follow through on the promise of campaining; which is usually a watered down version of what it was at campain time.

the way i see it the money will be spent planning and debating about how it should be done and doing very little. the best way to spend this money would be to put in 3 more international fiber links increasing the effective bandwidth to the rest of the world; or just 1 more fiber link and the rest of the moeny ensuring that all NZ'ers have access to wired broadband. My GF lives in a 'rural area' 15min from palmy and cannot get broadband because the exchange needs to be 2km closer to her house...that is a failing of the current communications policy.

cokemaster

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# 126324 25-Apr-2008 16:49

peejayw: Fibre-to-cabinet is a sop.
If Telecom, rather than the Government of the day, had installed our original copper network, it would have terminated in pigeon-roosts in the streets!

I suggest you go outside and see for yourself how the cabling is done...

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