PR SPIN, The Broadband Agenda

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bbman

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#20165 15-Mar-2008 08:52

The Orcon & pending Vodafone announcements are great news for the consumer.

Isn?t it also wonderful ISP's are going to offer these great speeds that Telecom wont or couldn't do and even better they only need to have space at an exchange, they don?t need anything else from Telecom... Oh and they are investing heavily in these new technologies, millions even!

hmmmmm, lets think about this for a minute........

Some questions.
How is possible it possible for Orcon to deliver it's new service to homes with out some one having to pay for the local loop, develop and maintain it invest in infrastructure?

How is it Orcon have a business with out investing in a real wires in the ground network?

And what the hell are Vodafone doing??? "The future is wireless, no desk phone" that?s what they told us a few years back.

The answer is Telecom had no choice to share its network with leech companies that have been able to cherry pick and make money from low hanging fruit consumers. Orcon and Vodafone are prime examples and they are particularly damming of Telecom, yet in Orcoms case they would have no business were it not for Telecoms forced regulation from the past 10 years.

As for Vodafone, they want ULL and?moan publically?so often about how Telecom?has slowed broadband development down and don?t offer fair access to their network, yet?when the shoe is on the other foot they?probably?will never consider a roaming agreement on their Mobile network with Telecom and how about the Telstra VMO deal that feel through.?

To say that the exchange is only for housing the equipment is?insane, some one had to pay for the cooper to be installed and maintained, plus the network that goes behind that that gets these fantastic new services to customers. This investment is in the $100?s of millions, not millions that Orcom are touting.

I am all for enhancing services and competition, this is so important for growth,?we need much better speed and quality of service but no one is investing in?a total network and?the hype and B/S that is being put out their is crazy.??When a business comes along and does something on their own and creates it from ground up, I will respect them for their willingness to compete and not to leech! Telstra is one, they built a real network! But I wonder why they don?t need to open their network up??So that?s my vent, I dare say no one will agree with me but that?s ok?

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#116750 15-Mar-2008 09:23

This is probably going to draw some shrill responses from various people.

I agree with many points raised though.

However, I do see that a lot of the PR has been a bit economical with the truth. Speeds aren't just going to magically increase, particularly DSL2+ speeds. However its been gobbled (could we use 'wholesaled') up by the media.

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freitasm

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#116752 15-Mar-2008 09:26

Some googd comments here - and some bad. Let's go for the bad first:

bbman: The Orcon & pending Vodafone announcements are great news for the consumer.

It is also great to see the PR people doing so well on here, they run the forums almost. The guys like Paul Brislin do a great job, they would do well working for the Labour Govt as spin doctors.

No, they are not running the show. They are answering questions. If you disagree with their answers, that's fine - a lot of people do and express their views in reply to Paul's and others' posts. But from that point to say they are running the board, you are offending myself, other moderators and everyone else who engaged in those discussions, pointing out inconsistencies, and more importantly making a difference.

Yes, because lots of the discussions here on Geekzone created the momentum for companies like WorldxChange, Vodafone, TelstraClear and others to change their ways. If you look at the Orcon+ discussion thread you will see Orcon's Product Manager Duncan Blair participating, answering questions and clarifying their site based on feedback.

I am shocked to learn you don't see things this way, after being here for so long.

bbman: How is possible it possible for Orcon to deliver it's new service to homes with out some one having to pay for the local loop, develop and maintain it invest in infrastructure?

How is it Orcon have a business with out investing in a real wires in the ground network?

And what the hell are Vodafone doing?? "The future is wireless, no desk phone" that’s what they told us a few years back.

The answer is Telecom had no choice to share its network with leech companies that have been able to cherry pick and make money from low hanging fruit consumers. Orcon and Vodafone are prime examples and they are particularly damming of Telecom, yet in Orcoms case they would have no business were it not for Telecoms forced regulation from the past 10 years.

I completely agree and I have posted this in my blog before. I regard LLU as a prize to companies who did not invest a dime in local loop infrastructure.

All those companies eager to use the local loop are betting on an old technology. And they all cried when Telecom outlined their plans for cabinetisation of their network.

I think LLU would have been good for New Zealand ten years ago. I believe access to exchanges and cabinets should only be legally granted to companies who at the same time put money in rolling out new network access to consumers. Something like "Access to the Auckland Exchange [A]? Sure, but you have to also roll out 200 kms of fiber in Wellington".

That would accelerate things. Otherwise, as you say, I can only see leeching going on. The only company really doing this was TelstraClear with their cable network, which the Auckland council ditched - too bad now Auckland can't get the benefits of competition and have to wait for LLU to happen.

bbman

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#116754 15-Mar-2008 09:50

freitasm: Some googd comments here - and some bad. Let's go for the bad first:

bbman: The Orcon & pending Vodafone announcements are great news for the consumer.

It is also great to see the PR people doing so well on here, they run the forums almost. The guys like Paul Brislin do a great job, they would do well working for the Labour Govt as spin doctors.

Mauricio your right, my target was not the forums, my bad and i should have left out, i will edit. The PR guys do a great job on here at times, Telecom could learn some thing from this. I do feel they spin some what but hey thats what they are paid to do. My target was the media spin they give and i didn't elaborate this well.

Thanks

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sbiddle

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#116755 15-Mar-2008 09:50

There undoubtably has been a lot of PR spin - and this has been happily picked up by the media, many of whom have absolutely no understanding of the technologies involved and real world performance.

bbman: How is possible it possible for Orcon to deliver it's new service to homes with out some one having to pay for the local loop, develop and maintain it invest in infrastructure?

As for Vodafone, they want ULL and moan publically so often about how Telecom has slowed broadband development down and don’t offer fair access to their network, yet when the shoe is on the other foot they probably will never consider a roaming agreement on their Mobile network with Telecom and how about the Telstra VMO deal that feel through

I'm not trying to defend Vodafone but Telstra's network was hardly a MVNO in the sence, it was nothing more than resale agreement. Vodafone also have negotiated a roaming agreement with NZ Communications and as for a roaming agreement with Telecom who says one is required? Telecom's GSM/UMTS coverage at launch may surprise some people.

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#116759 15-Mar-2008 10:12

bbman: When a business comes along and does something on their own and creates it from ground up, I will respect them for their willingness to compete and not to leech! Telstra is one, they built a real network! But I wonder why they don’t need to open their network up?

Just FYI Telstra have provided access to their cable network for quite some time and there are a handful of ISP's who offer services. There is no requirement for them to provide access to their copper network however.

When you look at the bigger picture however most telco's are only interested in gaining access to ULL circuits to provide broadband and VoIP services over that. Since TCL's FTTN network and copper has no ADSL capabilities I'm not sure that many ISP's would be interested in spending money deploying the required 100+ DSLAMS's in every node cabinet in the Wellington network as well as renting fibre backhaul from TCL when they could simply gain wholesale access to their cable network and provide a broadband service over the cable modem platform which is superior to ADSL in many aspects.

bbman

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#116761 15-Mar-2008 10:23

As is the case with every other country where unbundling has occured the government or telco regulators have established a price that competitors must may to access the network. This more than compensates the incumbent for the loss of service on the line.

I don't believe anybody taking advantage of ULL to establish a network is a leech or doing anything that's immoral. In a nutshell Telecom are renting them a copper circuit for them to run their service over. If you object to this then you obviously object to anybody else other than Telecom being able to provide a service over any telecom circuits or even wholesale services which would leave you with a choice of Telecom for phone services and Xtra for broadband.

Thanks some objections i have!
I object to companies who have a business model based around using some one else’s investment to make money and then complain and make noise when it does not met their expectations etc. Orcon are a company who has cherry picked and picked the juiciest fruit for very little outlay,

Now yes it has made sense for Telecom to wholesale - hold on they had no choice in the matter I believe.

I object when companies make promotion of how good their services will be and the fact that they are eliminating big bad Telecom ... hold on they must be providing a wireless service... other wise they haven't eliminated Telecom, they dont have a business with out the Publically listed company providing the lines, exchanges, national network, undersea cable blah blah blah.

I object when the Govt gets involved with a Public company and will not consider buying back the local loop to make an even playing field. Hold on, we would be worse off they did so maybe flag that idea!

I object to the notion that Telecom has a monopoly so they should share their wealth and investment. No how about creating real competition by building infrastructure of your own. Look at the rural areas, no one wants them as they make no money, So Telecoms monopoly works for them, they would have no service other wise.

I don’tt have a problem with wholesaling when it works for both parties, regulation has caused lack of growth, not enhanced it because it as eliminated the need for others to compete in real terms using a real network. Only Telstra have attempted to play this game.

As for Vodafone, they want ULL and moan publically so often about how Telecom has slowed broadband development down and don’t offer fair access to their network, yet when the shoe is on the other foot they probably will never consider a roaming agreement on their Mobile network with Telecom and how about the Telstra VMO deal that feel through

I'm not trying to defend Vodafone but Telstra's network was hardly a MVNO in the sence, it was nothing more than resale agreement. Vodafone also have negotiated a roaming agreement with NZ Communications and as for a roaming agreement with Telecom who says one is required? Telecom's GSM/UMTS coverage at launch may surprise some people.

You got me on that, Vodafone hardly hold the moral high ground when it comes to inter connection though! but your right. I sure hope Telecoms GSM is a surprise!

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bbman

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#116762 15-Mar-2008 10:27

sbiddle:
bbman: When a business comes along and does something on their own and creates it from ground up, I will respect them for their willingness to compete and not to leech! Telstra is one, they built a real network! But I wonder why they don’t need to open their network up?

Just FYI Telstra have provided access to their cable network for quite some time and there are a handful of ISP's who offer services. There is no requirement for them to provide access to their copper network however.

When you look at the bigger picture however most telco's are only interested in gaining access to ULL circuits to provide broadband and VoIP services over that. Since TCL's FTTN network and copper has no ADSL capabilities I'm not sure that many ISP's would be interested in spending money deploying the required 100+ DSLAMS's in every node cabinet in the Wellington network as well as renting fibre backhaul from TCL when they could simply gain wholesale access to their cable network and provide a broadband service over the cable modem platform which is superior to ADSL in many aspects.

Ok thats good to know, was not fully aware, i guess i meant they have not been forced to open it up. Telsra has a great network, fantastic for speeds thats for sure.

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#116764 15-Mar-2008 10:45

On top of Sbiddle's comments - that Telecom is paid rental by access seekers wanting to serve customers over the copper local loop - I should remind you that it costs real money for providers to buy and install gear into the local exchanges and provision backhaul for it.

There's no free ride, in other words.

Juha

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#116766 15-Mar-2008 10:49

bbman: I object to the notion that Telecom has a monopoly so they should share their wealth and investment. No how about creating real competition by building infrastructure of your own. Look at the rural areas, no one wants them as they make no money, So Telecoms monopoly works for them, they would have no service other wise.

Like it or not Mike, the copper wires which connect the majority of our homes to the PSTN are a natural monopoly in the same way as power lines are.

Does it make economic sense for another power company to install a duplicate set of power lines in order to provide choice for the customer? Of course not.

In the same way, it doesn't make economic sense to duplicate the investment already made in our copper phone lines either -- more's the pity

In a Utopian world, we could all have FTTH and wondrous services such as IPTV, Movies on Demand could be provided. The reality is that only new homes can expect that to be provided as per the NGN-type projects that Telecom and WxC are already working on.

For the rest of us who live in existing homes, FTTH isn't going to be installed any time soon. The best we can hope for in the next few years is FTTN with roadside cabinets and copper loop lengths reduced to less than 1.5km or so.

Meanwhile, it makes good economic sense to get the most from the existing copper lines by following the UK example where ULL was implemented several years ago, and as a result:

- There is vastly increased choice of broadband plans/ISPs in the market
- Speeds have increased
- Prices have come down

How can anybody say those are bad things?
The reality is that without ULL, progress would have been much slower.

Paul Reynolds is a very smart guy and he has been through this process before with BT. Under his stewardship, ULL was good for business at BT, resulting in increased investment from many other industry players, as well as BT. All of which has resulted in the benefits above being provided to consumers.

With Paul Reynolds at the helm, there is absolutely no reason that these same benefits cannot be reproduced here. Looking at this week's announcements from both Orcon and Vodafone, and then stripping out the PR spin, I believe you have a good case for arguing that these benefits are already starting to become apparent.

bbman: don’tt have a problem with wholesaling when it works for both parties, regulation has caused lack of growth, not enhanced it because it as eliminated the need for others to compete in real terms using a real network. Only Telstra have attempted to play this game.

Really?

If there was no regulation (or the threat thereof), do you think Telecom would have introduced Naked DSL?

One has only to look at the uptake of WxC's Fusion service to see that there was pent-up demand for this product. There are competing NDSL offerings from another 4 or 5 players, yet so far, Telecom have not announced any competing offering.

Even though ULL is in its infancy, and Naked DSL is only now starting to get off the ground, nobody can deny that there is vastly more choice of Broadband Plans in the market now, compared to what we had prior to the May 06 announcement of impending regulation.

More consumer choice is a good thing wouldn't you say?

bbman

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#116768 15-Mar-2008 10:51

no agreed, but in real terms that equipment has come after a much larger investment was made by the one owning the exchanges and lines etc.

The fact that we are getting ADSL 2+ is great (Telecom are rolling out around the country as well) the way the spin is done is not so great.

Like Mauricio said the split of Telecom, ULL should have been done along time ago but it wasn't and now we pay.

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#116770 15-Mar-2008 10:56

bbman: Like Mauricio said the split of Telecom, ULL should have been done along time ago but it wasn't and now we pay.

Yes, agreed 100%. But better late than never

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#116794 15-Mar-2008 11:49

grant_k:
bbman: Like Mauricio said the split of Telecom, ULL should have been done along time ago but it wasn't and now we pay.

Yes, agreed 100%. But better late than never

And being late to the party can sometimes be a good thing. Rather than being held back with old technnology we've now got ADSL2+ at present and both Orcon and installing gear that is VDSL capable and both planning to use this technology.

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#116809 15-Mar-2008 13:41

I think you've made a couple of assumptions there about levels of investment that need to be addressed.

Firstly, LLU access is not without its cost. Each exchange costs hundreds of thousands of dollars to unbundle. Companies like Vodafone and Orcon (and any others that get involved) are already investing millions in Telecom's network for LLU. It's far from being the free ride that has been suggested here.

The idea that competitors should build an entirely separate network is also quite a strange one. Do you really think New Zealand has the population to support an identical duplicate network? It does not. In fact, nowhere in the world has a second national network been built along side an existing network. There is no econcomic model to support such an act - it is lunacy. TelstraClear has invested billions in its network in NZ and it covers parts of Wellington, Christchurch and has a national backbone. It would cost (I should think) about ten times that investment to cover every household in NZ with fibre or copper (the medium makes little difference to the cost of the network build itself).

Instead, all over the world we see access to the existing network being introduced because it makes more sense to make the most out of one network instead of building separate networks to deliver the same thing. I've just been reading that international regulators are suggesting telcos work TOGETHER to build networks instead of over-building each other. That's the sane thing to do. That's what LLU is all about.

Secondly, this idea that the telcos don't contribute to Telecom's network build. The TSO ensures that we do. I have problems with the TSO as it stands and am delighted that the MED is reviewing the whole thing, but to date Vodafone has paid millions to Telecom to ensure the network is retained in hard-to-reach areas. If we had that money in our own investment pool we could have built the network we own out by one third. Instead, we pay Telecom (and ironically, the more customers we take off Telecom, the more we have to pay to Telecom).

As for the idea that Vodafone doesn't allow competition on its own network, I think you need to do some reading. The Commerce Commission has just, this week, decided there is enough competition that it doesn't need to set the price of access to existing networks. Vodafone has three MVNO partners and one roaming partner. We work with the other networks to co-locate equipment where we can and this has been going on for some time now. TelstraClear had an agency agreement to resell service - that's quite a different issue.

What LLU allows us all to do is to differentiate on service. If I ran a small ISP in a smaller town I'd be able to unbundle just my exchange as soon as possible, install my own equipment and provide my own service. It might not be a priority for Teleecom to build VDSL2 capacity in my small town but it would be for me, so I'd do it. The customers benefit, I benefit, Telecom benefits.

As you've seen we've got two LLU competitors building quite different solutions for different customer bases and that's only six months into LLU itself. This is a good thing. This makes economic sense for all the parties concerned.

I hope that helps your understand and isn't too much spin for you.

Cheers

Paul

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Paul Brislen
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#116818 15-Mar-2008 14:22

PaulBrislen: Instead, all over the world we see access to the existing network being introduced because it makes more sense to make the most out of one network instead of building separate networks to deliver the same thing. I've just been reading that international regulators are suggesting telcos work TOGETHER to build networks instead of over-building each other. That's the sane thing to do. That's what LLU is all about.

And that's what I want to see: network investment from the entrants. If they need regulation such as "you can only access an exchange if you roll out [x] kms of networks then so be it - but I doubt many entrants would freely put money on 200 kms of network on a much needed rural area without the "help push" from regulators.

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#116822 15-Mar-2008 14:39

freitasm:
PaulBrislen: Instead, all over the world we see access to the existing network being introduced because it makes more sense to make the most out of one network instead of building separate networks to deliver the same thing. I've just been reading that international regulators are suggesting telcos work TOGETHER to build networks instead of over-building each other. That's the sane thing to do. That's what LLU is all about.

And that's what I want to see: network investment from the entrants. If they need regulation such as "you can only access an exchange if you roll out [x] kms of networks then so be it - but I doubt many entrants would freely put money on 200 kms of network on a much needed rural area without the "help push" from regulators.

David Cunliffe always talks about the "ladder of investment" which starts off with an ISP selling resale services (today's market) then when it's got customers, moving up the food chain to offer wholesale services (either off the incumbent or off one of the challengers that wants to sell capacity) and then moving up to its own LLU offering and eventually to building its own network where it sees fit.

That's a model that strikes me as a great ideal - but you have to ensure the encouragements up the food chain (better margin, more control) aren't eaten up by the "incentives" (namely building x capacity). It hasn't worked in mobile where the requirement was to build 10% of a network BEFORE being granted roaming access to a competitor AND showing the ComCom a plan for national build. Instead, the ComCom has downgraded that to 10% or 100 cellsites and no need to build a national network, one covering 60% of the population will do.

That seems more likely to attract investment if you ask me.

Cheers

Paul

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