Author Archive for The Unreasonablemen

Net Neutrality

Published by The Unreasonablemen on April 18, 2008 in Business.

There’s been a fairly long protracted debate about net neutrality happening in the US.

My basic understanding is that Carriers in the US want to be able to police what goes over their portion of the internet. That is stop VoIP or P2P traffic because it damages their core revenue streams etc etc.

I admit to not getting the debates relevance (outside of a moral discussion) My question for you readers is two fold.

1) should anyone who lives outside the US even care? What is the impact here

2) does it even matter? The point being that the internet is so interconnected now that content etc can be taken from anywhere and if we can’t get it via the US then we’ll get it from another source… and such activity will only be to the detriment of the US economy ?

Can you out there shed more light on this?

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No One solution

Published by The Unreasonablemen on April 9, 2008 in Economic Development, IT, New Zealand, Society, Strategy and nzwc.

Last week I wrote the post “Isn’t the answer mobile?” which created a great deal of interest, commentary & thought provoking questions. Thanks to those who commented, some of what you wrote provides the basis for this post, as well as comments on Rod Drury’s blog post about FibreCo.

I guess the best starting point is to say last weeks post should have been titled “Isn’t PART of the answer mobile”. It’s clear from both these posts that mobile technology alone won’t suffice, but equally importantly neither will fibre. The FibreCo idea is audacious, and the vision both compelling and energising (which I suspect is the major goal behind it), however it does have a few weaknesses. I’m not here to throw stones at it, because I love that at least someone has provided some constructive solutions to our fast internet conundrum, what follows is my own attempt at conceiving some more.

In my opinion FTTP (key being P not H) (editors note - FTTP is Fibre to the Premises, as oposed to fibre to the Home) is only needed by a small (but hopefully growing) group of businesses. Not everyone needs a raging torrent of internet access, just like not everyone needs Mac trucks, PDA’s, high definition printers or computers at all. Hand in hand with this, I must also admit that I’m not sold on the 1:1 causality that goes with the belief that ubiquitous fast, cheap internet access will drive economic benefits. I don’t see massive queues of ‘weightless businesses” just waiting for fibre, I also don’t see all the other fundamentals (like wages, taxes and support) being addressed to drive the weightless economy. Maybe it’s chicken & egg, but I’m not convinced. Simon Arnold also asks if you need ubiquity in his comment on Rod’s blog”

But if you go back and look at the source of the benefits being claimed by NZI that make up the $2.7-4.4 billion per year (see here) most are able to be captured with much lower than the 75% penertration they are justifying the need for public investment off. I do think a bit of hard nosed analysis of marginal cost of provision versus marginal benefit is warranted.

Secondly, if you do need that kind of data throughput, you should take Bwooce’s advice …

If you want fast internet access for your business, site your business appropriately. ….. Just as you may choose to live next to an airport, you may choose to live in an area with crap internet coverage

If I may extrapolate this out a little, you may want to even have the position that if fast, large bandwidth internet access is important to you, you should pay for fibre to be connected. The great news is that Telecom’s cabinetisation program will make this more affordable. The way I read it (& again-not an engineer!) Telecom will be laying a lot of ducts & the distance to the Cabinet is going to be a lot shorter… so it should be that the cost of getting Fibre installed will decrease. This position should hold true if you are a business or consumer who wants IP TV.

Having just said Fibre is just one of the solutions it’s fair to say that I also believe that ADSL broadband has a role in our future. For some it is more than adequate. Again, as Bwooce says 24 mbps is plenty for email, internet, video conferencing etc. By that, it addresses the NZI’s ‘Telepresence’ and ‘Remote working’ economic benefits. (as a sidepoint even Cisco’s full monty Telepresence system only requires 15 mbps & that’s way more demanding than a web-cam type approach!) For digital media and other data intensive sectors is ADSL going to be enough? No, see point 1, buy fibre…

Mobile….I caught up with some folks about my previous mobile theory. According to them (the royal them) there area bunch of things you can do on a cell site like sectors, carriers & polarisation which all work to decrease contention, optimise spectrum use and generally make the experience better for the consumer & more economic for the carrier.

Despite popular opinion, ISP economics is important, if they can deliver services cheaper (and make an operating margin), then generally the price to customers will be cheaper, but it’s not all about price. Again, according to ‘them’, doing all these things could allow you to deliver speeds of up to 1 Mbps (maybe more). This speed would definitely improve if high demand users went to fibre. I know 1 Mbps ain’t fantastic against global benchmarks, but again for some it would be a great leap forward and more than suffice. I’m thinking of people on dialup (and there are still nearly 700 000 of those) or old plans (256kbps for instance, again plenty of those). Tom Chignall of Vodafone commented on Rod’s blog

We don’t need a fibre vision - we need a broadband vision which connects the people of this country to each other and to the outside world.…. Our view is that wireless has a major role to play…., The technology is in place today to deliver as good an experience as I get over my Telecom service (resold thro ugh Vodafone!)in Auckland’s central suburbs. Wireless speeds are doubling very soon and we have Telecom and NZ Comms entering the fray with similar technologies.”

I agree with Tom’s major points , we need a vision that connects NZ to the world in the most appropriate way for them. I think this vision means when you buy a fast internet plan, you are going to have to make some choices based on your particular needs. If you are one of those companies or people feeling massively restrained by ADSL (financially, gaming wise, IP TV wise) then you are in one camp. If you get on the internet to ‘get the email’ like my mum, dial or mobile technology might be fine for you. The reality is though, whatever you choose, you should be aware that you are going to pay for it ….. there are no free rides. To me this is the crux of the issue for NZ . Just look at the links above, price isn’t the impediment (we’re cheaper than the OECD average), fast speeds are available, so why so many dial and low speed plans? No need for them?

For all those who did comment and weren’t referenced, your input did help, again many thanks.

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It was never about competition

Published by The Unreasonablemen on April 7, 2008 in Business.

In case you were wondering. The Labour government has zero interest in improving the broadband situation in this country.

This report on the line just shows that the whole operational separation is a political exercise. The reports here were obtained under the official informations act…

The report, dated five weeks before Telecom publicly announced the extensiveness of its FTTN plans and three weeks before the release of the final LLU STD, advised Cunliffe that FTTN is generally considered to be “the death-knell” for a LLU regime. Written by MED manager ICT regulatory team Reg Hammond, the report advised that a gradual deployment of FTTN is “the most effective means of maintaining efficient investment incentives” for industry players.

If the Commission made a slight change to the STD without public consultation, it would be immediately picked up by the industry and would be akin to an announcement by the government that it intended to accelerate FTTN. “While this would stall investment by access seekers in LLU it may be more palatable than allowing access seekers to invest in LLU and then making an announcement at some later stage,” reads the document

Following the official news of the extent of Telecom’s cabinetisation plans, Telecom CEO Paul Reynolds sent a letter to Cunliffe saying that he was “genuinely taken aback” by the industry’s negative reaction. “As such, we think the accusation that we have been hiding information and gaming the situation is completely baseless and unfair,” reads the letter obtained under the Official Information Act.”

Couple that with this on stuff, with IDC stating that operationally separating Telecom won’t reduce the incumbents dominance. (I’ve written before on the unreasonablemen.net about how markets operate)

In case you forgot, its an election year….

So just a bit of time to ask yourself, has all this kerfuffle changed your perception of Telecom? and …while you were focusing on hating Telecom did you forget the promised tax cuts? that AU GDP and standard of living had gone up again, that interest rates had sky rocketed, that kiwisavers a huge flop (in terms of implementation), that compliance costs on SMB’s have gone up…..hmmm interesting…..Maybe the Government got what they wanted after all….

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Isn’t the answer mobile?

Published by The Unreasonablemen on April 1, 2008 in IT, New Zealand, Society, Strategy and nzwc.

Before I start, let me just say I’m not an engineer, so if I get some of the technical bits wrong, forgive me. But I genuinely think I’ve got the ramifications correct!

There’s been a fair amount of debate about how NZ gets better faster broadband. This isn’t a simple proposition and much of it has been made even more complex because of politicalisation, poor press leading to general acceptance that Telecom New Zealand is ‘bad’ (just look at the sensationalist title to this), ignorance and a real clouding of issues.

So lets separate out the issues. Jim Donovan provides a nice synopsis of the issues as Rod Drury sees them. In my opinion there are a lot of issues tied up even in this.

Firstly can we accept the fact that Telecom is a public company and as such will try its best to make a profit for its shareholders, (which incidentally includes just about everyone in NZ with a managed fund, the point being you are doing yourselves out of your retirement dosh!). The implications of this are that they are legally obliged to invest their shareholders money to get the best return possible…which may not always be what people think is ‘good’ for the country as a whole.

Having multiple international trade routes is different from national data speeds. It’s a damn good idea and should just happen ala Google.

Next, lets address national data speeds. There’s a lot of apples with pears comparisons with other nations out there. These nations don’t have our population levels or distribution, so doing this isn’t that valuable. Benchmarks are good, but how about making them meaningful (as opposed to a political weapon).

Lets look at broadband. Everyone is talking about fast ‘broadband’, but what they really mean is fast internet connectivity - give me the webpage I want faster, upload my stuff faster…. Semantic, but important difference.

Broadband in common use means an ADSL connection. ADSL is effectively compressed data travelling down the same copper as you use for a phone line. Broadband in other countries means other things like cable, Fibre and other technologies. The whole broadband thing became quite topical when the government noticed that people might be pointing the finger at them for our slow movement down the OECD averages for income and wealth. They also noted that the countries moving up that list had higher penetration of faster internet technologies than us and viola, it became an election issue.

If we take a stick to Telecom, make them the bad guy people won’t point at us anymore. This conveniently neglected other things like company tax, RnD, incentives and funding for start ups, tax breaks for international tech companies etc. Anyways, the end result was that in a knee jerk reaction to get the monkey off its back Telecom agreed to invest in its fixed line business to the tune of $1.4bn. The point of this investment is to shorten the loop between the point where the core network (fibre) stops and the copper (last 2km - the bit to your home) starts. This shortening reduces the distance impact and will provide greater speeds (10mbps) to the home and …. no one will be happy with the result. It still won’t be fast enough (here for religious screaming from the left, here for business impact).

This type of disappointment will mean more Telecom bashing, closely followed by the realisation that the loop distance needs to be reduced to about 800m. That means more cabinets (I’m told 3 times as many, and another $700mill). And get this, this additional investment will only give data speeds of up to 20mbps… more disappointment !!! Which gets you to the point where you realise you need Fibre to the home. I heard that the last time Telecom looked at that it was going to cost circa $10bn to deliver. So that’s just not going to happen (as Paul Reynolds has already said).

Or, you try a different approach.

Think about the world we live in, most people have telephones they carry around with them, notebook sales outstrip desktops, pda’s, ipods, WiFi in the home… its all about untethering the cable…or simply being mobile. Why then are we trying to solve the issue with redundant technology when the requirement is just for fast internet speeds.

Here’s my hypothesis. The network you think of as mobile, isn’t really mobile. It’s a fixed backhaul network with cell towers attached at the end to deliver the last mile. If you think about it, its identical to your home WiFi network and we love those!

Why then don’t we leverage the fibre to the cabinet programme, turn all those cabinets into a cell site and start thinking about fast mobile data technologies like LTE. I know its not a ratified standard (others are though and they are quite quick!), but it is already demo’d as doing 150mbps. That’s 15 times what cabinetisation is going to deliver to the home…. Isn’t it about fast internet, not copper or fibre. I know there is a pricing issue, but scale will bring that down….

Thoughts?

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