Hard News by Russell Brown

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Hard News: Shooting for the Moon

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  • Gareth Ward,

    Doing it with Telecom as a willing partner would take 12-18 months and cost a lot. If it ain't willing ...

    So the NZInstitute paper on this had three options:
    1 (preferred):
    FibreCo pays fair price for the existing fibre and copper networks
    Telecom (and others) agree to sell its access network to FibreCo
    FibreCo takes over management of copper and optimises maintenance and migration as fibre rolls out e.g. copper switched off as fibre rolls out

    2:
    Competitive structure whereby FibreCo setups in competition to TCNZ

    3:
    Regulated purchase - same as 1 but forced by Govt


    The problem with 1 is surely that TCNZ would price it through the roof given they have a locked-in, deep-pocket buyer? Unless it is "light-regulation" whereby everyone agrees to sell at an independently-judged fair value.

    Auckland, NZ • Since Mar 2007 • 1727 posts Report Reply

  • Russell Brown,

    The problem with 1 is surely that TCNZ would price it through the roof given they have a locked-in, deep-pocket buyer? Unless it is "light-regulation" whereby everyone agrees to sell at an independently-judged fair value.

    It could be done, but I've had some insight lately into the work that's gone into Telecom's undertakings for operation separation. It's eye-watering.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Steve Barnes,

    I almost totally agree with Steven on this but would like to add a few points.
    The data cap question, decoupling the data cap from the speed may make sense for some but not most. Once you start downloading hi def video in real time (streaming) you are going to blow that cap in no time high definition video requires 19.8 Mbps according to Intel and I guess they should know. I personally think that Hi Def video would be the limit of reasonable use with current technology when matter transfer becomes a reality we may need more ;-)
    So to answer Paul's question I would say everybody would be happy with a 50Mbps down 10 up for domestic and 50 up for media business. I say 50Mbps for the reason that, as we all know, these things never deliver the speed they say they will. Fluctuating contention ratios will knock your 50Meg connection back to 20meg going by current C/R so to have uninterrupted video would require a 50Mbps connection.

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • Gareth Ward,

    It could be done, but I've had some insight lately into the work that's gone into Telecom's undertakings for operation separation. It's eye-watering.

    Well there's certainly benefit in having gone through all that before you get to structural separation - at least the businesses should be more easily detached from one another.
    But yes, TCNZ is a privately-owned company with moral and legal obligations to shareholders - that makes it difficult to have them easily (and cheapily) give up assets simply because the NZ public would like them in their hands, thankyou very much.

    Although the TCNZ board may have been eyeing up the well-above-book Toll deal and counting their chickens already...

    Auckland, NZ • Since Mar 2007 • 1727 posts Report Reply

  • 3410,

    And this is nowhere nere as bad as what I saw on my last trip to Asia...

    How about this?

    Auckland • Since Jan 2007 • 2618 posts Report Reply

  • Matthew Poole,

    Rich says:

    I'm unconvinced on the upgradability of passive networks. If it gets built out with 100G bandwidth say, wouldn't all the users need to upgrade equipment at once for 1G bandwidth?

    Sounds right, yes. But when you're starting from a position of nothing, and the marginal cost to go from 10Mb-100Mb-1Gb for the consumer equipment is very low, it's a much easier situation to deal with. Specify that the minimum level of equipment that can be attached (similar to the TelePermit system) must be capable of connecting at 1Gb. I understand the hesitation, but I don't think it has to be a total show-stopper. TCL are delivering non-uniform connection speeds over their shared-medium cable network, so it's definitely possible to do so.

    Briso asks what kind of speeds people want. I respond, something that takes into account that HighDef media is already here, and will only become more prevalent. TVNZ's On Demand is a nice service, but it's only marginally usable with current connections. What will happen to its utility if HD becomes the format in which everything is recorded and made available and we're building for today's low-def content? We've already got media companies talking about doing on-demand movies, and saying that it's just not going to happen here in the near future because of the data caps, but what they often don't mention is that for many people downloading a movie over a period of many hours just isn't going to be a winner. 10Mbps sounds fast now, but it really isn't. Really, really isn't.
    I was devastated to read in the Herald that Mark Ratcliffe (head of Chorus) "believes that 20 Mbps will be fast enough to meet most customers' needs into the future, including watching TV programmes over the internet and downloading entire movies in a matter of minutes." Why devastated? Because it's precisely that kind of short-sighted thinking that's got us so utterly fucked now on any number of fronts, not least of which is Auckland's transport network as well as our telecommunications situation. When Intel says that HD TV streaming will require around as much bandwidth as the head of Telecom's network devision says will suffice for customers into the future, I have to ask what hope NZ has of ever having a quality internet experience.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Nick D'Angelo,

    How about this?

    heh heh - that's exactly what I was thinking of!

    TCNZ is a privately-owned company ... - that makes it difficult to have them easily (and cheapily) give up assets simply because the NZ public would like them in their hands, thankyou very much.

    I had to laugh the other day. Some old coot in the pub kept blathering on about how the NZ public once owned the phone company, before the Government sold it last century. Us young folk didn't know where to look, it was embarrassing, his brain was obviously rotted by the alcohol. Why would you sell a monopoly phone company? That would be like selling the roads, or rail! They'll be selling the airports and Air NZ next ...

    Simon Laan • Since May 2008 • 162 posts Report Reply

  • Matthew Poole,

    That would be like selling the roads

    The man who looks likely to be the IT Minister in a year's time wanted to do exactly that! His road-to-Damascus conversion, as quoted in the same Herald article that talks of Ratcliffe's short-sighted notions, is rather hard to swallow when one considers just how far he bought into the slash-burn-privatise ideology.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Russell Brown,

    Although the TCNZ board may have been eyeing up the well-above-book Toll deal and counting their chickens already.

    But ... once you've acquired Chorus, even at a regulated price, you've spent all the money you were going to spend on fibre, haven't you? I can see any way it adds up, except for Telecom/Chorus to be the dominant shareholder in FibreCo. That'd be a fun negotiation.

    Auckland • Since Nov 2006 • 22850 posts Report Reply

  • Neil Smart,

    The following is the most sensible suggestion in my opinion. It makes use of existing investment and provides the best long term return on capital.

    1 (preferred):FibreCo pays fair price for the existing fibre and copper access networks to FibreCo
    FibreCo takes over management of copper and optimises maintenance and migration as fibre rolls out e.g. copper switched off as fibre rolls out

    Paul I thought we would never agree glad to say that is not the case you quite probably are correct.

    There are alternatives to fibre ......... at this fixation on One Technology to Rule Us All.

    If this network is used to provide HDTV it would be the most expensive way possible to do it and I struggle to see an advantage with broadcast satellite and terrestrial digital TV (freeview) available.

    I agree we should build fibre with the fastest speed possible at the best return.

    It is good to see we are all copying Mr Key and making policy on the fly!! at least on a new technology I suppose. Of course no one in blogland asa vested interest!

    Since Nov 2006 • 71 posts Report Reply

  • Gabor Toth,

    And this is nowhere nere as bad as what I saw on my last trip to Asia...

    I know of certain parts of Wellington which don't look that much different (Mt Victoria for instance). Though Wellingtonians are fortunate to have the Telstra Clear cable network, combine it with overhead power and phone cabling and parts of the city are starting to look like the urban streets of developing economies in Asia.

    Wellington • Since Dec 2006 • 137 posts Report Reply

  • Paul Campbell,

    I'm glad you mentioned the Tolls purchase - can you seriously imagine the Nats doing the same to Telecom? their money people would have a hissy fit

    I do remember when we owned the phone company - it sucked badly - really badly - it was run by people from before the ark who didn't really understand computers - we had to design our own datacom equipment and get it permitted - part of that process included them running the product through a bandsaw. They had a public monopoly, no one could compete with them - burying our own cable between buildings resulted in a lawsuit (forget that they didn't have enough circuits because the copper had been put in the 30s and the only connection they could offer had to go down town and back again).

    These are the same people who got their first bunch of phones cheap back in the 30s because the numbers had been printed on backwards .... worked great for years until they tried to do international STD

    Anyway while selling the phone company might have been a stupid thing to do it certainly wasn't a golden age of telecommunication

    Dunedin • Since Nov 2006 • 2623 posts Report Reply

  • Gareth Ward,

    But ... once you've acquired Chorus, even at a regulated price, you've spent all the money you were going to spend on fibre, haven't you? I can see any way it adds up, except for Telecom/Chorus to be the dominant shareholder in FibreCo. That'd be a fun negotiation.

    To be honest there was no clear view in the NZInstitute document on whether or not the purchase of the existing copper and fibre networks was included in their upfront $4b cost but it seemed not too (happy, in fact hoping, to be proven wrong). Their simple bottom-up analysis was about fibre ducting and lengths - so no mention of existing network purchase.

    So you have to buy one of the largest existing networks in the country as well. Unless, as you said, Telcom gives it up for a HUGE shareholding in the FibreCo entity - but they were keen to separate off the network and flog it initially so I'm thinking not. And you would then require an additional $4billion in funding for rolling out the fibre network as you decomission the copper.

    Auckland, NZ • Since Mar 2007 • 1727 posts Report Reply

  • Kumara Republic,

    Anyway while selling the phone company might have been a stupid thing to do it certainly wasn't a golden age of telecommunication

    Nowhere near as stupid as keeping the privatised telco vertically integrated, thereby turning it into the Ma Bell of the South Pacific. At least Ma Bell had the saving grace of its world-renowned research division.

    The southernmost capital … • Since Nov 2006 • 5446 posts Report Reply

  • Steve Barnes,

    If this network is used to provide HDTV it would be the most expensive way possible to do it and I struggle to see an advantage with broadcast satellite and terrestrial digital TV (freeview) available.

    True but as a method of delivering video on demand whether it be movies, lectures or interactive long distance medical procedures it can't be beat. A 50meg connection should be the goal of any upgrade to the network, anything less would be a complete waste of time and money. Delivering such speeds may be problematic in terms of legacy equipment but the network itself , the pipes if you like, should be at least to this standard. As for home equipment I think there woud be few people who don't have a router slower than 54mbps (802.11g is rated at this speed but actual throughput can drop to around 19mbps just fast enough for hi def video-almost) or in the case of a wired home network 100mbps.
    It looks like Woosh are going to roll out WiMax later this year or early next year. Now that could be fun, WiMax from the cabinet, stuff yer fibre. ;-)

    Peria • Since Dec 2006 • 5521 posts Report Reply

  • A S,

    @ Paul

    I'd love 100MB up/down. That way I might finally get a deceny ping to US game servers....

    I'm on telstra cable now, and frankly, even their cable offerings aren't good enough to game and have one of the other machines on the network surf at the same time. I'd hate to go back to the dark days when I was stuck with the dross that is adsl, but cable @ present is really only the best of a fairly poor bunch.

    It would be good if they aimed for GB capability at the very least, if not aiming for TB to future proof things for a year or two.....

    On the cost of rolling out fibre...

    I would have thought that stringing fibre from phone poles (of which there are an awful lot around the country) would significantly reduce the cost of rolling out fibre. Telstra clear has cables festooned all over the place in various Wellington burbs, and Citylink in wellington has their little blue cables strung thoughout the city. They tend to fade into the background pretty quickly.

    No reason, aside from NIMBYism why it couldn't happen with a fibre roll-out.

    If it is a problem, roads get dug up with awful monotony, so it wouldn't really be too hard to lay conduits when councils are doing their usual mad spend up before the end of the financial year. Start now, and in a few years, everything will be in place.

    Trying for two birds with one stone might even be possible on this one.

    Wellington • Since Nov 2007 • 269 posts Report Reply

  • Matthew Poole,

    I would have thought that stringing fibre from phone poles (of which there are an awful lot around the country) would significantly reduce the cost of rolling out fibre. Telstra clear has cables festooned all over the place in various Wellington burbs, and Citylink in wellington has their little blue cables strung thoughout the city. They tend to fade into the background pretty quickly.

    No reason, aside from NIMBYism why it couldn't happen with a fibre roll-out.

    Ain't going to fly in Auckland. A significant part of the reason that Auckland doesn't have TCL cable is that the Auckland City Council said nay to overhead lines. District plan forbids new ones unless it's absolutely imperative. Big ups to them, coz the lines are bloody ugly. I lived in Avalon for 18 months, and while I was able to eventually ignore the visual pollution of a single fat cable festooned from the lamp posts on my street it was impossible not to see the veritable jungles of wires overhead in the CBD.
    Toss in the significant work that's been done up this way to get rid of any overhead wires, and it's trying to poke runny brown stuff uphill with a small piece of tree to not do a ducted rollout in Auckland.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • A S,

    Ain't going to fly in Auckland. A significant part of the reason that Auckland doesn't have TCL cable is that the Auckland City Council said nay to overhead lines. District plan forbids new ones unless it's absolutely imperative.

    Then Auckland will risk missing out. I'd be quite happy if they rolled fibre out to the rest of us instead, who don't mind overhead wires if we can get decent speeds. It will also mean less congestion on the international links if Akld stays in the IT stone age, not to mention significant cost savings to whichever govt decides to go with FTTH :-D

    Wellington • Since Nov 2007 • 269 posts Report Reply

  • Matthew Poole,

    Then Auckland will risk missing out.

    Wishful thinking on your part. The figures, from NZI's estimates at least, appear to be based on ducting not overhead.
    The big advantage of ducted is that errant car drivers, of which NZ has more than a few, don't knock out large swathes of connectivity if they happen to hit an inconvenient pole. That was a major reason for Auckland's undergrounding work, plus those big wooden poles are very unforgiving to motor vehicles so there are safety benefits also.

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Paul Brislen,

    So the consensus seems to be about the 50Mbit/s down and similar up... which is nice (momentarily puts Vodafone hat on) as we're hopefully introducing a VDSL2+ service this year that will do just that (frisbees hat into the the corner again).

    Several years ago now I met a nice chap from Ericsson who had recently commissioned a study into Adelaide and the potential economic net benefit of doing FttH as we called it then. Much like the Institute work, it concluded that the city would make a net benefit in a relatively short time frame. Of course, everyone poo-poohed it at the time because Of Course They Say That, Ericsson funded the study...

    One thing he pointed out was that broadband demand increases exponentially so this year 1Mbit/s a second is OK, next year (well, he had an 18 month cycle as I recall) it would be 10Mbit/s and 18 months later it would be 100Mbit/s. So far he's pretty accurate - at the time I would have killed for 1Meg down. Now I have about 4 and I'd love 10. When I get 10 I fear I'll be drooling for 100 and so on.

    So my next question is: what price would you pay for 50/20Mbit/s service? With, say 100GB of data.

    Auckland • Since Nov 2006 • 200 posts Report Reply

  • Matthew Poole,

    50/20 with 100GB? You're joking, right? We can get 100GB now with downstream speeds half that and upstream speeds not even in spitting distance.
    Seriously, caps are the thing that kill us the most. I could probably convince the flatmates to wear $150-175/month for that kind of speed, but 100GB? Do the maths. It's bad enough Xtra offering a 200MB cap with 2Mb DSL!

    Auckland • Since Mar 2007 • 4097 posts Report Reply

  • Stephen Judd,

    I'd love 100MB up/down. That way I might finally get a deceny ping to US game servers....

    What's the minimal latency from here to the US West Coast? Speed of light is about 3000000km/s, distance point to point is about 11000km, so I reckon it's going to be at least 60ms, even if it's fibre all the way, owing to the overhead of switching steps + the irreducible 30ms. (I believe fibre is even slower than that, refractive index etc....) More bandwidth is not going to help much; you need to crack on to changing the speed of light.

    Wellington • Since Nov 2006 • 3122 posts Report Reply

  • Paul Brislen,

    @Matthew - No, I'm not joking. I don't think there's an ISP in NZ today offers a 100GB plan. I can't see one offering one with that large a cap any time soon.

    I do hear what you're saying - with a family each member downloading movies, TV, surfing, working and saturating the link, you're going to hit 100GB at a run... but the wholesale service on offer today simply isn't up for it.

    And I think you're proving the point for those that don't like the National party fibre plan. If you're willing to pay that little but want more than 100GB, there is no business case for fibre to the home. We're talking about a $6bn investment here... that's got to pay a return or we'll be digging up the streets twice, the second time to remove all the lines.

    I don't see a way round it - if you want to invest that much it needs to generate a return on the investment.

    I'm no economist - anyone want to tell me why I'm wrong? Personally I'd love fibre to the home. Wave division multiplexing is a glorious thing. In the mean time I'll "settle" for VDSL2+ with only 50/20 but I can't see it coming with a 100GB cap.

    Still not an official comment. Just me.

    Auckland • Since Nov 2006 • 200 posts Report Reply

  • Rich of Observationz,

    what price would you pay for...

    About $50, same as now. I don't plan to budget any more for internettery.

    But it's not what *I* would pay for the service. It's what an average household would pay - or, more specifically, the price/adoption curve.

    Taking a small group of early adopters (like the readers of PA, I suspect) and extrapolating to the whole country is a bit of an obvious fallacy.

    Back in Wellington • Since Nov 2006 • 5550 posts Report Reply

  • Kerry Weston,

    As to how long it would take to lay underground fibre/cost over-runs...I heard a chap on natradio talking about China - they have built a 32km bridge from Shanghai to an island in just 18 months.

    Where there's a will there's a way and all that. I dunno what it is about this country that we piss around so much over infrastructure, meanwhile the costs escalate - Transmission Gully, a better Harbour Bridge.

    Maybe those 1800 Chinese workers we're getting can get on with the job.

    Manawatu • Since Jan 2008 • 494 posts Report Reply

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