Isn’t about Mobile

Before i start, let me just say i’m not a 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 political policies, poor press leading to general acceptance that Telecom 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 is 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 out 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 connections – give me the webpage i want faster, upload my stuff faster…. Semantic, but important difference.

Broadband as in common use means 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 you need to reduce the loop 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 gonna 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 telephone they carry around with them (called a mobile), 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 tho and they are quite quick!), but it is already demo’d as doing 150mbps. That’s 15 times what cabinetisation is gonna 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….



The netco debate

I spotted this on Rod Drury’s blog. A really good synopsis of the politicking going on about the network seperation (netco) proposal by Telecom.  Rod’s statement  here would be the crux of the matter.


           I'm a bit puzzled by David C’s approach here.”


My read on this is that the threat of operational separation has been used by the government to ensure Telecom plays the governments game and they therefore win the political points.  Telecom has called the governments bluff here and Labour are stalling for time to think up an appropriate response.

Another thing i’ve noticed is that this government in particular are really reluctant to make decisions. Decisions polarise the population (that is some of them won’t like you and hence vote for you), decisions have consequences, decisions have a long term impact. All things that this government don’t like (given they way the love pointing fingers rather than doing anything about it, just look at Cunliffes bit in the Rod post). This leads to investment.

I also think that by putting investment fairly and squarely in the public arena (which seems to be the actual problem with our future network) the labour government feels slightly exposed.

Mr Cullen is about announce a massive surplus, which indicates that the government isn’t investing our tax back into our creaking infrastructures.  The problem the government has (despite its best efforts to point the finger for the out of control interest rate at home owners) the reality is that central government spending has played a large part in fuelling interest rates.

The other factor I think that is critical here is that up until this moment the government has had an ‘out’ on the much debated OECD broadband penetration and productivity reports. That out has of course been Telecom. This of course ignores tax reform, exporter incentives, a decent savings scheme, education reform and creating an environment where its easy to run your company or live for that matter.  By putting the network back into public hands the government becomes accountable. Hmmm, more tough decisions to make, ops can’t do that. Can’t actually do anything.

In fact that statement is truer than I originally meant it to be. By its complete mismanagement of the wider inter related issues with the economy, the government has painted itself into a corner because now, when we need spending the most,  they can’t as it is tip the manufacturing sector over and the rest of the economy with it.

The telco week that was

Its been a pretty interesting week for Telecommunications in NZ and the world in general actually. Remarkably there has been some fairly reasonable commentary about Telecom’s proposed separation plan.  Personally i think this is a good move by Telecom, it

a) removes a point of leverage that the government was putting on them

b) it will provide a more realistic and manageable timeframe for actual separation

c) it will remove the burden of investment off them alone (to who i wonder again)

d) it will mean that they MUST absolutely deliver on their ICT strategy and remove the foot in both camps that they suffer from and

e) make it easier on their staff (i think that makes 4 severe re-orgs in 2.5 years!!! Spare a thought for them)

I particularly like the line in Fran’s piece where she says

  "Trouble is the Government may be too wedded to its own offensive strategy to see reason in return.”

I’d actually extend that bit to “the government and Telecom’s competitors” are too wedded to their strategies and in my opinion are going to miss an outstanding opportunity.  

I think that the government will miss the opportunity (despite the efforts of people like Rod Drury), i think they are far more interested in rhetoric and political posturing than actually making things better for that average NZer. The other issue is, if they controlled the network, then they’d be on the hook for our current OECD standings, which will in turn make it abundantly clear that having a decent broadband network is only a small part of a picture. Personal and company tax rates, compliance, electricity and other core infrastructures as well as a student debt scheme that drives grads away in their droves once we’ve educated them all need to be addressed.

I also think that most of Telecom’s competitors will miss the boat as well. Firstly that are so attached to being a victim that they don’t have the DNA to actually be proactive.  They will also have to put up some cash to actually differentiate themselves or even get ready to sell the network assets of the new netco. Finally, with the exception of a few of the ISP community, most of them are focused on the consumer market, (which is actually pretty much already on a trajectory) and miss the greater opportunity of offering services to business.

I think the big mover this year will be the Vodafone Ihug story. Already they are making some moves. But this is a network, access and calling game. To be honest this is Vodafone’s DNA coming through. At the end of the day they are what Telecom was 7 years ago, a network and calling company, full stop, end of story. Their track history in building and deploying value added services isn’t flash. Added to this is their ambition (which i have heard from a source) to have one of their divisions being the number 1 telco (and that can only be NZ) and i think they’ve got it wrong.  Another factor that they should be considering is market saturation in the core business and things aren’t going to be that rosey.

Be and interesting couple of years

World most innovative countries

My bet is that Telecom’s in for another shellacking today. The World Economic Forum listing out which countries are the top innovators . (full list here )

The media frenzy will pick up the fact that liberalisation of the Telco sector is key factor and miss the fact that “a first-rate regulatory environment and large availability of e-government services” are also critical to making this real.

Interesting the plummet in the US ranking though. Is the empire falling?