Slowly into the future with UFB

By Anthony Doesburg

Ultra-fast broadband is spreading, but where are the customers? Anthony Doesburg reports

John Eccles of Magnetism Solutions credits ultra-fast broadband with winning the software company a customer in London. Photo / Richard Robinson
John Eccles of Magnetism Solutions credits ultra-fast broadband with winning the software company a customer in London. Photo / Richard Robinson

Brent Martin began enjoying some fibre in his broadband diet in the middle of last year.

The head of Whangarei accounting firm Plus Chartered Accountants wasted no time in getting connected to the newly installed fibre-optic network running past his CBD door.

But when the company moved to new premises about 2km away in March, Martin was dismayed to discover fibre was off the menu. Although fibre was installed in the street, the new office was not connected and he was told to expect a six-week wait.

In the months the firm had been using the government-funded ultra-fast broadband (UFB) network, it had put the extra speed to work by connecting to cloud computing services.

Having to downgrade to the old copper network and become reacquainted with the Microsoft Windows "hourglass of death" when uploading files would have seriously hindered operations, Martin says.

"We'd made the decision to move most of our accounting software into the cloud once on ultra-fast broadband. Then, given our reliance on the internet, to have the potential to be back on the copper wouldn't have been a disaster but it would have certainly affected productivity and profitability.

"We really didn't want the crew sitting there watching the hourglass of death while waiting to use the cloud-based applications."

Northpower Fibre, one of four companies part-owned by Crown Fibre Holdings and contracted to install the UFB network throughout the country, came to the rescue, connecting Plus CA without delay and sparing it from having to revert to copper.

"It was upload speed that really made the difference," Martin says.

"When you're working in the cloud you're sending files up as much as you're downloading them and uploads on the copper network were pretty abysmal.

"It's significantly faster on ultra-fast broadband, which is really important for our eight or nine staff using cloud-based audit, accounting and practice management software."

Plus CA is getting a 100Mbit/s download, 50Mbit/s upload service, which Martin says is costing about the same as the ADSL copper-based service it replaces.

Those speeds - about 10 times faster than typical ADSL downloads and 50 times the usual uplink - are newly available to thousands of small businesses.

Northpower Fibre, an offshoot of community-owned electricity lines company Northpower, is running months ahead of schedule with UFB installation, says spokesman Steve Macmillan.

By the end of the year it will have run fibre to more than 19,000 addresses in Whangarei and its surrounds, six months before the original June 2014 target date. By next March, after testing is complete, all of Northpower's fibre network will be live.

"Hopefully by March we'll have some government officials up here to mark the first fully fibre UFB city in New Zealand, probably two years ahead of any other city, we're thinking," Macmillan says.

But that's the easy part. Persuading the occupants of those addresses - whether residential or commercial - that it's worth connecting to fibre will be the making or breaking of the Government's $1.35 billion UFB plan.

At this early stage of the rollout, actual connections are running at about 3 per cent of the 15 per cent of target addresses so far able to connect.

As Northpower Fibre takes care of Whangarei, Ultrafast Fibre, part-owned by Waikato lines company WEL Networks, is installing cable in Hamilton, Cambridge, Te Awamutu, parts of Tauranga, Tokoroa, New Plymouth, Hawera and Wanganui.

In the South Island, Enable Networks, majority-owned by Christchurch City Council, is laying fibre in the midst of earthquake repairs in the city and nearby centres including Rangiora, Kaiapoi and Lyttelton.

About 70 per cent of the national rollout is being done by Chorus, which has the plum Auckland, Wellington, Palmerston North, Dunedin and Queenstown markets to connect, plus a score of other towns, with a total of more than 830,000 premises.

The Government's goal is to have fibre laid - or hung from power poles - outside 1.35 million addresses by 2020. Its projections are that by 2016, 90 per cent of businesses in the UFB coverage area will have connected and the remainder will do so by 2019.

But from where we are today, those are distant targets. At the end of March, Communications and Information Technology Minister Amy Adams said fibre had reached nearly 172,000 premises, but just over 5000 users had taken the plunge and connected.

Adams considered that was good progress - in line with expectations and overseas experience. And to some extent the numbers are deceiving. Businesses, with schools and hospitals, are being given higher priority for connection than residential areas. And businesses are taking up fibre at a faster rate than residential users.

Northpower, for instance, reports an overall uptake rate of more than double the national average and says more than a third of early adopters are businesses.

Nevertheless, reckons Tony Collins, chief executive of the Northland Chamber of Commerce, the rate of adoption by businesses is low. In part, he says, that's because key service providers - such as Vodafone - haven't yet entered the UFB market.

Vodafone is one of dozens of RSPs, or retail service providers, which before the advent of ultra-fast broadband were known as ISPs, or internet service providers. There is more new lingo: there's UFB itself, then LFC, or local fibre company, the name given to the four UFB installers (Northpower Fibre, etc).

The LFCs supply wholesale services to the RSPs, which include the familiar Telecom, Vodafone, Orcon, CallPlus and Snap. As Collins points out, not all RSPs are operating everywhere that UFB is available.

Perhaps that's just as well. Another of the barriers he sees to business adoption of fibre services is the difficulty of weighing up the merits of the competing RSP offerings.

"Businesses ... get three quotes from three RSPs and they can't figure out what they actually all mean. So there's still some work to be done."

Collins says many small business owners struggle to understand the technicalities of broadband services - download and upload speeds and data caps, for instance.

"RSPs ... need some kind of framework so that it is clear to the customer what they are getting."

Help could be at hand. At Adams' request - she was apparently taking up the cudgels on behalf of her 70-year-old mother - the Telecommunications Forum, whose members include many LFCs and RSPs, is drafting a broadband product disclosure code.

Adams would like to see a template giving prospective UFB users a consistent set of information about broadband plans, including the total service cost, the data cap and traffic management policies, minimum contract periods and the average speed of users on the plan.

A first draft was released last month, but it's being written for mass-market offerings, not business plans.

Steve Fuller, head of Christchurch LFC Enable Networks and a Telecommunications Forum member, says in principle a similar framework for business customers would be useful, although it would be complicated by the greater range of business market offerings. In Christchurch more than 30 RSPs are selling business UFB services, versus only a couple catering to residential customers.

Collins says the key to attracting businesses is to show them what fibre services can do for the bottom line.

"The dollar benefit is the thing."

According to Northpower's Macmillan, fibre-connected businesses routinely report efficiency gains of 20 per cent on IT-related tasks.

Collins says the fibre network is tailor-made for IT businesses. But it can be equally beneficial for traditional businesses - retailers and tradespeople, for example - giving them fast access to software to manage their businesses and with the potential to make more sophisticated use of the web for reaching customers.

Browns Bay panel beater Tim Holgate says the ability to upload hundreds of digital images of damaged vehicles to insurers in seconds rather than minutes has contributed to a productivity improvement of between 10 and 15 per cent in the administration side of his business.

Collins says Kiwi businesses, and Northland's in particular, are mostly small to medium-sized. Connecting to fibre can help them overcome barriers of scale and isolation and improve market reach, and he is eager for Whangarei to take the lead.

"With Whangarei being first cab off the rank, that gives us a competitive advantage if we take the opportunity to use it and other investment around IT. But we've probably only got about an 18-month head start."

Indeed, Christchurch won't be far behind. Enable's Fuller says by this month about 30,000 premises will have fibre outside, which is a feat considering the amount of earthquake repair work taking place in the city.

As many as three dozen retail service providers are connecting Christchurch businesses to UFB at a 15-20 per cent uptake rate, several times the overall national average. But that leaves as many as 8000 businesses that could connect but haven't yet.

"There's a real opportunity for businesses to work with service providers to see how they can go about business differently, how they can use fibre to save costs first and foremost," says Fuller.

Fibre has the benefit of bandwidth to spare for multiple services - such as voice, internet, IT and backup services - which a single copper connection would struggle to carry, says Fuller. In Christchurch, that has particular resonance.

"Christchurch businesses can gain resilience by putting applications and services [via the cloud] in the hands of IT professionals. Remote working solutions mean key business information and applications aren't sitting [on a server] under a desk waiting for an earthquake to happen."

Analyst Paul Budde, who keeps an eye on the Australasian telco market from fibreless Bucketty in the New South Wales bush, thinks UFB and Australia's national broadband network (NBN) have much more to offer than just faster data connections.

He is an advocate of government-led "trans-sector transformation" based on ICT, with fibre connecting what are today separate branches of government and industry to boost digital productivity. For example, UFB could be used to create a power-saving smart electricity grid, he believes, and health officials should direct money to cost-saving services such as telemedicine instead of new hospitals.

Budde would be less relaxed about New Zealand's 3 per cent UFB uptake rate than Amy Adams apparently is, saying up to 10 per cent of Australians had flocked to the NBN at a similar stage of its installation. "The Australian experience has been about 10 per cent take up fibre as soon as it's available, rising to about 40 per cent within 18 months. Some areas are at 70 per cent by now."

An entry-level NBN service is A$29 ($34.41) a month, versus about $75 for UFB.

"I think what you're seeing in New Zealand is the fibre is being rolled out as a premium service for businesses, schools and hospitals and therefore is priced higher than if you were rolling it out as quickly and deeply as possible in the residential market.

"It is totally price-driven. You can talk about speed all you want, but it's all about affordability."

He concedes the A$40 billion the Australian Government is spending on the NBN means it can make fibre available more cheaply than New Zealand can. But he also acknowledges New Zealand stands to get a good return on its $1.35 billion investment, if over a longer term.

Enable's Fuller doesn't think price comparisons with overseas are particularly meaningful. What matters is the cost relative to the copper and wireless broadband.

"I think the current pricing is good - it shows a price advantage for fibre over copper, and given that you can do much more with it - the fibre service performs a lot better than copper - not only is it cheaper, you also get a lot of added value from it."

In Northland, the chamber of commerce and other business entities are taking every opportunity to encourage Whangarei businesses to connect.

Says Collins: "We just see it as a must."

Keeping lines humming

Christchurch-based Research First is a fibre fan less for its data capacity than for the fact that a single connection can carry multiple phone lines.

The market research company has a dozen researchers and an outbound call centre with about 25 operators who rely on an ultra-fast broadband connection to keep the lines humming.

Call centre general manager Philip Sapsford says like many Christchurch businesses, Research First has had a transient existence since February 2011.

Before the February quake struck, the business was sharing premises with a small internet service provider, getting the benefit of the ISP's fibre connection.

There was no fibre at the new location, but there was the next best thing, VDSL, which in speed is a step up from ADSL.

"We survived adequately with that - we only had about 10 people calling at any one time," Sapsford says.

Now in permanent premises on the opposite side of the CBD from its pre-quake location, Research First is back on fibre. As well as voice traffic totalling about 90,000 calls a month, the fibre provides internet access.

"There's a fat old pipe coming in and speed is consistent no matter how many calls are being made."

From Penrose to London, by fibre

Software company Magnetism Solutions credits ultra-fast broadband with winning it a customer in London.

John Eccles, managing director of the Penrose business, says the fibre network is so fast that working on customer systems remotely is as easy as being on site.

"The impact for us is we can do a lot more from our office as opposed to visiting our clients, whether they are in Christchurch, Wellington or London," Eccles says.

Fibre allows Magnetism to demonstrate new software to customers in real time using shared screens, which Eccles says is a powerful new support tool.

"We have a client in the UK and we have done more than $100,000 of work for him and I only met the guy for the first time in May when I was in London."

Eccles says fibre makes it practical for a company such as his to form and maintain business relationships that span the world Magnetism has written software that ties customer relationship management (CRM) package Microsoft Dynamics into cloud-based accounting software Xero, and the British customer discovered the company through an online search.

"Without the communications that are available via fibre it would have been difficult to undertake this work. It reduces meeting costs dramatically if you can set up a videoconference with just a few clicks of your mouse."

Fibre has also opened up training opportunities for the company. A staff member who is one of just a few dozen accredited Microsoft CRM specialists in the world conducts "webinars" for international participants from his desktop.

"As his name and reputation spreads, that's good for the business," Eccles says.

A little fibre could be a dangerous thing, however, by making any other type of network unacceptably slow, an issue that Eccles says is going to become more pressing as cloud services spread.

That trend can be seen in the evolution of Dynamics CRM: what started out as an application that businesses ran on their own servers has since become one of Microsoft's primary cloud-based packages.

"After accessing the cloud via fibre, a slow connection is just intolerable," says Eccles.

Far to go

• Number of users able to connect to ultra-fast broadband: 172,000
• Number who have connected: 5130
Latest update, as of March 31

- NZ Herald

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