Kurt Rodgers , strategy manager at Chorus. Photo / Dean Purcell
Kurt Rodgers , strategy manager at Chorus. Photo / Dean Purcell
The move to fibre-optic technology has sparked further disruptions that are changing the way we live and work.
The move to fibre-optic technology has sparked further disruptions that are changing the way we live and work Five years ago no-one could foresee the change that has already happened. Kurt Rodgers Chorus NZ network strategy manager Kurt Rodgers says fibre is the disruptor that reshaped New Zealand's telecommunications industry.
He says: "Deciding to build a fibre network was only the first disruption. The network build is now past the halfway point, as adoption grows and the technology itself evolves it enables new disruptions. They aren't likely to stop."
Rodgers is talking about the changes that swept through New Zealand's telecommunications sector in the past six years. Thanks to the growing demand for data and the explosion in mobile use, the sector was already on the move. The rate of change stepped up in 2009 when, then communications minister, Steven Joyce announced government plans to spend $1.5 billion building a new fibre network.
Joyce's initial plan was for the 75 per cent of New Zealanders living in the 33 largest cities and towns to have fast fibre broadband connections. That has since been extended to cover around 80 per cent of the population. When finished, the Ultra-fast broadband network will replace the 100-year-old copper telephone network with data connections capable of carrying vast amounts of information at high speeds.
Fibre meant the restructure of the telecommunications industry. In order to win UFB contracts, the largest company, Telecom NZ, had to spin off its Chorus network division. That changed the nature of Telecom.
Since then, Telecom changed its name to Spark NZ, reflecting its new role providing a broader range of digital services. Meanwhile Vodafone acquired Telstra Clear becoming a full service telecommunications provider in the process. On top of these moves a wave of consolidations has created stronger competitors. The market is no longer one giant and a string of minnows.
Rodgers says this all happened because of the move to fibre optic technology. He says: "It's a fantastic technology for broadband. Not only is it incredibly fast, but it is reliable and stable in ways other communications technologies are not. Copper and wireless broadband performance can be heavily impacted by climate or interference. This makes it impossible to predict what data speeds a customer will see."
Because fibre is stable, service providers are able to sell different speeds to customers. Rodgers says everyone gets exactly the speed they purchase -- at least from the local fibre access network. Actual overall network performance will depend on other factors either downstream with national and international connections or more locally as the data is distributed around their homes and offices. He says wireless and copper service providers can't sell speed in the same way because they can't guarantee what customers get.
Another difference between fibre and other telecommunications technologies is that it is easy to upgrade. And that's why Rodgers says fibre will continue to be disruptive.
When UFB connections were first sold here, most customers chose the lowest priced 30 Mbps service. This offers roughly the same speed as the best copper broadband service, but with fibre's stability and reliability. Now he says the most popular UFB service is 100 Mbps. "To upgrade a customer from 30 to 100 Mbps doesn't require much change, they don't need new equipment or engineers to call. It all happens seamlessly at the service provider's end."
One curious aspect of being able to offer different speeds is that service providers can differentiate their products by price. Users with modest requirements, maybe just wanting email and web browsing can have a low cost 30 Mbps plan while those who want to stream television and other digital entertainment can pay more to buy faster connections.
Five years ago no-one could foresee the change that has already happened. All we know is that more disruption is on the way.
Rodgers says online television has been 2015's big disruptor. When Netflix entered New Zealand service providers reported a doubling of traffic. It has driven up demand for data and seen providers increase capacity. It is causing customers to switch from copper to fibre.
Online television is disrupting local broadcasters and Sky TV with competition coming from new entrants like Spark's Lightbox and the Premier League Pass football service.
"You really need a fast fibre connection for online television because it needs high peak speeds. Fast-forwarding or rewinding video content means large bursts of data arrive to quickly fill buffers. You'll get a much better television experience with 100 Mbps or higher".
About 25 per cent of new customers want more than 100 Mbps and choose the even faster 200 Mbps services. Rodgers says as recently as five years ago when the UFB project started, 200 Mbps was thought to be faster than anyone would ever need.
"But household demand continues to climb. Every year each house has more digital devices, people have more apps, they do more online, businesses use more cloud computing services and the quality of digital content improves. Next year we'll see more 4K television which means higher definition pictures, higher frame rates. Fibre is able to take all that in its stride".
Rodgers says by 2020 the standard fibre connection in New Zealand will operate at 1 Gbps and that will mean further disruption. Some New Zealanders are already using that speed. Dunedin won the Chorus Gigatown competition and customers in that city can buy 1 Gbps connections at normal UFB prices. The city already has higher average speeds than the rest of the country and customers use more data. Rodgers says Dunedin already has a higher uptake of fibre services than most towns and demand is still growing there.
It's not just Dunedin. The latest uptake figures suggest that after a relatively slow start, New Zealand is now the world's fastest-growing fibre market. Rodgers says that's likely to accelerate because the first wave of the Chorus' UFB build focused on areas with businesses, schools and hospitals. From now it will be running fibre into potentially high-uptake suburbs.
