Spark saw a surge in the amount of data traffic humming through its cables and airwaves earlier this year.
Chief operating officer David Havercroft says though the company anticipated and planned for an increase in data demand and had invested in the necessary infrastructure, the jump was sudden.
"We worked on the assumption there would be a 100 per cent year-on-year growth in data. That's more or less been the case," Havercraft says. "However, it accelerated early in the year. In February the average household used 42.5GB of data. By July this was 62GB. That's an increase of 46 per cent in six months. Most of the increase was in just three months".
The extra data traffic demand came as consumers switched from conventional broadcast television to video-on-demand services like Spark's Lightbox. Netflix got a lot of attention when it started a local service in March and triggered increased awareness of all the digital entertainment options.
Havercroft says the original idea behind the Government plan to build a UFB fibre network was that it would boost the economy. That is still going to happen, but he says we're now learning broadband is also a much better way of distributing television.
The switch to video is not just about entertainment. Businesses are learning to use video conferencing and Havercroft says where a few years ago someone might look at a printed manual to learn how to, say, replace an inkjet printer cartridge, now they "hop on to Google and find a YouTube video that shows them how its done. Everything is becoming video and that means more data."
We're seeing a declining use of SMS messaging as people switch to messaging apps. Mobile data continues to grow at 70 per cent year-on-year.
Spark is investing in digital infrastructure to meet that demand. The way the Government-sponsored UFB fibre network is designed means internet service providers like Spark have to buy local connections between cabinets or exchanges and homes or business premises from specialist wholesale fibre companies like Chorus. The rest of the job of connecting users with the internet is left to ISPs.
Havercroft says as New Zealand's largest ISP, his company has to carry more bits than anyone else. "We're disproportionate in terms of data traffic and we wholesale services to other providers. We run backhaul and core networks and services.
"We invested heavily in caching so that once a file is downloaded from the US or elsewhere a copy is stored here, making it easier the next time it is needed," he says.
The move from broadcast analogue to internet delivered digital television transition means that what once went through the air, now goes through the ground. Curiously there's a reverse process with telephone traffic. That once went through the terrestrial phone network but voice traffic is fast switching to wireless mobile networks.
Havercroft says Spark's biggest single infrastructure investment last year was buying air. "Air is an enabler to everything mobile." The company outbid Vodafone to buy the remaining block of 700 MHz spectrum for $81 million, making a total investment of $158 million. Spark has four blocks, Vodafone three and 2degrees two.
Having more 700 MHz spectrum means Spark can offer faster wireless data on its 4G mobile network -- potentially a key competitive advantage. Havercroft says Spark is going hard on 4G on the back of that investment. He says the company is combining its mobile assets into a single radio access network and now has over 75 per cent of customers on 4G.
He says: "Moving to 4G didn't require anything in terms of physical civil engineering, instead it meant upgrading the electronics on cellular towers. The next move will see us using emerging small cell technology. We're already trialling this. Small cells are what the name implies, cellular base station technology in a small package. It's ideal for deploying in densely populated areas or in new suburbs. Small cells can extend capacity and coverage on a micro level -- you can even attach them to street lamps".
Behind Spark's mobile and fixed line infrastructure is the software needed to run complex networks.
Havercroft says Spark has invested in huge data centres, including the $60 million Takanini data centre opened late last year. He says modern mobile networks are software controlled and that data plays an increasingly important role. "We're seeing a declining use of SMS messaging as people switch to messaging apps. Mobile voice traffic is growing a little as people substitute cellphones for landlines. Mobile data continues to grow at 70 per cent year-on-year," he says.
Havercroft says Spark's investments are geared towards building the infrastructure New Zealand needs for a digital future. He says the 100 per cent year-on-year growth is likely to continue for the near future. The shift of all forms of information to video still has some way to go.
"We don't know where that's going to take us in 20 years' time, but we want to make sure New Zealanders can take full advantage of the digital future."
Tasman Global Access cable on track for 2016
Spark New Zealand chief operating office David Havercroft says Spark's biggest single infrastructure investment this year is the 2300 submarine cable linking New Zealand to Australia. Work has begun on the Tasman Global Access (TGA) network with Alcatel Lucent contracted to build the project. The network is on track to start operation by mid-2016.
The TGA network is a joint venture between New Zealand's two largest service providers, Spark and Vodafone, along with Australia's Telstra. The three are investing US$72 million to build a cable from the west coast port of Raglan to Oxford Falls in Sydney. Spark's share of the project is $30 million.
When operational, the network will have a capacity of at least 20 Terabits per second.
Havercroft says though there's no immediate pressure to add extra international capacity between New Zealand and the rest of the world -- the existing Southern Cross Cable Network has headroom for the near future -- there is a need for redundancy.
The TGA network will provide an alternative route for traffic and improve New Zealand's connection to Australia and Asia. This is important as many international cloud computing companies serving New Zealand are locating their regional hubs in Sydney.
Havercroft says with data demand continuing to grow at 100 per cent year-on-year the additional capacity will eventually be necessary.