What’s going on with Chorus and UFB?

NBN-BannerIt’s looking to me like Chorus is in trouble. The latest pressure coming from a Coalition of ICT lobby groups supported by the Commerce Commission in an attempt to reduce copper pricing. Chorus’s answer to that?

“John Key last week said Chorus could go broke if the recommendation by the Commerce Commission to cut the price of copper broadband went ahead.”

There are many problems with Chorus and it’s starting to look and smell a little bit like Australia’s NBN, which has been described as one of the greatest white elephants, ever. The Australian NBN aims to wire up a large part of the country, however, as of June this year had managed to only connect 73,000 homes and businesses. It will be interesting to see what the newest elected government across the Tasman does with the NBN, there are rumours it will be canned or driven back to fibre backbone only, with nodes established on the end of lines that are then serviced by copper, fibre, or wireless.

In New Zealand, the Chorus rollout continues to be incredibly slow, with estimates of connected homes completed by 2,400 or thereabouts. I live within two suburbs of the Wellington CBD and periodically check on the availability of fibre for my area.

“UFB deployment dates for your area are still being developed”

Most of you will be familiar with that particular status. Even when the fibre goes past my place, there is a going to be a problem getting it from the street to me.

The real problem appears to be Chorus itself, which was formed out of Telecom’s demerger, and largely funded by a nearly $1B cash injection from Government. It would be terribly embarrassing if Chorus failed and the loss of cash would be, well, huge.

Chorus faces some big issues and competition.

First, the Chorus structure itself is largely Telecom like, despite their being a deliberate attempt at formation to avoid that very situation. This means that Chorus is not as agile as it could be. Turning the supertanker takes time and that’s an issue in this market, because the technology changes in the market are increasing rapidly.

As an example, I bought Vodafone’s super fast broadband a few months back after not being able to get a time for UFB. It works, it’s flies along at 100Mb quite happily, and its allowed me to be a lot more connected. I run my entire business from Cloud, so the extra kick in speed is worthwhile.

That’s a copper service. It’s already running at UFB speeds. In fact, last week I got an email from Vodafone saying, “we just bumped up your speed by 30% for nothing.” Sure enough, speed tests now confirm that I am getting nearly 130Mbs.

That’s hard to compete with when Chorus is struggling to just get fibre in the ground. Already the speed on copper is above what Chorus is going to take years to achieve.

And as I’ve commented before, those copper speeds are just the beginning.

Enter DOCSIS 3.1, the next generation of the cable access technologies. The new standard will allow cable firms deploying D3.1 equipment to deliver up to 10 gigabits per second down and 1 gigabit up. The technology uses OFDM technologies familiar to the wireless industry to cram more bits into a single megahertz of available spectrum used in the cable plants (it’s 11 bits per hertz if you care). Thus, cable providers can then deliver more bandwidth using their existing radio frequencies. – Gigaom

Wireless as well is starting to push into the fibre space, not just to the door, but as a backhaul as well.

Researchers at the Fraunhofer Institute and Karlsruhe Institute of Technology in Germany have successfully transmitted 40 gigabits per second over a one-kilometer (0.62 miles) wireless link — a new world record. The technology, dubbed Millilink, is the same speed as the fastest commercial fiber optic links, and could represent a major breakthrough for carrier backbones, broadband internet access in rural areas, and ultra-fast last mile access for customers who haven’t had fiber rolled out in their area. – Extremetech

The other problem that Chorus has, and the entire industry, is that the government keeps sticking its nose into the problem.

Last month, Communications Minister Amy Adams proposed a price for copper connections of $37.50 to $42.50 a month, comparable with faster fibre services and about $10 higher than the commission had recommended. The analysis by economists Covec for the protesting coalition has calculated the charge would amount to a $600 million tax on copper broadband users for the sake of the faster cable. – NZ Herald

This is interesting, because it looks like Amy and National are trying to prop up a company that is in trouble to protect their investment as opposed to looking at the global issues and coming up with a new plan.

The NZ Herald goes on to say:

At $2935 for each premises the fibre passes, it must be wondered whether the fibre is worth it. With roll-out well under way it is too late to be asking the question, and perhaps in time it will pay off. But it is equally possible that wireless technology will have entirely displaced cable by then.

We should be asking the question, nearly $3k per connection is actually more expensive than fibre connections, for a business, in the Wellington CBD. It is also clear that both copper and wireless will (already are) overtake UFB speeds and feeds.

We have a desperate need for bandwidth and the current roll out plans and speeds from Chorus are going to leave New Zealand as a technical cul-de sac unless we treat the issue as one of national, critical infrastructure that needs private public investment across a whole range of technologies, not just fibre, starting now.

What we are seeing though, in my opinion, is an attempt by Government to tax those other technologies in order to shore up a company that is struggling. That means that we will simply create a digital divide. Those with money will pay for faster speeds via copper and wireless, those without will be forced to remain on old technology until UFB actually gets coverage.

Those of us on copper will effectively be taxed by the Government in order to support their white elephant.

What needs to happen is that Government should take a good hard look at what is happening in Australia with the NBN (suffering similar problems and due a change) while also looking at Chorus proper and its viability in it’s current form. 

If you are going to throw money at Chorus, then change it first at least. The current model is not optimal and just throwing cash at a company that digs holes is mad. The strategy and business should be examined carefully and a new plan drawn up.

It is likely that the Australian NBN will be driven back to fibre to nodes only, as opposed to fibre to premises. In other words, fibre is laid to strategic points whereby operators can then choose to connect and deliver end-user service however they choose in a competitive market.

This is likely what will happen with Chorus, they just haven’t recognised it yet, and nor has Amy.






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