23 Feb 2016
" So quickly is the rollout and uptake of UFB occurring across parts of New Zealand, the government almost can't keep up with its press releases."
Tim Murphy, former editor-in-chief of the New Zealand Herald
After five years of underground slog laying fibre optic cable and - regulatory and pricing decisions willing – hoping consumers would sign up, the project is gaining critical mass.
Source: Lakeview Images / Shutterstock.com
Previously, updates from Communications Minister Amy Adams on how many households and businesses had UFB 'available' were heavy with the caveat uptake was barely in double figures.
By the end of December 2015, however, connections were at 18.6 per cent, up from 11.3 per cent a year earlier. Adams trumpeted the gain in mid-February. Within two weeks, the February numbers had pushed uptake past 20 per cent and the minister was re-announcing the successes again.
The $NZ1.65 billion rollout, to be supplemented by a further $360m when required, differs from Australia's national broadband project, now called NBN, in several key ways.
First, it is being built by four separate Local Fibre Companies in different regions of the country rather than one entity. UFB is bringing fibre from exchanges to streets and buildings. The NBN is using a mix of Fibre to the Premise, Fibre to the Node, satellite and copper solutions.
The NBN originally focussed on connectivity where no or poor quality connections exist, while UFB and its Rural Broadband Initiative counterpart form an upgrade of all areas including metro homes and businesses.
Adams' latest update lists 14 urban areas in New Zealand which now have UFB fully deployed, the highest uptake of 26 per cent being the northern city of Whangarei which was finished early, almost two years ago.
By year's end 60 per cent of the country had UFB availability – a total of 875,000 end-users, up by 53 per cent in 12 months. The National-led government's target is for 99 per cent of consumers to access broadband speeds of at least 50 Mbps by 2025. Connections are now running at 11,000 a month.
The Telecommunications Users Association (TUANZ) is turning its attention to encouraging New Zealand businesses and households to make the most of these new high speed connections.
“Our focus now needs to turn to how we are going to use UFB and RBI to turn New Zealand into a digital economy, and how we can get fibre installed into premises more urgently," CEO Craig Young says.
Adams quotes 2014 research by the Innovation Partnership (including Internet New Zealand and Google) estimates gains for Kiwi businesses of $NZ34billion “if they made effective use of the internet" for productivity and efficiency gains.
Global experience is growth in fast broadband boosts productivity and jobs. An increase in the broadband penetration rate by 10 percentage points has been estimated to raise annual growth in per-capita GDP by 0.9 to 1.5 percentage points.
In advanced tech countries in the Asia Pacific region, such as Singapore and South Korea, the uptake of superfast broadband has been strong and the benefits critical to bio-medical and digital media sectors.
Singapore aims to offer all consumers 100Mbps to 1Gbps speeds through its Next Generation Infocomm Infrastructure, with one company already offering 2Gbps.
In South Korea, where governments have committed to ubiquitous broadband and have seen major enterprises flourish, slower than expected uptake among SMEs have slowed the country's expected performance in global innovation rankings.
Both Adams and TUANZ say planning law changes announced in February, which stop disputes between neighbours on shared driveways from blocking UFB connections, will spur faster growth.
The physical connections from roadside fibre optic cabling to houses and buildings are experiencing delays – from between three weeks for simple links to 100-plus days for multi-dwelling works.
Former TUANZ chief Ernie Newman blogged about his poor experience in arranging a fibre connection, concluding the service providers were still “woefully poorly trained" or the companies have a perverse incentive, still, to keep customers on copper.
There is an agreed shortage of technicians. The biggest UFB contractor, Chorus, believes the industry will require double the current number of technicians to keep pace with demand by mid-year.
The dominant telecommunications and digital company, Spark, has also accepted a Commerce Commission ruling effectively making copper broadband connections less attractive price-wise and the UFB more appealing.
“While TUANZ believes the outcome was not beneficial to users, it has given the industry important clarity on access pricing from now until 2019, which is important as they are choosing between services," TUANZ says.
The government has completed one priority segment of the fibre install, with 97 per cent of schools (around 2500 institutions) now having fibre to the gate. The other 3 per cent are remote schools which have had broadband boosts via wireless.
Upgrades to rural broadband towers are also moving with pace, 336 have been upgraded nationally and 135 new ones added.
In New Zealand's case, UFB is taken to mean the availability of broadband services at a minimum speed of 100 Mbps Downstream (from the Internet to the user) and a minimum of 50 Mbps Upstream (from user to the Internet).
The UFB technology means providers can offer different speeds with little technical intervention. Many signing up to fibre broadband packages now are at 100 Mbps, up from 30 when UFB fibre was introduced. That was about the same speed as existing copper broadband.
About a quarter of new customers are reportedly now requesting more than 100 Mbps, and choosing up to 200Mbps, a speed thought several years ago to be more than anyone would need.
The signs then are increasingly positive New Zealand might enjoy a dividend from a truly world class network.
Tim Murphy is a former editor-in-chief of the New Zealand Herald.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
23 Feb 2016
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