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Gigatown turns into a Giga challenge for Chorus

One more post before bedtime, now that I'm back in the temporary VDSL equipped TUANZ cave in #gigatownporirua.

I've had a flight back from Auckland, (cut off from my feed to the internets) to think about what Ultra Fast Fibre's declaration of their central North Island patch as the 'Giganet' means for Chorus [NZX: CNU].

And what it means for us as users and how I think its the most exciting thing to happen in the UFB world since Northpower finished their build.

In military terms this has been a brilliant piece of asymmetric warfare, a judo throw that Vladimir Putin would be proud to call his own.

Chorus will now be compelled to re-evaluate the entire gigatown proposition because its just had a whole lot of the gloss removed:

  1. The winning gigatown no longer enjoys the advantage of the 'Southern Hemispheres' fastest internet.
  2. The 3 year stint as the gigatown is also meaningless as UFF have declared that its package will run until 2020 - which is the big bang year anyway in terms of UFB evolution
  3. The winning gigatown will have the cheapest wholesale, residential gigabit service but that may not translate into much of an advantage in what will be a much broader residential gigabit market.
  4. The winning gigatown will still enjoy the Alcatel Lucent innovation fund, but the economic development benefit is seriously diluted.

I think there will be quite a lot of angst out there in the gigatowns tomorrow (disclaimer I am part of the #gigatownporirua team) because the competition has required a lot of energy and commitment from largely volunteer teams (think Top Town meets social media). The competition and rivalry is fierce and intense, the creativity that has been unleashed is inspirational and overall it has got us all thinking about what the UFB can mean for our communities.

So what can Chorus do?

The options as I see them are:

  1. Box on like nothing's happened
  2. Use the 'Team Oracle USA' like clauses in the gigatown T&C's to pause and look for a reset
  3. Match UFF and declare everybody a 'GIGATOWN' (my preferred option)
  4. I think Chorus owe it to all the towns who have played the game by their rules and who have sunk what I think must be millions of dollars worth of community time and energy into gigatown to show that they are serious about our giganation.
  5. So whats in it for us as users, this is the stuff that rocks
  6. RSP's now have the incentive to get really creative with UFB products, speed is no longer a limitation!
  7. The developer community can now start to build 'gigabit grade' products and services with a good sized local sandpit (even bigger if Chorus come to the party)
  8. UFB consumers will get world class connectivity
  9. The rest of the stack (backhaul and international) will get an increased incentive to open the pipes so we really will get genuine gigabit grade experiences
  10. There are going to be huge possibilities in education and health
  11. This will speed up the copper transition and force all the RSP's to get serious about UFB
  12. The market for fast WiFi is going to go nuts!
  13. Aussies are going to be sooo jealous 
  14. The Government might feel so good about the giganet they'll get behind other good ideas like Northpower's rural fibre plans
  15. The belt of towns from New Plymouth to Tauranga is hugely important to all our current export industries and it is home to our mighty 'Agritech' sector (think Gallaghers etc)  - which I believe is our best shot for a global ICT niche we can own. So the Giganet is really, really important to our collective future.

I've been involved in the fibre dream in NZ since 1999, when I first got a CityLink connection in downtown Wellington, I helped get regional fibre extended across Nelson, Marlborough, Tasman with NMi and the Broadband Challenge.

But this development today has got me more excited as it moves us from a rationed future (just one gigatown) to one that is brim full of possibilities (a whole giganation?) because the UFB is now really going to be Ultra Fast.

I think I need a lie down now, I hope I don't wake up tomorrow and find it was all a dream.

Chris O'Connell is the interim of CEO of the Tuanz, the Telecommunications Users Association of New Zealand and the director of Strategy for XandAR

Comments and questions

gigabit connectivity is pointless if you can't get any ISP to adopt the plans. The UFB access cost touted by fibre providers might be cheap but the backhaul and SX capacity will soon make it a very expensive proposition that most of NZ couldn't afford... especially in smaller towns.

Gigatown was always going to fall apart in the future as the retail prices will need to be astronomical to cover the massive costs to ISP's from extra provisioning.

Has any ISP even said they will be prepared to sell Chorus' gigatown service?

I see their announcement as purely something to steal the Chorus thunder - not actually deliver benefits to customers.

How many RSPs can afford to commit to a minimum of 10Gbps backhaul to little hick towns for handover just to service a handful of customers who aren't going to want to pay any more for 1Gbps than they currently pay for their ADSL2+?

I'd be presently surprised if we see any large RSPs commit to anything less than a couple of hundred smackeroos for a 1Gbps service. Even then they may not be able to make $$ from it.

The physical layer2 fibre service is the cheap part of UFB. It's provisioning backhaul that costs the big $$ and means that some areas will ultimately never receive coverage from every ISP, even if they're a nationwide provider.

Backhaul and the inability for an LFC/Chorus to offer a tail service (like they can with DSL) means it's a huge commitment to launch in an area, hence reasons why places like Taupo and Paraparaumu already have UFB in place but only 1 provider in the case of Taupo, and none in the case of Paraparaumu.

Very true.

It's not just the up-front commitment, though. If an RSP turned up in Taupo offering a 1Gbps service at below their cost, say just for the cost of backhaul from Taupo to Auckland, I'd expect no takers at all.

Interesting post. This will no doubt test the metal of the new boys on the block - MyRepublic. Although they haven't officially launched yet, they are the kings of gigaspeeds in Singapore. Surely this is just perfect for their entry into the NZ market.

Now all they have to do is work out how to deal with the five times higher international transit costs in NZ compared to Singapore. Any ideas Hawaiki Cable?