"There is something seriously wrong with the UFB business model if uptake is so low. Face it Paul"Featured comment
Sales conferences have their J-shaped hockey stick graphs, but in ICT, uptake conversations turn to the S-curve.
And rightly so – the early days of any tech are generally best informed by the phrase “nobody cares” shortly followed by “nobody saw this coming” and the geeks among us smile smugly, assuming they got it right in the first place.
Currently there’s much angst about uptake on fibre because, apparently, it’s a white elephant and nobody really wants it anyway.
I am smiling smugly, content in the knowledge that we loiter at the end of the first curve and are starting to see uptake ramp towards that “overnight success” leg of the journey.
Chorus’ annual briefing to analysts seems to back me up on this.
Page 29 (See graph below) has a lovely chart that shows premises passed by region, with uptake rates for each region.
Auckland has the highest uptake, according to Chorus [NZX: CNU], with 8.5% of customers who can get fibre actually signing on for it. In Auckland, Chorus has completed only 20% of the build, but clearly it’s this kind of market that the main ISPs are focusing their marketing efforts on. Blenheim, by way of contrast, has 90% of its build already completed, but uptake is a woeful 5%.
Clearly, demand for services is driven by retail partners promoting and selling the product. Sadly, in the outlying areas where service is available, the larger RSPs aren’t yet offering the product, presumably because of the cost of back office connectivity with the local fibre companies (LFCs).
On top of that, ISPs only sell their products and services. They don’t not do a pre-sales “this is why you want fibre” service and sadly, as we’ve discussed before, the LFCs, Chorus and the government all point the finger elsewhere whenever I raise the matter.
Someone needs to be out there selling potential customers on the benefit. Nobody is currently doing that job and without it, uptake will continue to languish. We need to get the country as a whole moving up that S-curve before some nervous politician decides to make mileage out of ditching the whole thing altogether.
The benefits are easily expressed for anyone with half an interest in the matter. For home users you get access to the world of online content. You can have your kids doing their homework while you watch TV or save your photo gallery to the cloud. The home of the future is here today and already I’m backing up a dozen devices on a regular basis. Woe betide the family that doesn’t have UFB when that list of devices includes the fridge, the car and the burglar alarm.
For SME business, the benefits are absolutely astonishing. You can catch up with your slow, clumsy corporate competitors simply and cheaply without having a huge capex outlay. You don’t need to buy servers and hardware, all you need is a browser and a fast internet connection and you too can have an ERP system, a customer relationship management system, state of the art live accounting processes that connect your customers with your suppliers and which take all the drudgery out of doing the chores each night in the form of paperwork. You can free up your time to do the job you love enough to go into business for yourself and you don’t need a fortune to do it.
These are easy wins. Health, education, government interaction, entertainment, economic gains… these are just the things I can think of right now, off the top of my head. Once you’re connected, the world is your oyster, make no mistake.
The country needs to move up that S-curve and someone needs to drive this to make sure it happens. Chorus and the LFCs say it’s not their job. The RSPs will spend lots of money promoting their own schemes. The government is the only one that has a vested interest in uptake and a need to see this project become the success we all know it can become.
If they can spend $14m of public money telling everyone to buy a new TV set, surely we can find something to promote the benefits of the UFB?
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Paul Brislen is CEO of the Tuanz, the Telecommunications Users Association of New Zealand.