The Commerce Commission's final version of its report on barriers to broadband update takes in areas ranging from connection cost to video content. InternetNZ sees in its findings a need for a single broadcasting-telecommunications regulator. PLUS &nda
The Commerce Commission's final version of its report on barriers to broadband update takes in areas ranging from connection cost to video content.
The watchdog says the key points of the study are:
• The costs related to connecting to the UFB network and using high speed broadband services have been identified by various parties during the study as critical. As these costs appear to be significant, they are likely to slow down the uptake for both consumers and SMEs.
• Video content is likely to be the primary driver of consumers’ uptake of high speed broadband services over the next few years. The rate of UFB uptake is likely to be higher if there is a diverse range of video on demand options available to consumers. Currently, there are limited online video on demand services in New Zealand compared with many other countries.
• Potential issues relating to data caps, backhaul capacity and IP interconnection are likely to be resolved by market forces.
• Rural users have the same appetite for fast broadband as urban users, but have a more fundamental need, which is to be connected to basic broadband. They are concerned that they could be left behind as New Zealand moves forward with high speed broadband services. This issue has been recognised in the RBI initiative and in the five point government action plan for faster broadband.
RAW DATA: Read the full report (PDF)
Single regulator call
"The Commission's report is another call to government to seriously look at a single regulator for telco, broadcast and media competition issues," InternetNZ CEO Vikram Kumar told NBR ONLINE.
"There is a real and increasingly urgent need to get this right."
Connection cost concern
Connectivity to the network remains a critical issue, Telecommunications Users' Association boss Paul Brislen said.
"While the three Local Fibre Companies are reportedly connecting all customers in their respective areas, Chorus remains the only one dickering with the government over connecting customers who are more than 15m from the roadside. This kind of nonsense doesn't help.
"One solution mooted in discussions with Chorus was forcing home owners to pay a fee for connection regardless of distance from the kerb. Tuanz remains vigorously opposed to any charge being levied against property owners as we were told all along it would not cost home owners anything to connect. The Commission's report backs up that view."
While Enable, Northpower and Ultrafast Fibre are pledging low-cost or free connections, Chorus is dragging its heels on how long its current free connection promo would last.
The head of a top five ISP told NBR he worried that once it expired - possibly by the end of this year - hundreds of dollars in connection costs could be passed on to retail customers, making fibre a hard, hard sell. More so given it would be very hard to give an up-front quote about how much a connection would cost.
Chorus, the key player in the UFB rollout given its is connecting 79% of the project by premise - has come under-fire in some quarters for its so-called "more equal than others" contract with Crown Fibre Holdings, and refusing to say how long a free-connection promotion will last.
Enable, Northpower and especially Ultrafast Fibre - which has no copper or othe business to fall back on, or assets to sweat - have been more on the front-foot in terms of guaranteeing free or lo connection costs.
"Some of the issues are immediate- for example, connection costs charged by Chorus. In other cases the Commission believes that the market will remove many of the barriers such as data caps and national IP transit," InternetNZ's Mr Kumar said.
"InternetNZ does not share this hope.
"Unfortunately, most firms providing fibre services are still approaching the market with a legacy copper mindset such as trying to charge for every packet of data rather than connectivity."
Telecommunications consultant Jonathan Brewer has pointed out that the terms of Chorus' Crown Fibre contract only require it to provide on-premise wiring 5m inside a home (to 10m for Enable, Northpower and Ultrafast Fibre and a buried lead in of 15m (compared to 30m for the other local fibre companies).
Yesterday, Labour ICT spokeswoman Clare Curran criticised progress in the UFB roll-out, to which taxpayers are contributing $1.35 billion ($929 million in the form of interest-free loans to Chorus, and Crown Fibre Holdings buying non-voting shares in Chorus). Mr Curran said the project was "ultra-slow" with only 1012 households connected so far.
The content question
In the area of bundled video services helping to drive update (or not, in the case of a near-monopoly on content rights), the commission's report is - as in other demand areas - only making observations.
However, separately, the watchdog earlier said it will investigate Sky TV's contracts with ISPs and telco partners - which TelstraClear has labelled too restrictive. The commission is also investigating the parallel issue of "whether Sky’s agreements for the acquisition of content harm competition by denying actual or potential rivals access to a critical mass of quality content."
In a statement this morning, Sky TV CEO John Fellet reiterated his stance that the pay TV broadcaster faces competition from new media.
“Already, people are using Skype, FaceTime, iTunes, Microsoft Zune, Xbox Music, Mobile Video, YouTube, Social Media, internet-enabled TV, online gaming and cloud-based video and that list will only grow as high speed broadband becomes available," Mr Fellet said.
Rural broadband in focus
"It's good to see rural customers singled out for special attention in the report," Tuanz's Mr Brislen said. "While rural speeds are increasing, thanks to the RBI [Rural Broadband Iniative], they will end up a long way behind urban speeds once the [urban-focused] UFB is in place. It's imperative we don't create a two-tier internet in New Zealand especially given the importance of the rural sector to our economy.
"Tuanz has lobbied for the upcoming 700MHz spectrum auction to focus on lifting rural broadband speeds to the next level via LTE (Long Term Evolution or 4G) run over the 700MHz spectrum and we urge the Minister to put rural New Zealand ahead of filling the Crown coffers during the auction process. The gains to New Zealand's economy of having that money spent on improving connectivity in rural New Zealand will far outweigh any short-term gains to be had from charging the telcos hundreds of millions of dollars for the spectrum."
Health, education out of focus
"The commission faced constraints in both legal scope and resources in doing this study. Given that, they have done a great job in initiating the study, holding a conference, and raising some of the big issues," Mr Kumar said.
"The best it can do is to now continue to report in its monitoring role and hope that others will take on the issues it has raised."
He added, "The Commission's report is another call to government to seriously look at a single regulator for telco, broadcast and media competition issues. There is a real and increasingly urgent need to get this right.
"Much of the report and attention is about consumers and small to medium business.
"Yet, it is likely that the biggest potential for early gains will be from education and health. While these aspects of the report are not getting much attention, it is time to step up the focus on these areas. This is where government itself is the major driver and we need to see a significant change in pace and determination. Otherwise the government's investment will be hostage to the vagaries of consumer behaviour."
