I retired from personal blogging in July 2008.
But you can find me over at http://blog.xero.com.
It was exciting to see the news today on the 1.4b proposed investment in infrastructure.
Telecom: ‘Fast broadband for all in four years’
While investment is good what is also important is that we change the investment return profile to allow a bandwidth abundant mentally rather than a price maximization model when we are scared to use the infrastructure. For example: Mobile Data. Yes it’s there but we don’t use it, we don’t innovate on it and we don’t create significant export revenue from content we develop over it.
My fear is that we’re losing an opportunity to change the underlying economics. Telecom on their own cannot monetize all the public good that comes from having strong intra/inter city communications and inter country links.
I’m not hung up on the state owning the network. Telecom should/could separate the long term, public good impacting, infrastructure investment from retail communications services. They could even ask for KiwiSaver money to fund the 1.4-2bn required to do that if it return a solid 8%. That base infrastructure needs to be cost plus.
So we welcome the investment, but are we letting a chance go by?
I believe there is a strong public mandate for investment in some shape. I don’t think it’s time for backslapping yet.
What do you think?
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Credit where credit is due Rod - they’re doing something good - we should give them the benefit of the doubt at this stage
20mb/s doesnt sound so fast to me for a 4 year investment. I read somewhere that Japan average speed now is 60mb/s. I acknowledge Japans population density profile is somewhat different to NZ, but… in 4 years we will be 1/3rd of Japans current speed? I think the government has to own the broadband infrastructure space, and treat it as core business.
Greg - in absence of any Government investment (and they’re not exactly jumping to do it themselves) shouldn’t we at least applaud that someone is going to do something?
@Ben
Slow-clapping for TEL. Remember, they need to build a new mobile network too, in order to stay in the mobile race, having chosen the wrong horse last time. They’re going to be busy - where are all these people going to come from?
Like Microsoft, I will save my comment for TEL’s action - I’ve heard their hollow words all too often in the past.
Trust Telecom to delivery it all - sure why not (haven’t they always??). I’m not at all surprised at this Telecom announcement - didn’t you all except it? (look at all the lobbying that has been going their way and the threats of substancial alternate investment).
But it’s still up to each town/city/community to decide if they still wish to have the “new average” broadband solutions in their own patch. If they do want/need to be infront of the jones (the other towns/Cities)or have particular ecomonic development outcomes in mind, then they still need to invest in or underwrite a local fibre infrastructure (go the niche competitors).
Ben, I guess I feel telecom has bungled their broadband strategy from day 1, so not sure why we think its going to get better. Im reserving my clapping for TEL in the meantime and … giving a brickbat to the government. This ball has to be picked up by them, not by telecom.
I’ve got a question for you all. What are you going to do with you’re faster broadband? The speed of the network is only one of many things that needs to change for NZ to become a 1st world nation. By doing this its just going to move the bottleneck somewhere else…
so again i ask, what are you gonna do with it?
Paul, good question! Personally, I would expect with faster broadband that things become more … connected. The divide between the desktop and the net just vanishes, and there is no concept of location. Practically, what does this mean? It means my life goes with me wherever I am, my photos, my dental records, my latest CT scan, videos of me crashing my mountain bike.
Data simply exists, and the quantity is (almost) irrelevant.
I could go on and on, but regardless, the pace just keeps getting faster. We need to be in the ballpark of the rest of the world so that something one of us dreams up can be experimented with and put into practice. I want to … video search youtube in order to … um, analyse images to … target advertising. Some things just arent possible with slow.
Greg Day said…
I want to … video search youtube in order to … um, analyse images to … target advertising
Why would you want to do that? This sort of thing is not the concern of the user. This is the concern of the vendor (in this case it is Google). It is they who must implement such capability, since the market would demand such functionality. Such functionality is memory & numeric intensive that you don’t do the searching live. The vendor system runs the computation off-line to index the extracted features (specified by the vendor itself, such as table features, cup features, vehicle features, etc…) of the multimedia files, saved those into a database which is then deploy live for searching. It is the feature database that search is being done on and not the original multimedia database, and that is why it is so fast (eg - Google search engine) because the original massive dataset (high dimension) has been reduced into a smaller searchable dataset (low dimension). The feature set database just points to IDs in the original database for retrieval of files that contain those features from the query.
So, I think that one doesn’t need a fast broadband connection to do a video or image searching of a multimedia database which is the job of the vendor, however the transmission of those large files need fast broadband connection.
I’m sorry Rod, I refuse to read the rest of your post until you correct the spelling of “losing”.
Sorry Grandma, you may now continue.
This track has gone off topic to a discussion we’ve had before.
My point is: Of course it is good Telecom is doing this, but is the best result for New Zealand if they do? Will this give us abundant broadband in the areas that will drive economic transformation.
I don’t think I understand the model where you ration the bandwidth to save it.
Why not try and maximize utilization, break-even on your investment as soon as possible so that you can move up to the next tier and upgrade the pipes?
It’s not like bandwidth is a non-renewable resource that’s going to run out.
Yet this is the model of so many telecoms companies, its depressing.
As for what we’re going to do with this bandwidth? Asking the question is almost like stating “640k is enough for anyone”. Me, I see multimedia content delivery becoming more and more natural over broadband, in ways not considered practical at the moment, to name just one example.
There already exist niche providers with the capability to deliver real broadband networks and nip off the most lucrative buds in the market. By simply making this announcement Telecom is cleverly pre-empting any of that sort of thing. The new guy at TEL is no fool and has seen the writing on the wall.
I’m sure Telecom would have no problem funding the proposed project from a mixture of cash and debt spread over the next four years. If there really has been a mindshift at the telco level, then doesn’t that obviate any need for govt. involvement? Of course a lot could happen (or not happen) in four years.
To capitalise on the opportunity we need two things however. Firstly, we need to ensure that the new domestic network dovetails with fast access across the Pacific. Secondly, the network providers need to support and encourage the local content and applications developers. Otherwise, why bother with a new network?
I’m torn, it’s a positive announcement, and I have to pick holes!
I love to see Telecom announcing network investment. I just wish it felt like more than a Business as Usual announcement. To my jaded, skeptical eyes, isn’t this just a commitment to continue their ADSL2+ roll-out? I guess it means they’ll be retiring (instead of re-using) the ADSL equipment as they upgrade their urban exchanges?
Anyone know if there is any new investment announced here?
It looks like Telecom has gotten over playing chicken with the government. Perhaps that’s the true message of the release - definitely a good thing to hear.
re: Leon
Carriers price bandwidth high because they are extremely afraid of cannibalizing existing services. For example:
It takes 8-12kbps to transmit a GSM phone call. That means that a 10minute phone call is actually only 900kbytes.
12kbps*60*10/8 = 900kbytes.
Let’s say 1mbyte (being generous)
Today’s retail traffic charges are ~1.50/gigabyte.
So, your 10minute call costs (traffic only, using HD definitions of size)
1mbyte*($1.50/gb)/1000 = $0.0015
Essentially, a call that is at least $0.25c/minute can be made for
$0.002!
That has them completely scared. Companies have already demonstrated a willingness to perform call setup just to have your user account (skype, google). That is the carrier’s sole value add for most people, and it’s being offered for free!
For an even nastier comparison, compare the differences in cost for an IM vs an SMS. You can see why they keep mobile data charges up at 10c/kbyte without a plan. GSM SMS are 140 characters…
It’s short-sighted, but explainable.
It’s not easy to look a gift horse in the mouth, but it is necessary. With the operational separation, I’m hopeful that the access network services group will continue to compete and co-operate, bit streams aren’t services, and now Services (the upper layer of the split) will have to learn to compete with customer provided services (VoIP, on the edge, not in the exchange.)
There is a little niggle about delivering on big words, plus as I think Rod is intimating, perhaps Telecom has woken up to their last chance to be a mass-market player with an infrastructure dominance. Now they’ve lost the copper monopoly property, perhaps their aiming to be such a great cost-plus fibre supplier competition won’t be incented.
The cannibalisation point is a good one, and perhaps the final demise of DDS has helped focus Telecom on converging its bit stream products and resigning to the end of the DDS margins, must have been great on all that sunk cost.
Its all a matter of timing I think, leadership changes, technology, Government impatience and a recognition that communication is always too important to be placed totally in the hands of a absentee shareholder driven company.
Trust but verify, and I would be sorry to see this announcement cool our ardor for alternatives…
This is all fine and well by Telecom though we have to remember it’s not all about broadband. I was pleased to find out today that Voda are launching their at home service in early December after some trials for those in the industry. That will offer real competition.
It will be a long time before Telecom changes in the way you’re thinking. You know those old-school telco types you talk to, the ones that think in erlangs and circuits, and never really understood packet switched comms, or modern concepts like data dissemination. Well guess what Telecom is full of.
No. If that kind of change is going to happen then it wont be lead by Telecom, it’ll be lead by the smaller players, and ideally with the currently non-existant support of the Government.