Opinion: Now is not the time to undo progress

Consider the benefits of the Commerce Commission along with the costs

One of the oddest ideas to surface recently, and which is apparently gathering pace in government circles, concerns the proposed abolishment of the Commerce Commission. This was proposed by the ex-Commerce Commission official and current partner at Chapman Tripp, Grant David, in a recent article in the NBR. Government minister Simon Power has been quick to pick it up.

Before I go on, I should declare a potential conflict of interest. The Commission is one of Epitiro’s largest clients, to whom we provide a dataset on broadband service performance in New Zealand.

Just to remind ourselves; the global financial system has collapsed. Pretty much every analyst on the planet agrees this is as a result of the system’s inability to self-regulate and/or underfunded and ineffective regulation.

So, what is David suggesting we do in New Zealand? Abolish the Commission for being too aggressive (and expensive), and allow the private sector to self-regulate. Am I missing something?

Moreover, the Commission has also played a fairly significant role in the recent transformation of the telco industry, helping to deliver a functioning market out of a monopoly. A consideration of the benefits it has created, along with its costs, would seem only fair.

The other news is of course, the Castalia paper jointly published last week by Telecom, Vodafone and TelstraClear. If ever there was a sign times have changed, that was it. The report’s thrust was; we don’t need the money for a fibre roll-out, we’re doing enough already.

In contrast to the NZ Institute report (I agreed with just about everything in it except the conclusions) the Castalia report seems to arrive at some reasonable conclusions based upon some sound evidence. Having a good view of the industry’s performance data, both locally and around the world, I can see its conclusions are generally backed by the data regarding service performance.

I know the telcos are nonplussed about the prospect of the lines companies getting all the cash, and this was a factor in the report’s generation. But surely if it ain’t broke, don’t fix it — or perhaps more accurately, if it’s just been fixed, don’t break it again.

New Zealand is finally getting a 21st century broadband infrastructure; should we ambush the guys bearing the risk and investing the cash with free money from the government, gifted to the guys responsible for our 20th century power grid? Where is the evidence the lines companies are up to providing a state of the art NGN service? I worry that Vector et al are being seen as the White Knights in some quarters, just because they “do fibre”.

However, as one punter noted on an InternetNZ thread;

“I don’t feel that planned and existing investments that are not performing should have immunity from displacement, merely by virtue of being there. Certainly there is investment we don’t want to duplicate, but if it is not offering the right outcomes then it should not expect any protection.”

I couldn’t agree more with that. I’d just say; give them a chance to deliver those outcomes, particularly as the evidence suggests they are beginning to do just that.

By the time any kind of fibre to the home (FttH)is up and running, we will have had VDSL and fibre to the node (FttN) for a few years, and the telcos will have learnt a lot about customer requirements, service delivery and performance. We should think carefully about allowing a set of new players a free leapfrog to the next technology iteration, coupled with all the issues of duplication, overbuild and so on. With their own cash, fine. But subsidised? The telcos have a right to be dismayed about that. And if it’s not your money, it’s easy to spend it badly.

One positive message in the Castalia report is it appears to reflect the belief among most of the big network, wholesale and retail players that they can all deliver shareholder returns in the operationally separated, NGN world. We haven’t heard that before. Now doesn’t seem the time to undermine it.

Under Telecom’s current strategy, we’ll have FttN and VDSL2 combined within a year, not to mention local loop unbundling (LLU) services and DOCSIS 3.0 in Christchurch and Wellington. Epitiro is tracking some of these services through its desktop agent Isposure, and we’re seeing some impressive service levels.

TelstraClear’s 50Mbit/s service is doing well, while some LLU services in Auckland are almost twice as fast as some of the wholesaled ADSL2+ out there. And just about everybody with an ADSL2+ router will be getting an extra couple of Mbit/s or so out of their service. These initiatives are having a real effect in consumer land; we’re seeing it in our 11 lab sites, and we’re seeing it in our several thousand desktop agents. It’s not a revolution, but it’s definitely an evolution, and recessions are not a time for revolutions.

Maybe I’m just scarred by Think Big.

No question; DSL technologies are problematic; asynchronous, influenced by the quality of the copper, subject to contention, distance limitations and line interference (as are most broadband technologies to some extent). But properly provisioned, FttN/VDSL should give acceptable high definition video streaming and VoIP service quality; the two big consumer applications about to arrive in mass market form, particularly if it’s supported with decent backhaul and customer premises equipment (CPE).

The two primary unresolved issues in the report are essentially rural access and the asynchronous nature of DSL — and the increasingly synchronous nature of applications. What cost is associated with these?

And speaking of CPE, the report again: “Without an internal wiring upgrade, the effects of FttH on customer experience may not differ materially [from] ADSL2+ and VDSL.”

That upgrade is estimated by Castalia to cost around $400 per house, which means sparkies will probably do it for $800.

Finally, speaking of CPE upgrades, take a look at the graph below. I doubt there are many Computerworld readers still using a broadband modem (not using Ethernet, but USB or PCI), but if you, or anyone you know is, get them off it ASAP and onto a decent ADSL2+ router. It will have a substantial positive effect on the quality of the service you experience from your ISP — around 2Mbit/s on average.

We’ve removed all the entry-level services, so these results reflect services advertising 4Mbit/s or more. We have also excluded mobile data cards. By way of definition, broadband modems are not connected via Ethernet; ie, generally via USB, or PCI.

Cranna is managing director of broadband benchmarking company Epitiro Technologies in Australasia

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