Problems that have been perceived to have plagued New Zealand internet users for years are not significant issues according to the Commerce Commission.
In the first of three papers assessing the demand side of the Ultra Fast Broadband network, the Commission looked at technical issues that may impede uptake.International bandwidth, peering, datacaps and net neutrality, which have been debated in New Zealand for years, were found not to be significant issues.
“One of the things we wanted to do is not only identify issues, but also identify non-issues. There are a lot of myths about things that will affect uptake which may well not have any impact at all,” telecommunications commissioner Ross Patterson told Computerworld. Here’s what the study found.
National and international transit
The Commission is conducting a review of national transit but in the meantime it found that “competition for national transit has increased since 2008 and recent developments may increase competition further.”
The study also found that the cost of international transit has “fallen significantly since 2008 as the wholesale market has become more competitive.” It notes there are plans to build two additional international cables (Optikor and Pacific Fibre).
The Commission could find no evidence that peering is problem, despite “reports of networks taking local traffic off-shore (usually to the West Coast USA) to peer, since this was preferable to peering on-shore.”
“A possible explanation ( for the perception that peering is an issue) has been advanced, suggesting that web-hosting can be purchased more cheaply in the USA than in New Zealand, and that some US hosting services also offer free peering with the US internet backbone, an otherwise expensive facility,” the study notes.
The study found that network neutrality is not a significant issue in New Zealand and that “it should not be an issue if ISPs are transparent about the limitations or restrictions placed on their broadband services. There are sufficient competiting ISPs for customers to switch relatively easily to a provider that does not impose those restrictions.”
The Commision has found that overall New Zealand data caps compare poorly to data caps and costs elsewhere in the world but increasing competition should improve the situation.
However, data caps don’t appear to be of great concern to those questioned by the Commission: “Surveys undertaken for the high speed broadband services demand side study indicated that most consumers and SMEs are satisfied with their data caps.”
Meanwhile the Commission’s study found that the most significant barriers for consumers and small businesses in switching from copper to fibre-based services is the cost of rewiring premises and replacing Customer Premise Equipment (CPE). Only new homes with category 5/6 wiring are like be “fibre ready” and the cost of rewiring a house “could vary between a few hundred and few thousand dollars”, the study notes.
In addition, it is not clear whether equipment designed to run over copper will work reliably in an IP environment. If it doesn’t, the cost of replacement could be substantial.
“In a document provided to the Minister of Communications and Information Technology on 31 March 2011, Telecom estimated that 1.6-1.7 million customers could be impacted by having to move to an IP environment. Telecom also estimated that replacing the impacted CPE equipment [would cost] $811 million.”
See also our Q & A with Ross Patterson: Dawning of a new regulatory regime