New Zealand's field of dreams

If we don't build it, they won't come, writes Keith Newman

The past two decades are littered with hype and broken promises, the legacy of dominant carriers who put more energy into curbing competition and maintaining profits than investing in the essential communications info-structure.

The phrase from the 1989 film Field of Dreams “build it and they will come” springs to mind. Every time there has been an increase in available bandwidth that capacity has been rapidly devoured. Expectations that the Tasman 1, Tasman 2, PacRim East and Southern Cross cables would each meet our need for the foreseeable future proved wrong. Southern Cross is still struggling to cope with our international traffic needs.

As a nation we have played this waiting game too long. Build then bottleneck, over and over. Like the wagon trails, the railways and the sealed roads that enabled revolutions of the past, the new infostructure, comprising high speed copper, wireless and fibre-optic cabling, is the key to our field of dreams. The challenge, however, is more dire than ever: if we don’t build it, they won’t come.

“They” are investors, international business people and businesses looking for world class infrastructure and lifestyle.

Dial-up mentality

While much of the developed world is focused on delivering hundreds of megabytes to the door, many of us are still struggling to get beyond dial-up speeds.

According to the World Internet Project, New Zealand has the second-largest proportion of narrowband users in the 30 countries surveyed in 2007. Only Colombia has a larger percentage.

We’re prepared to buy back the railway lines and trains, but appear uncertain about how to progress tomorrow’s core fibre-optic conduits into business and homes to replace our rotting copper network.

Despite a stream of reports and recommendations from industry groups, think tanks, scientists, economists, technologists and visionaries, action lags rhetoric. The lack of a clear government roadmap and incentives is holding back investment. For example, several major community fibre plans remain stalled after a follow-up to the 2005 Broadband Challenge funding failed to materialise.

Telecom has promised to deliver 10Mbit/s to 80% of New Zealanders and 20Mbit/s to 50% by 2010. A series of reports suggest that will have to quickly ramp up to 100Mbit/s to cope with user demand. Huge investment and momentum is required way beyond Telecom’s commitment to a $1.4 billion investment in its next generation network (NGN); funding first announced several years ago and re-announced under new management.

A growing number of competitors, partnerships local authorities and others keep beavering away to widen true broadband coverage. The $900,000 profit of independent backbone provider FX Networks says it all: do it right and the investment pays off.

National’s promise of $1.5 billion to accelerate the roll-out of fibre-to-the-home to 75% of New Zealanders within its first six years in office sounded like the needed leg up. However, the counter move by Labour, $340 million over three years, now known as the Broadband Investment Fund, leaves me wondering how serious the government really is in pursuing its goal of getting into the top half of the OECD broadband rankings.

The fact is we’ve been waltzing between place 19 and 22 in the OECD for the past six years, and remain compost at the bottom of the heap.

The latest Statistics New Zealand survey shows a 10.7% increase in broadband numbers to 891,000 for the six month period ending March 2008 while the number of dial-up customers dropped 9.3%. The announcement is something to celebrate but comparatively that’s just 1.6% growth on September 2007.

Broadband penetration is still appalling and, during peak hours, speeds often decline to below dial-up levels.

Today’s dilemma is built on 20 years of squandered opportunities. We failed to appreciate our pioneers, dismissed the reports and recommendations of highly qualified, hands-on engineers, technicians and visionaries and expected somehow that “market forces” would lead the way.

In April 1989, New Zealand became the first nation in the Asia Pacific region with a full 9.6kbit/s connection directly into the US internet backbone, through a subsidised NASA link into the National Science Foundation (NSFnet) node in Hawaii. That connection was achieved — at a time when the government and Telecom backed proprietary networking — by innovators in academic institutes who had no government mandate or support.

Not quite network

Instead of leading the world into a new era of affordable, high-speed digital communications, customers and competitors of Telecom have had to fight for every increment in bandwidth and every drop in price.

Closed ISDN trials were planned from 1987 and it was expected that by 1990 a narrowband digital network would be commercially available, enabling users to operate telephone, videotext, packet switching, facsimile and various data networks as one integrated service. Telecom then insisted “broadband” ISDN (30 x 2Mbit/s channels) should be available to all New Zealand homes and businesses by 1995. It never happened.

By the time narrowband ISDN arrived in 1992 it had virtually been superceded by 2Mbit/s dial-up lines, the advent of next generation frame relay (up to 45Mbit/s), fast packet-switching and independent fibre networks. Hardly anyone could afford it.

In June 1990 Telecom was sold to wholly owned subsidiaries of Bell Atlantic and Ameritech for $4.25 million, in the biggest business deal in New Zealand’s history. In 1992, the World Communications Laboratory (WCL) had been established to promote New Zealand as a centre of excellence for broadband connections capable of supporting voice, data, video and graphics. There was a specific focus on the faster roll out of fibre-optic cabling with initial funding from government, business and carriers. The funding plug was pulled in late 1993.

In 1990, Telecom embarked on a hybrid fibre-coaxial (HFC) cable trial claiming it would deliver movies and fast data connections to 300,000 homes. First Media piped more than 20 channels of TV to the Auckland suburbs of New Lynn and Pakuranga.

As Kiwi Cable (acquired by Saturn) expanded its cable TV and communications network into Wellington and Christchurch, Telecom began digging up the same streets. Then a stoush with Sky TV curtailed the content it could offer. After an estimated $200 million investment and passing only 68,000 homes it was over.

Telecom claimed it had found more appropriate technologies to carry fast data and video and began pulling cable out of the ground, all the while saying it would continue looking at the relevance of fibre to the curb. A new technology called digital subscriber line (DSL) would deliver everything we need more cheaply, it said.

Meanwhile, Bell Atlantic and Ameritech, having reinvested very little in New Zealand, took the money ($11.5 billion) and ran.

In June 1999, Telecom finally let its fast internet service out of the bag. Jetstream, however, was not fit for video, pricing was high, data caps were low, and due to the condition of much of our copper, performance was often poor.

A couple of years later Telecom was talking about IPTV, on-demand movies and services over the internet delivered by shortening the copper loop and taking fibre closer to the curb. It ran several trials and stated in its 2006 Annual Report that IPTV would be rolled out late in 2007 over its NGN. It even formed a business unit to oversee that, but the deadline shifted out to 2009 due to the demands of unbundling and operational separation. This year, the unit was quietly dismantled. IPTV is no longer on Telecom’s roadmap.

Closed to open access

In the midst of the debate over the need to increase funding for open access fibre, I am stunned to hear the input from the leaders of our two major telecommunications providers again attempting to dumb down the game.

TelstraClear’s CEO, Dr Allan Freeth, should have known better than to tell us “true high speed broadband available at home is not important for New Zealand’s future” only days after informing the country it was about to embark on a major investment in broadband infrastructure. His comment that fast internet to the home would mainly be used to view faster porn and movie downloads was an insult to home business and remote workers who have been demanding better service for years.

And recent comments from Telecom CEO Paul Reynolds questioning why New Zealand should spend billions of dollars on creating 100Mbit/s fibre-to-the-home when people aren’t using what they already have, leave me fearful for the future.

He stated that a motorway without cars wasn’t smart and was clearly undermining the debate about the need for open-access fibre — in other words fibre Telecom doesn’t own — saying the majority of New Zealanders are yet to be persuaded to subscribe to ADSL over copper let alone pay a premium for fibre. Of the 93% of New Zealanders able to get ADSL, he said, only 44% had taken it up.

This reminded me of Telecom’s previous input into the infrastructure debate. Back when dial-up was the only way to get online we were told 28.8kbit/s was adequate for anything anyone might want to do. Then, once 56kbit/s modems became mainstream and there were interminable delays in rolling out DSL, we were again told dial-up was sufficient for most people’s needs.

With DSL finally here we were told 128kbit/s was broadband until Telecom admitted a couple of years on that perhaps 256kbit/s was where it began. Now 2Mbit/s is too slow for most users and, when the throttle was opened beyond that, the shortcomings of the aging copper network were again exposed.

In Telecom’s own statement only 75% of customer lines are capable of speeds higher than 6Mbit/s, and it is doubtful you could get more than 8Mbit/s over 65% of them. The average speed is 2Mbit/s to 3Mbit/s. The journey to 20Mbit/s is going to be a long one.

Even existing broadband goals are unlikely to be met due to the dire shortage of skilled contract labour. While there’s an obvious need to ramp up broadband momentum, Telecom wants to dampen down “open fibre” plans and slow the pace of development in case its two-decade vice grip is further loosened.

Visionary viewpoint

In reviewing the history of communications technology in New Zealand for my book Connecting the Clouds (Activity Press, 2008), I was once more appalled not only at how Telecom has been able to hold the country to ransom for so long, but by the refusal of successive governments to take the evolution of our telecommunications infrastructure seriously.

We have failed to train the right people for the times ahead, undervalued our knowledge workers, inventors and creative people and allowed our progress as a nation to be hijacked.

So who do we listen to? Those constrained by three-year thinking or shareholder expectations of a quick profit, or those with a longer term goal in mind: the engineers, computer scientists, researchers and innovators who have done their homework and know that the future is about light-speed communications?

The membership of InternetNZ, including many of the nation’s internet and technology pioneers and the up and coming generation they are mentoring, are more than willing to share their collective wisdom on such issues. No government can afford to ignore their advice, their independent analysis or their willingness to be involved in forging our digital future.

We are at a critical crossroads. We can move rapidly into catch-up mode or further isolate ourselves from the trends that are reshaping business, communities and nations.

I’m reminded of the quote from sci-fi writer William Gibson, who coined term cyberspace: “The future is here, it’s just not evenly distributed yet.” We can’t afford another three years of digital dithering.

Newman has been writing about communications technology for over 20 years. His new book, Connecting the Clouds – the Internet in New Zealand, covers the development of our infrastructure from Morse code to our evolution as a digital node on the global network. The book, commissioned by InternetNZ, is published by Activity Press and online as a wiki (www.nethistory.net.nz). Newman has also updated his Kiwi Telecommunications Timeline at www.wordworx.co.nz

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