When it comes to broadband, New Zealand is at least a couple of years behind the Nordic countries, which are also four to five years ahead of much of Europe, says Michael Engstrom, vice president business development for broadband solution-provider PacketFront.
Engstrom was in New Zealand recently to assess the market potential for his company.
The key component in PacketFront’s broadband solution is its BECSTM control and provisioning system, which makes it possible for operators to build and run fully automated broadband networks with self-provisioning capabilities. This gives users the option to choose services for themselves, without having to wait for a third party to make the changes.
In essence, the company is delivering automated services for triple-play networks: high-speed internet, television (or video) and telephone services over a single broadband connection.
“The government in Sweden has spent billions of dollars building a fibre backbone that has paved the way for local initiatives and advanced services,” Engstrom says. “At the end of the 1990s, 70% of all homes were connected to the internet.”
A significant driver was the weather. “Because of the climate, people spend a lot of time at home, so they use the internet a lot.”
Sweden’s networks — there are 200 of them within the country’s cities — are driven by municipally owned utilities.
Engstrom says the philosophy is to keep the fibre as it is considered a strategic asset, but to sell off technology such as routers to commercial operators. “Many networks have been built based on services, which are then sold off when there are enough users.”
PacketFront has 60% of its market sector in the Nordic countries and is also the dominant player in the Netherlands.“New Zealand is absolutely a potential market for us,” Engstrom says. “Organisations such as CityLink, Vector and FXNetworks would be essential to a model like Sweden’s, linking the cities to a backbone.”
Where the major providers in New Zealand have charging models based on chunks of broadband, Sweden has a pay-as-you-use model. Engstrom regards this as critical.
“We negotiate revenue-sharing agreements with backbone providers. For example, you can’t charge more for a television screen because it uses more broadband. You don’t pay when you’re not using the broadband.
“That’s something that many major telcos have difficulty getting their heads around.”
He draws an historical parallel with the ancient Romans. “Many of their roads were built privately and users were charged tolls only when they used them.”
Typically, in rural Sweden, delivery of services to any given community is driven by one or two individuals who are prepared to talk their neighbours into joining up and so provide an economic base for fibre to be laid. “The network owner then kicks off a marketing campaign.”
PacketFront was established in 2001. Most of its staff are former Cisco Systems and telco employees. The company has an Asia-Pacific operation based in Korea but has yet to move into the Australasian market.