- Will 2003 be the Year We Get Broadband?
- Will 2003 be the Year We Get Broadband?
I rang Ross Pfeffer the other day to talk about broadband uptake. Pfeffer runs the Southern Cross Cables company. About halfway through our chat he said, "Hang on, didn't you ring me a few months ago to ask me all these questions?" I had to allow that it was all starting to sound horribly familiar.
We were talking about the lack of uptake of broadband in the residential market. Pfeffer put it down to two things - lack of marketing and excessive pricing. Only about 20% to 30% of the cable is "lit" currently, although you have to factor in the economic downturn and the belief that there's an excess supply of fibre in the world. Probably there is too much fibre - mostly between the US and Europe. North-south there's a lack of it still, I would have thought, although only having a third of the Southern Cross fired up doesn't bode well.
I also spoke to two ISP bosses - the two largest ISPs behind Telecom and TelstraClear. Sean Weekes runs ICONZ and Martin Wylie looks after Ihug.
Both had interesting things to say about the uptake of DSL, which currently runs at less than 2% of the possible market.
Weekes says if he had a product that had only managed 2% penetration into its market he'd be looking for an exit strategy as quickly as possible. It's true, from that point of view you have to say Telecom's DSL rollout is a failure.
But is that the strategy? Is Telecom's DSL strategy designed to do what we all would like? Is Telecom trying to build a market or simply fend off those that would want to build a market? Am I sounding too much like Carrie off Sex and the City and should we just all stop for a moment?
You'd have to say on the surface that, yes, Telecom does want a DSL market. It wants people to use broadband because then they can pay those per-megabyte charges. So why make it so expensive? It can't surely be to protect the leased line/ISDN/ATM market that it has, can it?
Telecom's revenues in these areas make for interesting reading. Revenue from DSL is up by nearly 80% year on year while revenue from ISDN has risen by 2.3%. Telecom's digital data service has dropped by nearly a quarter in the same time while frame relay has risen by a third. (See the link below for the full numbers.)
From that you'd think Telecom would be keen to see DSL services pushed even harder, as it's the only area that's really on the up and up. However, in dollar terms DSL is a mutt with fleas - it's only worth $25 million compared with $41 million for digital data services and $44 million for ISDN.
Telecom clearly doesn't want to eat its own lunch here, meaning there's some reluctance to move to selling a DSL product that is vastly cheaper than its ISDN or leased line counterpart. However, there's a pent-up demand for residential broadband that simply isn't being met.
Martin Wylie at Ihug would like to see a system put in place at Telecom that encouraged the ISPs to push DSL. He likens it to the early days of cellphones in New Zealand when Telecom introduced an incentive scheme for its product managers and suddenly it took off.
Are we likely to see such a service any time soon? Pressure is mounting in the form of Project Probe (if you can offer competitive service when you feel like, what about the rest of the time, Telecom?) not to mention competition from Walker Wireless and Vodafone (and all the regional initiatives that are going on regardless of Probe).
Maybe this year will be the year we get broadband?
This story is from October 2001. How time flies...
What a loyal lot we all are. There were our boys, smarting from having broken the boat the very first day out, and there we all were, worrying about how they were getting on.
Did we let going back to work get in the way of our support for the Black Boat and Dean and Schnack and the crew? We did not! We eschewed working for a living and sat glued to our websites for information.
Bugger the economy, we said, stuff the bottom line. Forget about productivity -- we need to know about headsails and trim and downward legs and tacking duels.
We just about shut down Nzoom's website, but they're a cunning lot down there and they switched the front page to a bandwidth friendly text-only set up so we could all get live updates typed in furiously.
If only the news had been better. Still, we can't have it all ways, I suppose. Access to the news is better than knowing something's going on but not knowing what.