Opinion: Tackling the demand side of Ultra Fast Broadband
- 11 October, 2011 22:00
Nearly eight years ago I went to the small town of Enschede in the Netherlands to see a fibre-to-the-home rollout.
Enschede, for those that don’t know, is famous for two things: Grolsch beer and fireworks (in 2001 the fireworks factory blew up and destroyed around 2000 homes). Ericsson took me along to see a green fields deployment of fibre and how easy it was to do.
It was very cool to see, such as it was – basically every dwelling had a box on the wall and CAT-5 (or similar) connections in each room in the house.
What was most interesting was how it was sold. Telling people they could have fast internet access and make phone calls simply didn’t do it. Instead, residents were tempted with cheap toll calls and hundreds of channels of TV but of course in order to get that you had to have broadband.
Back then we called it the “triple play” and it’s vital to uptake of fibre networks like our Ultra Fast Broadband rollout. The reasoning is simple – consumers don’t really care about internet access, but they’ll put up with it in order to get the good stuff like television, movies on demand and cheap phone calls.
Broadband is used as a noun but it’s not. It’s an adjective – it describes something. In this case we have broadband internet access, but it could just as equally be applied to television or to business or consumer services or anything else that requires a high speed connection.
We geeks will happily sign up for faster internet access because we value the need for connectivity. But we’re unusual because we see behind the scenes.
Most folk don’t want bandwidth. They don’t want throughput and they don’t care about latency, jitter, ping, traceroutes, firewalls, packet shaping, filtering or any of the rest of it. They want music, books, magazines, television, Skype, Facebook, Google, Twitter and all manner of content, both creating and created.
The mobile providers have tried for years to sell data ($10 for 100Mb, for example) but people don’t buy it. They simply don’t want to buy data. But they absolutely want Angry Birds, iTunes, Farmville, Facebook and Twitter and so on and it just so happens they need data to buy them.
Customers need a reason to want to buy the service and selling them fast internet isn’t going to cut it.
That’s why I’m concerned about the UFB roll out. I desperately want it to work, which means we need to get a high level of uptake. Our UFB rollout isn’t like the Australian NBN project. For a start we don’t have A$42 billion ($53 billion) to spend, so we’re reusing our capital.
The Local Fibre Companies (LFCs) will rollout fibre and the Retail Service Providers (RSPs) will connect customers to it. Get enough customers and the government will pay back the LFC for that tranche of work and they’ll build the next area, and so on until 70 percent of households will be covered.
But if we don’t get the right amount of uptake, the money-go-round stops and that’s that. We need to encourage residential customers to take up the offer of connecting to the UFB (it’ll cost nothing to connect, after all) but to do that we need to have something to offer them.
Fast internet and cheap phone calls will work for some, but for the vast majority it simply won’t matter enough to do any more than buy the basic plan, and that’ll push the LFCs into a difficult corner. There simply isn’t the margin in the basic 30Mbps download, 10Mbps upload plans to make it worthwhile. The roll out will stop and we’ll be left in the dust by the rest of the world.
The UFB project gives us the opportunity to build on Sir Paul Callaghan’s dream of New Zealand becoming the place “where talent wants to live” and TUANZ backs that belief to the hilt. The high tech sector is our second biggest exporter and our top ten companies are worth $4billion a year in revenue.
If we had 100 of them we’d be in quite a different position, economically speaking. It’s vital we build the UFB and that it be a success – but that success is predicated on uptake and uptake demands content so I find myself in the strange position of calling on television for help. Without it we simply won’t get the network we need.
Brislen is TUANZ chief executive and a former editor of Computerworld.