James Young-Drew, a solicitor with Wigley and Company, says broadband speed transparency is an important legal compliance issue.
He says Australia’s regulator, the ACCC (Australian Competition and Consumer Commission) found 80 percent of consumers struggle to understand what they are buying from broadband service providers. To help, it issued guidelines for service providers selling broadband, to better explain what customers can expect from the service.
Young-Drew says New Zealand’s consumer laws are almost identical to Australia’s, which means the ACCC guide is relevant here. He says is boils down to this: “Broadband speeds should be marketed in a manner which is accurate, easily comparable and descriptive of speeds that consumers can actually expect to receive in a typical busy period.”
In a PDF on his company’s website, Young-Drew writes about the six steps New Zealand RSPs (Retail Service Providers – Internet Service Providers in New Zealand) should take to stay on the right side of the Fair Trading Act:
- Consumers should be provided with accurate information about typical busy period speeds that the average consumer on a broadband plan can expect to receive
- Wholesale network speeds or theoretical speeds taken from technical specifications should not be advertised without reference to typical busy period speeds
- Information about the performance of promoted applications should be accurate and sufficiently prominent
- Factors known to affect service performance should be disclosed to consumers
- Performance information should be presented in a manner that is easily comparable by consumers, for example by adopting standard descriptive terms that can be readily understood and recognised
- RSPs should have systems in place to diagnose and resolve broadband speed issues
Communications Minister Simon Bridges says 90 percent of New Zealanders now have access to 4G mobile.
“In 2013, the Government set an objective that 90 percent of the population would have access to 4G cellular mobile services by 2019. Thanks to the work of Spark and Vodafone, we’ve reached our target well ahead of schedule,” says the Minister.
“As part of the Government’s 2013 objective, Vodafone and Spark were required to build new towers to provide new coverage each year for five years. They’re well on track to meet this deadline – creating even better coverage and capacity for rural communities.”
“Broadband speeds should be marketed in a manner which is accurate, easily comparable and descriptive of speeds that consumers can actually expect to receive in a typical busy period.”
Fastest fibre uptake in the world but returns flag
Investment up, returns down. That was the message from the most recent Telecommunications Forum report, released at the end of March.
New Zealand is experiencing the fastest fibre uptake in the world, and Kiwis are early adopters of mobile services like smartphone banking, the TCF’s 2017 industry report says.
But to cope with “extreme increases in demand”, telcos have had to ramp up network capabilities, meaning investment reached an all-time high of $1.77 billion in 2015, the most recent figure available. This makes New Zealand the second largest telecommunications spender in the OECD, in terms of investment by the sector, as a percentage of the sector’s revenue, the report says. Year-on-year investment growth between 2014 and 2015 reached almost five percent.
Getting a good return on that investment is increasingly difficult, however, says the TCF Forum’s CEO, Geoff Thorn.
“Revenues continue to fall, with consumer spend on telecommunications services declining each year, while competition becomes increasingly fierce.”
Consumers are getting a great deal as the speed and capacity of services improves and prices fall, says Thorn. Electricity and rates’ bills have risen in real terms since 2006, but consumers’ telco bills are lower now, and this is squeezing the sector.
“The reality of declining industry profitability and the potential consequential impact on future investment is a concern for the industry, when the focus should be on encouraging New Zealanders to take greater advantage of the digital economy,” says Thorn.
As a result, return on assets for telcos has slumped from 3.5 percent in 2012 to 0.6 percent in 2015, the report shows. At the same time, investment as a percentage of revenue has increased steadily since 2006.
And in the future? The need for telecommunications sector investment isn’t going away any time soon. The report predicts New Zealand’s fixed internet traffic will more than double by 2019, and mobile data volumes will grow six-fold during the same period. Meanwhile, 99 percent of Kiwis will enjoy peak speeds of 50Mbps by 2025.
Research company Gartner says spending on communications services will reach NZ$4.43 billion in 2018 up 1.8 percent or $79 million from the NZ$4.36 billion spent in 2016. It defines communications services as including: consumer fixed services, consumer mobile services, enterprise fixed services and enterprise mobile services (both voice and data).
Commerce Commission rules on congestion-free copper
New Commerce Commission rules mean Chorus must keep its copper network congestion-free as network traffic volumes grow.
The ruling says links between DSLAMs (Digital Subscriber Line Access Multiplexers)and the first upstream data switch can’t exceed 95 percent of capacity for longer than five minutes. At the same time, Chorus must report when network segments approach full capacity. It must also tell ISPs about plans to improve capacity as lines approach 80 percent capacity.
These changes will give retail ISPs more certainty when buying Unbundled Bitstream Access (UBA).
UBA services are the main way people not yet connected to fibre buy broadband. For people outside UFB (Ultra-Fast Broadband) areas, it will remain important for years to come.
Once the fibre network is complete there is an option to deregulate the copper network where the two networks overlap.
Telecommunications Commissioner Dr Stephen Gale says: “We are confident that the new standard will not lead to inefficient investment, even if copper is deregulated in UFB areas.”
In the same ruling, the Commerce Commission decided not to change the rules for VDSL (Very high bit-rate digital subscriber line) connections. It says this is already covered by existing rules.
Electricity and broadband now on one bill at Slingshot
Slingshot customers can now add electricity to their monthly broadband bill.
Taryn Hamilton, general manager consumer at Vocus Group New Zealand, says the move is the fruit of his company’s acquisition of power retailer Switch Utilities late last year.
The customer benefits are mainly economic. Hamilton says Switch’s power prices are lower than those of the main electricity retailers. He says that on top of that Slingshot customers get 10 percent off their broadband bill and 10 percent off their electricity bill for prompt payment.
But that’s not the only reason people are signing up. Hamilton says for some people the idea of having both services on a single bill is attractive. At the same time, he says, many users find they prefer dealing with Slingshot’s customer service team.
Customers of other Vocus brands will be offered electricity later on, but for now Hamilton and his team are learning how to make the strategy work.
Power and broadband have a history of being close to each other. Some fibre companies are also electricity lines companies. Electricity retailer Trustpower has been selling broadband since 2006. It offers a simple bundle of electricity and power on a single bill.
Hamilton says the margins on power are lower than on telecommunications. Most of the industry profit lies in power generation, but there are benefits from running a combined billing and customer service. Beyond profit, the big gain for Vocus is that there is less customer churn when people buy a bigger bundle of services.
Tasman Global Access cable boosts NZ data security
Tasman Global Access (TGA) will boost international bandwidth and capacity between New Zealand and the rest of the world. It will also bring us closer to our fast-growing Asian markets by connecting us with the five international cable systems serving Australia.
Communications Minister Simon Bridges welcomed the cable as a valuable alternative to the trans-Tasman section of the Southern Cross cable, which presently carries much of our internet traffic.
“Given New Zealand’s geographic isolation, international connectivity is vital for growing our economy and for helping us capitalise on opportunities.”
He praised the cable for helping ensure New Zealand has affordable, robust connections with the rest of the world – connections that will “set us up for the future”. Greater cable capacity means fewer bottlenecks and a faster internet. The TGA cable also means there is now more competition in the cable market.
The $100 million TGA cable is 2,288km long, stretching from Ngarunui Beach, in Raglan, to Sydney’s Narrabeen Beach. It can carry 20 terabits of data per second.
Spark, Vodafone and Telstra cooperated to build the cable, which took two years. Spark general manager of wholesale Jilyut Wong says trans-Tasman traffic is growing quickly and now constitutes 60 percent of their international traffic – up from 10 percent in 2000. This is expected to grow 11,000 percent in the next 10 years.
They described the cable as “extremely important in keeping New Zealand connected now and in the future” as it will support consumer needs and New Zealand business’s growth aspirations.
Alcatel-Lucent built the two-fibre pair cable, which features 20 repeaters along its length to amplify optical signals. A third cable, the Hawaiki cable, should be completed next year, providing New Zealand with three cable systems.
Spark moves Genesis’ IT into the cloud
Genesis Energy shifted its business into the cloud. The country’s biggest electricity and gas retailer has migrated its whole IT infrastructure to Spark’s Revera Cloud as part of a five-year deal that will see Spark provide Genesis with managed IT services, business mobile and cloud services. The deal is a two-way street with both companies planning to offer complementary value-added services to their respective customers.
Genesis has recently focused on using technology to make the company more efficient and to “deliver the digital services and tools our customers need for energy management – in their homes or their businesses.” It sees the shift to Spark’s Revera Cloud as a logical part of this move. Spark says it’s pleased to help Genesis simplify its operations, so it can focus more on its customers.
Netflix passes million mark with Lightbox in hot pursuit
Data from Roy Morgan Research says Netflix had over a million New Zealand subscribers at the end of 2016. That’s up 56 percent on the 684,000 users a year earlier. However, Spark’s Lightbox grew faster over the same period, climbing from 285,000, at the end of 2015, to 630,000 as it was offered free to subscribers. Numbers for customers buying the two services tripled over the same period. A total of 1.4 million New Zealanders, roughly one-third of the population, now have one or more streaming-video services. In March, Spark began offering discounted Netflix subscriptions to its broadband customers.
When Huawei founder and CEO Ren Zhengfei met Prime Minister Bill English, in March, he announced plans to invest $400 million in New Zealand over the next five years. The money will be spent on local procurement, university research and building cloud computing infrastructure.
Last year, Huawei committed to becoming a leading supplier of cloud infrastructure. It aims to repeat its telecommunications success by selling the technologies that enable cloud computing. The company says its focus is local for now but could extend later to offering services throughout the Asia-Pacific region.
“So in the wireless space spectrum is very, very expensive everywhere, regulators and governments are making money and they’re selling it off very piecemeal. And unfortunately, because it’s piecemeal, you get little bits of spectrum everywhere; you’ve got 20MHz here, 20MHz there or 16MHz here. And the more fragmented it gets, the less you can do with it. A lot of the chipsets can work very efficiently if you have what’s called contiguous spectrum, a continuous block – but unfortunately that’s not how it gets cut up.”