JB Rousselot took over the Chorus CEO reins as the first stage of the UFB network completed. The UFB2 and 2+ project is due to complete at the end of 2022. The company is moving from building infrastructure to operating a network. It is a time of change. Rousselot says one of his first priorities is winning customers who have yet to take up fibre
Chorus was on JB Rousselot’s radar a decade ago. When Australia was establishing its own fast broadband project, he joined NBN Chair Ziggy Switkowski on a fact-finding mission to New Zealand. Since then he has kept watch on the company’s progress with the UFB network.
He says; “I think this country got it right in terms of their structural separation and policy framework around it. There are very big differences between how it's been set up here and how it's been set up in Australia.” He says New Zealand was correct to keep the copper network assets in Chorus. Another area where he says New Zealand has done better than Australia is the bipartisan consensus which kept politics out of fibre.
A more subtle observation is that he sees Chorus’ tough early experience, with the regulatory regime wrangling over copper pricing, as having put the company on the right trajectory.
He says: “It shook the organisation to the core. The regulations meant Chorus had to learn fast how to operate super-efficiently and keep costs low. That’s a culture that has remained with the company. Along the way it has become innovative about finding ever more cost-effective ways to build a fibre network”.
Now the first stage of that network is complete. At the end of last year 56 percent of homes with fibre network access had taken up a service. That’s far more than anyone expected when the network was first planned. Yet Rousselot is certain there is more to come.
He says; “A 56 percent uptake means that 44 percent of people still haven’t placed their order. This is a great opportunity for us. What we need to do is to convince people to climb aboard. The network is there thanks to a great public-private funding model. The country and investors made an investment in the technology; it’s ready to go.”
Part of getting people to switch to fibre is to make the process as easy as possible. Rousselot says there are people who have been able to place an order for years now; “They just haven’t found the justification to do it. They may not know the installation is free. They may not know how much it has improved over the years. We need to get these messages to them. Once they discover how good fibre is, they won’t go back”.
The potential external challenge for Chorus comes from fixed wireless broadband. Spark and Vodafone talk of ramping up their wireless offerings with the arrival of 5G mobile technology.
Rousselot is more than ready to deal with the threat. In his last role he was chief strategy officer at NBN, Australia’s government-owned broadband company. He says; “Because NBN was running part of its network on fixed wireless, we know how hard it is to deliver very reliable, uncongested, unlimited fixed connectivity, home connectivity, using that technology. It's not easy.” He says a fixed line, especially a fibre fixed line, is always going to be cheaper and better.
That said, he acknowledges there is a place for 5G and wireless broadband. “The great thing 5G does is that it allows thousands of mobile devices to connect to the network. Think of how it will be used in the Internet of Things.
“It also has low latency compared with 4G, so it will be great for driverless cars and applications like that. There is going to be a lot more capacity created around 5G, but that extra capacity is going to be used best by applications that require mobility,” he says.
A key lesson Rousselot learnt working in telecommunications is the speed of technology change and how people’s behaviour reflects the change. He says: “Remember the world before smartphones? Those were the days when I had to organise to meet my wife under the clock at a certain time. We forget what that was like because things change so fast.”
With fibre, the pace of change is, if anything, faster. Part of this growth is fuelled by an increase in the number of domestic devices that consume data.
He says: “You know, when you think about how quickly people consume more and more data and what they do with it in their home, it is the equivalent of suddenly people going from hand washing to having a dishwasher, to having ten dishwashers and then to refilling their swimming pool every month.
“Data use is growing year on year. If something grows 25 percent a year, it almost doubles every three years. That’s where we are with data. I read in November that, on average, people will be using a terabyte by 2023. If we stick with the water analogy, the connection to your house would have gone from being a hose to a pipe that’s 50 centimetres in diameter.”
There has been discussion about Chorus and the other fibre companies becoming utilities like those that deliver water and electricity to homes and businesses. The regulatory settings are moving in that direction. Yet Rousselot says there is no other utility where the service being delivered changes at anything like the pace of broadband.
For him the service being delivered is not so much bits and bytes as connectivity. He sees Chorus’ core business as becoming more about providing customers with better connectivity. One aspect of this may be for Chorus to take the data further into people’s homes and business premises.
He says: “We need to ask questions like: how do we make Wi-Fi work better in the home? We need to get a better understanding of the applications that run on our network. That way we can improve our services to better meet customer needs.
“When Netflix launched in Australia, we suddenly saw a change in the amount of data used and the time of day at which the data was used. Even after a couple of months the change was dramatic. I’m sure it was the same in New Zealand.”
Gathering more information about what goes on with data flowing into homes and businesses is a key part of providing customers with better connectivity. Many of the events affecting the customer experience are external to the telecommunications sector or beyond its control.
Rousselot gives two examples. He says that when the UK introduced new privacy legislation, the networks saw a drop in traffic. He says: “It was in the background, not obvious.” Likewise, there was a noticeable change when Netflix introduced a new coding algorithm.
One of the tasks facing Chorus is to communicate sophisticated messages about complex technology matters to an audience that may not always understand all the nuances. Rousselot gives Google Stadia as an example. Stadia is an online gaming service that does away with the need for consoles and other specialist gaming hardware. It’s not yet available in New Zealand but is expected to arrive in the near future.
He says: “How do we tell the story that for Stadia to work, you need really low latency, and the only thing that's going to give you that low latency is fibre?”
Stadia is an example of the kind of external innovation that continues to reshape the telecommunications sector. Innovation can come from inside the industry too. Earlier this year Chorus introduced Hyperfibre, affordable fast broadband services that run at 2 or 4 gigabits per second. Rousselot says he loved the idea of Hyperfibre the first time he heard about it.
Another area of innovation is where existing service providers add content to their offerings. Vodafone has its own branded TV service. 2degrees gives its customers a subscription to Amazon Prime. Spark added television style content with Lightbox, which it has since sold to Sky TV. More recently it has made a bigger content investment with Spark Sport and its streaming Rugby World Cup coverage as well as English Premier League Football.
Rousselot has worked on the added content side of the fence when he was in Australia and knows where the pitfalls lie. “We were streaming the Melbourne Cup in Australia. People wait until the last moment to sign up for the service. Then suddenly what crashes is not your streaming server, but it's the authentication that you've put in front because everybody wants to authenticate at the last moment.”
He says that side of the project worked well for Spark Sport in the run up to the Rugby World Cup. Most of the problems that caused bad publicity for the company was to do with things that were beyond Spark Sport’s control. “Some people were still running off old Wi-Fi or an old laptop that was unable to cope with that type of streaming. But overall it was incredible.”
Yet for him, media remains an add-on for telecommunications companies. He says: “It’s not the core business. You might do it because it supports the core business. In Australia we saw telcos run media as part of the business, then establish stand-alone operations. Spark is going through the same thing now. In Australia the content is bundled as part of the service, here it is an add-on”.
The user experience is an essential part of making this kind of consumer service succeed. That is where Chorus has a role to play. Much of the innovation happening in the fibre market involves services or technologies that the consumer may not see directly, but they see the benefits.
Rousselot says it is different with businesses. “When we explain to an over the top provider that we can take their content at the very edge of our network and give their consumer a better experience, they get it. That's not a conversation that you can have with everyday Kiwi mums and dads. They'll see the benefit of it, but they don’t want to know how it is built and delivered. All they want is for it to work”, he says.
BETTER AND FASTER
He says: “It's amazing how we haven't really noticed our internet getting better and faster. It just happened. We didn't register that it is a lot faster, although we did register that it had not slowed, which is not the same thing. And we can do new things on it.
“I keep a box of old hardware in my attic, my ‘technology museum’. It’s full of devices that I’ve owned. Every once in a while I turn them back on. It helps to realise just how long it used to take a PC to boot up. Even four years ago that was normal, yet if you look at it now you think there is no way I can tolerate this”.
The customer experience continues to improve. Most of the time we don’t notice that it continually creeps up. We learn to accept this as normal. But this has been a downside for the industry. It makes it harder for technology companies to justify price increases even though people are getting more.