analysis In Australia, poking fun at our New Zealand cousins has become more than just a hobby over the years; these days it enjoys the status of a national sport. However, when it becomes to broadband, the situation has been turned on its head: New Zealand is doing everything right that we are doing wrong. Here’s five ways the Kiwis are smarter than us in this critical area.
First, some background. Like Australia, New Zealand has its own national broadband project. Dubbed the ‘Ultra-Fast Broadband’ project (UFB), it focuses on deploying Fibre to the Premises broadband to most of the population. It is being delivered by several private sector partners, with the rollout as a whole coordinated by a government company known as Crown Fibre Holdings. It is an initiative of the current National (conservative) government led by Prime Minister John Key and was announced in 2008, with the final details confirmed in 2009.
With that out of the way, let’s look at the top five ways New Zealand is kicking Australia’s butt when it comes to the broadband issue.
1. New Zealand’s NBN still has a Fibre to the Premises model
The dream of a national broadband network using the ultimate telecommunications technology — Fibre to the Premises — was first raised in Australia by then-Prime Minister Kevin Rudd and then-Communications Minister Stephen Conroy back in April 2009. Over the four and a half years since that time, Australians increasingly got on board with the vision of a new government telecommunications monopoly, dubbed the National Broadband Network Company, which would deliver that vision, finally fixing the broadband issue in Australia for all time.
However, over that period, the Labor Federal Government almost completely failed to deliver on its broadband promises. In December last year, after taking power, the new Coalition Government fundamentally abandoned Labor’s plan. The Coalition is now supporting a vision in which up to a third of Australian premises will be served by the HFC cable networks of Telstra and Optus, and Fibre to the Node and Fibre to the Basement used in other areas not already covered by Labor’s FTTP approach.
It’s likely that the Coalition’s ‘Multi-Technology Mix’ model will deliver many Australians better broadband over the next five years. However, even NBN Co executive chairman Ziggy Switkowski — a Coalition appointee hand-picked for the role — admits portions of the network will require upgrading in as short a period as five years’ time. The MTM mix does not represent a long-term solution to Australia’s telecommunications needs.
In contrast, New Zealand is sticking by its FTTP guns. As NZ Communications Minister Amy Adams said during a visit to Australia in August 2012: “It made better sense to do it now rather than have to come back in the future and retrofit fibre to the node to the fibre to the home connection.”
Like Australia, New Zealand is also planning to use satellite and wireless broadband in rural areas where FTTP isn’t economically feasible, but unlike Australia, New Zealand didn’t throw the FTTP option out the window when the going got tough.
2. NZ’s Opposition isn’t trying to tear its NBN down
As in Australia, New Zealand has two major sides of politics — a conservative/liberalist side and a Labor/socialist side. The current Opposition is largely formed from the New Zealand Labour Party. In Australia, while in Opposition, the Coalition did everything it could to tear down Labor’s NBN project, with then-Opposition Leader Tony Abbott famously telling Turnbull to “demolish” the project. Coalition MPs in Australia have been constantly critical of the project on every front.
Much of the Coalition’s criticism has focused on the fundamental nature of the project. Turnbull has stated on many occasions that the project uses technology — FTTP — which is too expensive, and that the Government should have focused on cheaper technologies such as Fibre to the Node, as well as reusing HFC cable. In addition, at a basic level, the Coalition does not support the idea of the Government building a new broadband network, but would rather incentivise the private sector to handle the issue.
In New Zealand, the Opposition has taken a radically different approach to the criticism of the Government’s Ultra-Fast Broadband project. I wouldn’t say NZ Labour is fully in favour of the UFB project, but neither is it trying to destroy it.
Instead of trying to tear the project as a whole down, the Opposition has criticised the Government over specific aspects of the project, as well as its management of specific aspects of the telco regulatory regime (such as the ‘copper tax’ issue). You can read through this criticism online here. You’ll find a real dearth of vitriol and more sober examination of the broadband issue in general. If I could sum it up, I would say that the NZ Opposition’s handling of the broadband issue seems designed to hold the Government accountable for its mistakes, while not trying to torpedo the project as a whole.
3. New Zealand has more reasonable rollout goals
By any measure, Australia’s rollout goals for our NBN project have been too ambitious. When initially announced, the Government planned for the NBN’s fibre to reach about 93 percent of premises by June 2021, with the remainder to be served more quickly by satellite and wireless.
In contrast, New Zealand has taken a more conservative and realistic approach, with the aim of bringing FTTP broadband to just 75 percent of New Zealanders over a ten year period, concentrating in the first six years on priority broadband users such as businesses, schools and health services.
And New Zealand has proven remarkably effective at meeting its deployment goals. Crown Fibre Holdings announced in August 2013 that the project was 20 percent complete was on track to reach the 75 percent coverage mark by the end of 2019. “We’re very pleased to see that just over half of urban businesses now have access to UFB, while 67 percent of schools in UFB areas are now able to connect to the network”, said CFH chief executive Graham Mitchell at the time.
Part of the issue here is related to perceptions. The Australian Government hyped up its NBN project to huge levels. Consequently, when it didn’t deliver, many Australians were very disappointed. This allowed the Opposition an angle to argument that the project should be radically overhauled. By using very modest, slow-moving targets, New Zealand has been able to maintain the non-controversial nature of its UFB project. The project is moving slowly but steadily towards fruition.
4. New Zealand split its incumbent telco
One of the fundamental precepts which politicians creating telecommunications policy over the past decade have realised globally is that the main impediment to the development of high-speed broadband in their country is usually the incumbent telco — a massive, national player like Telstra which owns each country’s copper telephony network, and used to be owned by each country’s government but was privatised some time over the past decade.
There are two key problems with incumbents. Firstly, they enjoy massive advantages over rivals, courtesy of their existing network footprint and subscriber base. Secondly, their vertically integrated nature (being both wholesale and retail players) means that they are likely to undercut the development of competition in broadband markets, by treating their own retail arms more favourably than their competitors, who are forced to engage with their massive infrastructure footprint.
This usually means incumbent telcos are not incentivised to upgrade their infrastructure with high-speed broadband. Instead, they typically will sweat their assets, continually generating profits for their shareholders.
In 2011, New Zealand, like other countries such as the UK, fixed this problem by splitting their incumbent telco into different wholesale and retail arms. Hence the country has a new, wholesale-only, publicly listed telco named Chorus, which looks after the infrastructure formerly owned by Telecom New Zealand after it split off from the mothership. Telecom NZ itself is re-branding along more retail lines.
Chorus is actively working with the NZ Government on the UFB project, and it’s also actively developing its own systems and focusing on the wholesale market. It has no interaction with retail customers.
In Australia, successive governments have failed to take the same action with regard to Telstra, meaning that Telstra still maintains dominant control over the telecommunications industry (both retail and wholesale). It also means that the Government is forced into costly and expensive negotiations for access to Telstra’s infrastructure as part of any national broadband upgrade, and that rival telcos are continually forced to work with the competition regulator, the Australian Competition and Consumer Commission, to get basic access to Telstra’s infrastructure.
5. NZ’s incumbent telco is doing most of its NBN rollout
If you examine the construction model which the previous Labor Government chose for its NBN rollout (consisting of independent contractors deploying the infrastructure, coordinated by a central government-owned company), you would have to come to the conclusion that it is highly unusual in international terms.
Globally, it is usually only incumbent telcos that are able to successfully upgrade their own networks. There are very solid reasons for this. Incumbent telcos have high levels of degree and expertise in dealing with their own infrastructure. They have large existing workforces which can be converted to deal with construction work. They have specific and detailed information about the geography of every city, every suburb, every street, every actual premise, which no other company has.
The failure to engage Telstra in the process of upgrading its network has had quite a dramatic effect upon Australia’s deployment of its NBN infrastructure. The rollout was significantly delayed right from the start by the need to negotiate with Telstra on access to the telco’s infrastructure; a delay that would not have occurred had Telstra been upgrading its own infrastructure. Even former Communications Minister Stephen Conroy has acknowledged that the external contractor model used by NBN Co has failed, and in several states — Western Australia, the Northern Territory and to a certain extent South Australia — contractors have had to be removed from the construction effort because of a lack of ability to deliver.
As in Australia, New Zealand established a government company, Crown Fibre Holdings, to get its own UFB rollout done. And, as in Australia, external contractors have been commissioned to deploy the network.
However, the key difference is that New Zealand has commissioned Chorus, the existing incumbent operator of the country’s copper network, to conduct the majority of its UFB rollout. Chorus is currently conducting 69.4 percent of the rollout, with other major utility companies Northpower, Waikato Networks and Enable Services conducting the rest.
In its model, New Zealand has taken a best of both worlds approach. Unlike Australia, it has contracted the incumbent telco to conduct most of its FTTP rollout. However, like Australia, it has also made use of regional utility manpower where appropriate. The net result has been significantly greater certainty and capability in the rollout.
So, are you convinced yet that New Zealanders are smarter than Australians when it comes to the deployment of high-speed broadband? No matter how you look at New Zealand’s Ultra-Fast Broadband project, it is apparent that our Kiwi neighbours are doing a better job of that project than Australia is doing with its own broadband initiative.
New Zealand’s politicians aren’t incessantly fighting each other on the issue and trying to tear each other’s projects down wholesale, as ours are in Australia. The country wisely split its incumbent telco several years ago, ensuring stable competition in the local market and that the incumbent would help with its high-speed broadband rollout. New Zealand has more reasonable rollout goals, and, most importantly, it’s still focused on using the best technology available — Fibre to the Premises.
Right now, when it comes to the issue of high-speed broadband, New Zealand is making Australia look like a nation of clowns who have no idea what we are doing. New Zealand has less resources than Australia and a much smaller population. But when it comes to the development of broadband, the country has been able to do more with less than Australia has. Right now, no doubt most New Zealand technologists are looking at the NBN situation in Australia and thinking: “Those Australians are crazy!”
I don’t blame them. I think the same thing every goddamn day.
Image credit: NAPARAZZI, Creative Commons
I definitely agree on the last sentence, what is going on here really is batsh#t crazy.
this crazy circus pisses me off as well. its a near daily thing for me too – its like someone said “how can we make this the most unusable fuckup of a policy that we can?” and expressly picked the worst items off the list.
if we were even doing a few things off that list as the Kiwis are i would feel a lot better about it. fat chance with this govt, tho. disdain for the constituency is rampant and as far as they are concerned the time to consult with and listen to the electorate is about 6mo before the next election – unless you are made of money. i fully expect whats happening next door will now be totally ignored, nevermind Malcolms history of spruiking them in the past.
/resigned voice/ bring on the clown show then…..
If you remember, the UFB project started with FTTN via Chorus. This was slammed by 3rd party providers as Chorus was locking them out of nodes & making a killing. All that seemed to change, I can’t even remember when to be honest.
Good to see conservative governments don’t always tear up important infrastructure.
Telstra should have been separated before sale. Have we heard any more about the separation that was (supposed to be) happening?
I wonder if the NBN would have been targeted quite so hard if Abbott hadn’t been in power?
Telstra was in the process of splitting into two companies when it was stopped by the then incoming Liberal government in 1996.
The Hawke/Keating government set the ball rolling, and there was the retail company (“Telecom/Telstra”), and the network company called “NDC” – which stood for “Network Design and Construction”. Many Telecom/Telstra vans were stripped of their branding, and rebranded with NDC. The process was well underway.
Along came 1996, and it was all knocked on the head/halted, etc, etc…and we got stuck with a single, vertically integrated Telstra.
NDC then got flogged off in the late 1990’s…
Another comms portfolio mistake by the “right”…
And interesting bit of history but ….. your dates seem awry
http://www.theage.com.au/articles/2003/02/17/1045330507206.html
http://www.computerworld.com.au/article/107834/telstra_launches_network_design_subsidiary/
I was thinking more recently – http://www.telstrawholesale.com.au/structural-separation-undertaking/index.htm
This is the greatest tragedy with letting these Coalitions stooges stuff the NBN. For once in our history we were on the cutting edge. We were deploying a network that would have been the envy of the world. Yes, there were problems. Yes, the Labor party screwed up badly in a wide number of important areas. But the point was, IT WAS HAPPENING. We were in the midst of a FTTH rollout that would’ve revolutionised broadband in this country. Now the project is a sad, worn out joke, much like the Copper and HFC networks upon which our broadband future now depends. New Zealand will be decades ahead of us technologically by the time their broadband rollout is completed, at which point we’ll most likely still be rolling out FTTN and making desperate patch-up jobs all over the place due to the failing copper. Meanwhile, Malcolm will keep on telling us that “I never guaranteed 25mbits minimum. I said ‘up to’ 25mbits minimum.”
It also needs to be remembered that the cost per premises to connect in NZ is actually far higher than that in Australia (NZ$2,935 per premises) yet they are smart enough to realize how important it is and are building it anyway.
“The cost per premises to pass by fibre currently stands at NZ$2,935. Chorus noted that this was higher than the NZ$900 to NZ$1,100 per premises cost it had estimated, but said that the current cost reflects that the project is still in its start-up phase, and that the rollout has yet to reach high volume that would lead to efficiencies.”
Source: http://www.zdnet.com/au/chorus-posts-profit-amid-fibre-network-vdsl-rollout-7000019829/
Wasn’t the idea that creating the NBN has done the same thing as structural separation?
Also, I’m not completely sure that the Labor Federal Government almost completely failed to deliver. You saying not that long ago that 2014 was going to be the NBN’s best year. I think we all know why the project has since halted…and it’s got nothing to do with Labor.
“Wasn’t the idea that creating the NBN has done the same thing as structural separation?”
The options presented to Telstra were to Functionally separate (forced by legislation if required) or to Structurally separate, of their own accord.
They chose the latter, via the SSU:
http://www.telstrawholesale.com.au/structural-separation-undertaking/index.htm
In NZ, the government didn’t give Telecom NZ an option, it was simply forced to separate into 3 units.
We haven’t done that here due to various reasons that strike me as rather short-sighted.
It was meant to be a rhetorical question.
The NBN was going to force Telstra to be a retail only customer. Malcolm Turnbull is undoing that…thanks Malcolm…not
Had Telstra been separated, prior to final sale, then much of the current situation would or could have been redundant. Unfortunately, that ship has sale’d. [stop groaning, it’s punny.]
Telstra is and always has been in the best position to build a FTTB, FTTN and FTTH network. We all know that. It’s never been in question.
But without true separation, it’s predatory nature has made successive governments, on both sides of the house, refuse to capitulate. It’s created an impasse that has only been resolved, by effectively creating the functional equivalent of Chorus. NBNco.
NZ realised the importance of this, and made it happen, before any sale could render it virtually impossible, and thus locking away infrastructure that was otherwise vital.
We didn’t. And should have.
By building FTTH, and then migrating from copper, Telstra would be primarily become a retail company (which is where it’s focus is now, anyway) and NBNco would remain the wholesaler. Creating that same separation. And moving infrastructure back to a non-retail entity.
Not perfect. Not really as efficient. But better than nothing.
Instead, Successive Governments were too busy seeing dollar signs and damning future generations.
I recently visited my folks, there were adverts on TV all the time for the now plethora of options available. Even though they are in a small regional community, odds are they will see FTTN as an option before I do.
And just to correct myself, Telecom NZ was forced to separate despite having already sold.
I think I’ve suggested that backwards – my mistake.
Wow great article Renai, so so true.
Just 5?
;)
7) NZ doesn’t have Rupert and News Ltd and their media journalists and commentators seem to be a little smarter than our MSM ones
Unfortunately Uncle Rupert does have a presence across the ditch. Unluckily for us, it was a conservative gov that proposed FTTP in NZ, so he basically supports it. Here it was a “socialist” government, so he’s done all that he can to rip it down, including all that he could to ensure the “socialist” government no longer governed.
6. NZ doesn’t have Turnbull
7. NZ does not have Tony Abbott.
Can anyone else think of an export industry that would benefit the whole country?
8. Jones..
9. Bolt..
10. Australian mainstream media..
I disagree. The Kiwis aren’t smarter than Australians when it comes to communications. I think that the politicians currently running the show in this country are smart enough and well-informed enough that they know *exactly* what they’re doing.
It may not be in the national interest, but you can be sure it’s in the interests of the Liberal party and their backers.
Sadly quite true.
Old media is still scared of the new media business models that a decent national network will allow. Quite rightly, as early inovators will be rewarded, and the older monolithic companies will not be able to adapt quickly.
If a startup gets the model wrong, they go bust and cost their backers some funds. If a major Murdoch company gets it wrong, we get HiH redux.
” “Those Australians are crazy!”
This should read “Those Conservatives are crazy!”, the simple fact is they have been against a genuine upgrade to the nations communications network from day 1, partly due to ideology and partly due to it not being in the best interests of their media mogul master, Rupert Murdoch!
Not to discredit the Murdoch thing because it is valid to a point but there is more to it. Have you noticed how many Telstra people Malcolm is connected to? There are little clubs of people who believe they are the masters of the universe and unfortunately for us the Liberal party and Telstra are connected at the hip in a way that is not good for the average Australian.
The blame for Australia’s failure on point 2 lies solely at the feet of compulsory voting.
And most of the other points probably extend from that as well, to some degree.
Come on everyone, people power, tell them to put the FTTH back on the plate.
270 000+ of us did.. A legitimate democratic process was shrugged off by Turnbull because he thought the election was a referendum on the NBN.
Here’s how much smarter the Kiwis are than us on fast broadband.
We built a system that 30% of households it passes signed up to. So its running behind on both coverage and in getting people to sign up, but at least there’s a hope that its finances can be fixed.
The Kiwis built one that only something like 2% of the houses it has passed have signed up to. Sure its got good coverage, its available to a lot of people, but almost no-one’s connected to it. Commercially it is an absolute disaster.
That’s really smart, right?
This article is all too typical of the blinkered ignore-the-inconvenient-facts rubbish Delimiter prints.
If it’s that bad, stop coming here. I’m not sure why you insist on posting your short-sighted views at every opportunity, but it seems clear that they aren’t compatible with the place you choose to post them.
The difference is there’s already Fibre to the node in New Zealand, so the majority of people don’t see the point of making the switch to fibre as its not a huge jump like it is here in Australia for most users.
I live 4km from Perth CBD and have 3mbit connection if fibre went past id be on it in a flash, were as if i was on VDSL getting 30-50mb+ connection it would need to a pretty good deal to make the move. The good thing about that is it create competition between ADSL/VDSL and fibre price wise and speed wise, you can get unlimited 100/50 for $99 a month and they have just released 200/50 speeds
> However, over that period, the Labor Federal Government almost completely failed to deliver on its broadband promises
Renai, why do you keep banging this drum?
Certainly there were unforeseen delays, many of them engineered by Telstra (surprise, surprise!).
But they had laid the essential ground work, the program was rolling out and was not far behind schedule.
Had the project been allowed to continue, with hard work and good will, the NBN would have eventually been completed.
I won’t post here anymore, I’m fed up with this, but I beg you to explain your reasoning.
I do think it’s fair of Renai to mention this. The Real NBN weren’t knights in shining armour, there were flaws, and to put the whole picture in context is reasonable. However, I do think he should stress how thoroughly inappropriate and short sighted the Liberal MTM is for Australia’s future in a more robust manner. ;)
Mr Fraudband is a well known rugby lover so he’s turned the national fraudband network into rugby, “always behind New Zealand”.
The NBN was never going to be built in a day it was always going to take between 15-20 years, any body that expected it to go quicker was clearly delusional.
Poor old Renai bought into the idea that Fraudband would eventually see the light build a true fibre network.
Australian politics has come to the point where it’s not actually in the best interests of the country, and has been that way for some time. This is not news.
I really enjoyed the article and wholeheartedly agree as I pretty much came to many of the conclusions myself regarding the inability for government (of either party) to operate effectively the way the politicians currently choose to behave.
Fibre to the node is the ultimate, however the other end needs to be fibre to the node as well. The more we do to obstruct this process the longer it will take to build. Ones it is build we will never look back. Everyone will be next door. Good luck Australia and Australians.
I think a lot of people have short memories… At this stage in the KRudd government that started this whole thing, they were just around closing time for the useless tender process for FTTN. Remember that time waster?
Tony and friends could have just let NBNCo continue on course, but they are trying to get us better broadband sooner. We get about 5mbps at home. Being offered 20mbps soon is much more important than being offered 100mbps at some unknown stage up to 15 years from now.
Don’t get me wrong – I love the idea of fibre terminating at my house for future proofing, but I don’t want to wait 10+ years with no increase in speeds before that.
I can understand where you’re coming from. I loved in 2 houses for a few years where the connection was around 6mbit. The problem is that the CBN isn’t going to arrive much faster because they’ve got to go through a bunch of hoops that were already jumped.
The idea of a large scale infrastructure deployment being redesigned and built in 2.5 years is a bit too much to believe.
It would have made more sense, as part of the negotiations with Telstra, to do as the Kiwi’s have just done. Apart from the whole stuff up by the LNP when they didn’t separate it before they sold it off :\
There are two more
1. NZ already has FTTN to 80% of mostly urban
The RBI is a parallel project to UFB and is delivering FTTN to the rural sector at a slightly quicker rate than NBN. BTW, FTTN = VDSL, our fastest VDSL panelist is measured at 84Mb/s
2. NZ measures and publishes performance comparisons at the bequest of the ACCC equivalent using TrueNet see Facebook.com/TrueNet.au for our comments on the small sample we rest in Sydney and Melbourne
John Butt. CEO TrueNet
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