Make the UFB free

, posted: 13-Jul-2012 13:13

The New Zealand Ultra-Fast Broadband project has several problems. It's over-complicated, slowly deployed and despite being in its first year already, only just over a thousand households have connected to it.

Obviously, the uptake figure will increase over the next few years, but let's face it: if ISPs charge $75/month for 30/10Mbps UFB connections with a tiny 30GB of data on year and a half long contracts, it's not going to be that attractive to many people home line bundling notwithstanding.

Or, for that matter, $234/month for 100/50Mbps and 1TB of data a month, which is more what you'd want from the UFB.

When I see that kind of pricing for relatively low speed and meagre data cap plans, it's clear that everyone involved have lost sight of the reason the UFB is being built with a large public subsidy: to ensure New Zealanders are well-connected. That is, it's not the network per se that's valuable, it's what we and others do with it.

If we don't do a whole lot with it, by not taking up UFB service because it's too expensive and/or offers not a great deal more than present DSL connections, that light fantastic fibre network won't be very valuable at all. ISPs that see the UFB as a premium product for the wealthy few miss the point of the new network. It's not about selling connections anymore, it's about connecting as many people and businesses as possible and making money out of that.

Interestingly enough, Google faces a similar uptake challenge in Kansas City, US, where it's been rolling out a 1Gps symmetric fibre-optic network to premises since last year.

Yes, one gigabit uploads as well as downloads, in a city with a population of under half a million.

Kansas City Fibre sounds like an experiment by Google, which is rich enough that it can do such things. And that's cool, really. I'm not sure where things are at with Google fibre in Kansas at this stage but this picture is apparently from the rollout:

GFiber Trucks

Picture courtesy of Google's fibre blog.

Thought-provoking as usual, Bill St Arnaud, the former chief research officer at Canada's academic network CANARIE points out in his blog that Google is hanging the fibre above the neutral wire on poles. This makes for less clutter, but also drives up costs as it requires expensive, trained work crews and means Google will likely deploy all drops to premises and splice boxes during the initial rollout.

Why would Google do that? Well, Bill reckons Google will offer "a basic free high speed Internet [service] to each and every home", perhaps with Google TV bundled. Then there can be paid for premium services on top.

That would pull the rug from underneath competing telcos that otherwise would undercut Google with their copper and HFC networks, which have been paid for many years ago - the "sweated assets" as the industry calls them.

Bill writes that to get return on investment when building a fibre network, you need around forty per cent take up. If you're competing against paid-for copper, which in theory can be offered for free. then why not do the same with fibre? Copper can't offer anywhere near the same speeds as fibre and is much more expensive to maintain. It can only compete with fibre on customer charges.

Apparently, Google needs to make something like US$10 to $20 a month per household to pay for the fibre alone over the next five years, which doesn't sound much but which Bill thinks will be tough to get.

I'm not so sure: Google's the opposite of a "dumb pipe" provider. A fibre network for Google is simply a means to an end, and only part of its business model. Partnering with advertisers, TV and film companies as well as local utilities - Kansas City will have a smart grid, monitored over the fibre network - and maybe Google won't have to on-charge the connection cost and have monthly subscriptions for its network, as it will have an entire area hooked up. Lots of connections, heaps of data flowing and its own network that others can't tamper with: that's exactly what Google wants.

A similar model is probably the only way the UFB will work in New Zealand, especially now that we're down to two huge telcos with copper networks and which have eighty per cent of the market to themselves. Vector could do it in Auckland for instance and they have three years or so to put rear-end in gear, but they seem happy to lie doggo under the Chorus/Telecom steamroller instead.

No, this isn't a troll. I also recognise that by inviting Google into your house, its offerings aren't free in the normal sense of the word. You become the product for Google to sell, as well as a purchaser of the search giant's products. There's plenty of risk involved in dancing with the Google elephant and it'll be interesting to see where the Kansas City experiment goes.


Jonathan Brewer who attended Communicasia 2012 pointed out that Singapore's uptake figures aren't as low unreasonablemen suggests in the comments. Here's a graph from Khoong Hock Yun, the Assistant Chief Executive of the Singapore IDA's presentation:

Singapore IDA uptake figures

Khoong also says that by June this year, 95 per cent of residential premises and offices have been passed by the NG-NBN in Singapore.

Speedtest from provider MyRepublic:
Looks like 100/50Mbps costs S$59/month, with no contract. No mention of data caps.

Update Google is doing the the above but not as thought. There is a free service, with the US$300 installation fee payable in instalments but it only goes at DSL like speeds of 5Mbps down/1Mbps up. The faster service will cost US$70 per month for 1Gbps, US$120 if you add TV. The pre-registration rallies are a brilliant move though.

Here's a video of the announcement. Features The Rainbow Rabbit and lasts for an hour. Thank me later.

Other related posts:
Video: Kim Dotcom and Mathias Ortman at the IITP Mega breakfast
Two-factor authentication broken
The problem with naming and shaming

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