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The cart before the horse

Written By: - Date published: 12:18 pm, April 23rd, 2008 - 28 comments
Categories: economy, national - Tags: ,

The internet is awesome; you can use email, learn heaps, and read sites like The Standard. Faster internet is awesomer; you can watch the Porirua market video without having to wait for it to buffer. Personally, I can’t wait until I’m getting the internet through a chip in my skull. Why, then, is National’s $1.5 billion plan to put fibre-optic 1gigabit per second broadband into everyone’s home a bad idea?

Let us count the ways:

  1. The current cabinetisation program, which is not costing the Government a cent, will deliver 20+ megabits a second into your home within four years. It is the same programme as Australia is rolling out. At 20mbps you can watch streaming DVD-quality video while you partner holds a video internet telephone call on other computer and your kid plays an online computer game all through the same connection. It’s bloody fast; faster than most people ever get close to using at present. So, 40 times that amount seems a bit excessive.
  2. It’s expensive. Key’s plan will cost $2000 per household, half from the Government, half from companies (who haven’t said they’ll pay yet)
  3. National plans to borrow the $1.5 billion. So you’ll be paying $1,000 plus a foreign creditor’s interest for a service you can’t yet use.
  4. We don’t have the people to do the job. Since it’s been privatised, Telecom has refused to invest in training technicians, and National cut skills training for nearly a decade in the 1990s. Now, we have a workforce shortage. Even the cabinetisation programme has required bringing in workers from overseas. A massive fibre to home project would require workers that just aren’t there.
  5. 20% of New Zealand households still aren’t connected to the internet. Far better to get these families computers than a fibre connection they can’t use. Better internet is important, and fibre to the home will have its time, but the important thing now is to get everyone connected first while offering a decent speed.

National has put the cart before the horse on this one. And, what’s worse, they’ll borrow to pay for the cart.

28 comments on “The cart before the horse ”

  1. Tane 1

    I wouldn’t call it a bad idea yet given how little we know about it, but I’d like to see some detail on where the money is going to go and whether it’ll make a return on the investment – especially considering that investment will have to be funded by borrowing.

  2. Steve Pierson 2

    It is an interesting issue. we want better internet but this just doesn’t seem to be the way to go about it.

    Some of the others have different angles on the issue and different feelings towards Key’s plan. you’ll probably see posts for them in due course too.

  3. I like the idea, personally. Rip out the copper. Copper can only go so far (ADSL/VDSL are reaching the limits of what copper can do) and Fibre is still being explored and improved upon.

    20mbit/s may cut it when we’re running our phone, television & movies (high definition, mind) on the downstream, but when your sending just as much data e.g. file sharing, p2p connectivity which includes VoIP, some IPTV implementations without heavy QoS (Traffic management) your upstream will be saturated easily.

    And also, you’re promised 20Mbit/s downstream, but what about the data caps? What about backhaul limitations, peering agreements and thin pipes to overseas carriers? And traffic throttling by the ISPs for the protocols they don’t like, these issues and ones like them prevent you from getting the advertised speeds right now…

    ADSL2 has a maximum upstream of 1Mbit/s. ADSL2 Annex M increases that to 3.5Mbit/s upstream when your ISP supports it (possible with NZ’s spectrum managment, but no ISP’s currently support it). VDSL is better, requires you to be very close to the exchange (not a problem with cabinets) but Vodafone are the only ISP with plans to implement it and the hardware is very expensive and usually business grade.

    My 2 dealbreakers are the “Who will own the network” question and the “How much are we going to have to borrow for it”, but otherwise rolling out new technologies to the home can only encourage progress and stimulate the economy.

    Captcha: Littering and… Littering and-ah, littering and-ah 😀

  4. Steve: At the risk of upsetting everyone who doesn’t live within walking distance of the Sky Tower why exactly do we need to give everyone in NZ equal access to the internet before laying fibre to the home (aside from that being the socialist way) ?

    The assertion that what we have is good enough ( and we are only now seeing ADSL2 rolled out to a few exchanges) ignores the very high likelihood that in the future we will have bandwidth needs that we cannot currently foresee. Dial-up was fine for email 10 years ago but even ADSL 1 struggles with You Tube video now.

    With GBps speeds national and international telecommuting (for example) becomes a reality not some Utopian fantasy. Think what that would do for traffic congestion, pollution, dependance on foreign oil, global warming etc etc. It would achieve far more than squandering a similar amount on upgrading railway lines in Auckland that nobody uses.

  5. mike 5

    More of the same Labour = Good/ JK = Bad policy analysis from Steve.
    Hell even your own EPMU have given this conditional praise.
    The difference between Farrar and you guys is at least while he pans the silly labour ideas he can also give credit where its due.

  6. Steve Pierson 6

    mike. seems to suggest they’re not my EPMU, doesn’t it?

    I’m happy to give credit where it’s due. Borrowing for internet speeds beyond people’s ability to use, in a situation where there arne’t enough people to install the fibre, while one in five people still don’t have the internet at home does not fit my criteria.

  7. I tend to agree with the general thrust of this post, although praising the cabinetisation shows limited knowledge of this subject. Telecom are rolling out the cabinet upgrade simply to stymie the leaching by other telcos via their exchange access agreement.
    This of course is fine by me because I understand and support that ancient concept of private property.
    If anybody was serious about improving the telco environment in NZ they would call on the govt to buy telecom back rather than continually ass raping private investors.
    Mike, give the standardistas a break, while DPF carries advertising and there is none here, they still have to avoid upsetting their sponsor.

  8. Steve Pierson 8

    barnsleybill. good to see you’re supporting buying back Telecom. Tha’ts something I’m all for too.

    yeah. my knowledge is limited on the topic, and i’m always open to correction. I think the points of the post stand.

  9. bill brown 9

    I’m still looking for the evidence that:

    Higher speed internet to the home = higher productivity

    For those who want / need to work from home there are alternatives already (except rural, and the fibre won’t be going there anyway) via xDSL or TelstraClear Cable (a very good service).

    If you want to provide a service from your home, say you have a server farm in your basement, I could see that the additional upstream bandwidth would be useful but (a) there’s not really a lot of that going on in suburban NZ (b) if everyone does it, we’d better look at the power grid all those servers and Air Con need a lot of power, and (c) who’s going to provide the interconnect service, current ISPs already have problems with the symmetrical peer-to-peer model (bittorrent) let alone hosting B2B services from subscriber’s premises.

    The in the ground fibre is only a small part (albeit the most expensive) part of the picture. If you’re going to spend the money to roll it out you better be sure it’s going to be used.

  10. higherstandard 10

    Planning and investing in infrastructure to make NZ more competitive in the future good idea I say even though it’s election year I expect the government to roll out something very similar in the budget.

  11. “20mbit/s may cut it when we’re running our phone, television & movies (high definition, mind) on the downstream, but when your sending just as much data e.g. file sharing, p2p connectivity which includes VoIP, some IPTV implementations without heavy QoS (Traffic management) your upstream will be saturated easily.”

    In english please? What is the practical difference – i.e. how often will we have to send just as much data e.g. file sharing, p2p connectivity which includes VoIP, some IPTV implementations without heavy QoS (Traffic management)

    Will this be a real problem for most of us, or are we just seeing the esoteric rantings of a geek getting all sweaty over endless virtual possibilities?

  12. Matthew Pilott 12

    rn – that was a bit angry… In simple words, our download speeds are fine, and that’s all most people do. Our upstreaming capabilities aren’t that good, so if you’re file sharing, or using VoIP (digital telephone) you might find you have problems.

    It’s a possibility when things such as xnetfusion become more popular – it’s a phone line – without a phone line…

  13. Cheers Matt. Apologies for the anger – just get a bit short fused when it comes to people assuming everyone knows the jargon of their chosen field. It’s a bit inconsiderate if you ask me. After all, in his post Steve Pierson showed that it’s possible to get your point across without excluding

  14. Matthew Pilott 14

    No worries RN, it’s my job to try and decipher what the IT people are saying and explain it th ehte lay people, so I understand! On a blog I just go past stuff I don’t understand, unless it’s the subject of the thread. Happens less in Politics than IT, thank god!

  15. IrishBill 15

    I’ve just been alerted to the fact our little friend DPF is claiming we don’t support the policy. Just for the record, I do like the sound of it but want to see more detail. I had a quick look at David’s post and noticed that David Skilling claims there is plenty of capacity to do this. I am afraid this is untrue.

    The two biggest players in the industry are Transfield and Downer EDI and both of these companies have been desperately trying to bring in workers from the Philippines under skills-shortage provisions but have been denied the numbers they need due to their poor employment record. And that’s just to provide capacity for maintenance and limited upgrading.

    Unless National is going to change the rules under which importing labour is allowed (by, for example, dropping the minimum salary restrictions and turning a blind eye to bonded labour) there is nowhere near the capacity to do this in five years.

    Of course given National’s record on industrial relations they may well choose this path.

  16. mondograss 16

    The better solution to this is to give the $1.5bn to Kordia (an SOE and owner of Orcon) for them to implement their own fibre and cellular network and in doing so effectively renationalise telecommunications. Cheaper than buying telecom. Of course Kordia is in the top 5 of SOE’s that National would sell, so perhaps the benefits wouldn’t last long.

  17. Chris S 17

    Sorry, gnome. I do sometimes get carried away.

    If it has IP in the name, it means “Internet based” (Internet Protocol). VoIP is Voice over IP – Voice over the internet! IPTV is TV over the internet. P2P means peer-to-peer, in other words a program that connects to other users to achieve it’s goal, in contrast to the usual client/server way of the internet (i.e. Web Server Web Browser).

    P2P is being used more and more these days, to offset the costs of running a dedicated server. P2P file sharing means files shared between users. P2P VoIP means calls from users to users (like Skype). P2P will mean that your computer will become both the client AND the server meaning that upstream traffic will have more and more relevance as these technologies progress. This is where ADSL falls flat, it’s “asynchronous” meaning that it can’t upload (send data) as fast as it can download (receive data) and your Internet Service Provider doesn’t like you using all your bandwidth as they can’t support everyone going full speed. They use techniques such as data caps and traffic management (slowing down certain services) to stop you.

    Hope that helps 🙂

  18. Chris S 18

    Ah, nome, I missed the end of your comment. Thanks for bringing that piece of Kiwiblog over here.

  19. infused 19

    Idiots.

  20. r0b 20

    Congratulations infused, you managed a comment with only one mistake, I think that’s a record.

  21. bob 21

    Great, so you are proposing we adopt a standard, 20Mbit/s, that is slower that current Blu Ray DVD streaming rate (36Mbit/s). And who knows how much data Super High Def TVs will be able to accept in say 20 years time. Were you by any chance one of those that thought 640Kb would be as much as anyone would ever need?

    And who’s to say that a home might not want several streams of super high definition video at the same time? 20Mb/s starts to look a bit slow…

    Note that 20Mbit/s just about tops for copper, whereas fibre cable can theoretically go up to gigabits per second. Even tens of gigabits/sec

    Technology history is full of people who thought that “nobody would want XXX” or that “XXX would be fast enough”. And guess what. They were all wrong.

  22. AncientGeek 22

    I’m a great believer in the net for economic growth. But for economic advantage I think that the politicians would be better served by reducing our risk levels.

    We are a trading nation who has been steadily moving into ‘exporting’ specialist products and services worldwide. Any exporter will tell you that they are utterly dependent on having the net to communicate with customers, suppliers, and offshore manufacturing.

    Have a look at Bruce Simpsons post and the associated comments over at aardvark – When the blinky lights stop blinking.

    One problem being an island a long way from anywhere is that we’re dependent on some very thin links. There is no particular point in having an amazing local infrastructure capable of delivering blu-ray level video to homes in economic terms. I worked from home using links for years, but you can do that with a VPN (virtual private networking) at ADSL speeds.

    There is a strong economic point in making sure that our international links don’t break. Ask anyone who was trying to deal with china when they lost a lot of their links in an undersea earthquake. Our shortage of overseas links is a high risk.

    JK’s policy simply doesn’t make sense in the economic terms, when there are areas with a higher economic return with similar pricetags. It is just buying votes.

  23. AncientGeek 23

    Hey nome – was that readable?

    Captcha: Mr everywhere
    Yep – that is me

  24. higherstandard 24

    AG

    “JK’s policy simply doesn’t make sense in the economic terms, when there are areas with a higher economic return with similar pricetags.”

    I’d be interested on which areas you believe they are – will make for good and useful discussion.

  25. Steve Pierson 25

    bob. I’m not saying we won’t want much faster connections in the future – in fact I argue that would be awesome – I’m just saying it’s not the priority when the increased speeds we’re getting in coming years are massive compared to need, and when Key is saying we should borrow and effectively restore Telecom’s monopoly position to do it.

  26. AncientGeek 26

    hs: Will do quite a bit later. But don’t wait for me. I’m going to be tied down until late this evening. Work and all that.

    captcha: engaging On
    Would love to – but no time.

  27. Draco TB 27

    If anybody was serious about improving the telco environment in NZ they would call on the govt to buy telecom back rather than continually ass raping private investors.

    I would support this except for:-
    1.) Telecoms network has become so run down since we sold it it just isn’t worth anything any more.
    2.) The cost of upgrading that network would be more than the cost of just building a new network.
    3.) We don’t actually want or need Telecoms administration.

    Just build a new, fully government owned, network and Telecom goes the way of the dodo. Seems good to me.

    1Gb/s both ways and paid for by taxes is actually the minimum that we should be aiming for. It opens to everyone the business opportunities such a network can bring ie, file servers, video servers, remote doctors visits, remote education, telecommuting and a hell of a lot more. Leaving it in private hands will actually prevent this from occurring.

    Yes, we will have problems with implementing this due to the lack of skill after we had 10k skilled linesmen but these things can be overcome.

    I just don’t like what I see in Nationals plan (after reading Key Notes #30) as it seems to be just another subsidy for big business from the NZ taxpayer.

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