Lance Wiggs

Telecom is launching something - I’m not really sure what it is, but apparently it will be some sort of Business Oriented Internet plan/ISP - where you get bundled internet access, hosting and things like Xero.

Business broadband plans will be “slightly differently priced” …

I read that as “more expensive”, but gee I’d pay anything for half decent NZ internet access - maybe even set up a business specifically to get it to my home.

and the services they encompass will also be different, she says. “There will be some guarantees about helpdesk and support.” 

Good. Indeed I do not know why more businesses don’t follow Trade Me’s example and set up 0900 (paid) customer service lines. When I want help, I want a really competent human to immediately answer the phone 24/7.

The business Internet service will register domain names for customers and offer to develop and host their websites. It will also provide managed e-mail services suitable for businesses and online backup.

Hang on -  why on earth would we want to get Telecom to provide those services?

Domain names, well maybe. But develop websites? Telecom outsourced their own unmitigated disaster of a website, so why would we not use any number of the excellent NZ design and development shops?

As for hosting, well let’s see what Xero themselves do…

Currently Xero is being hosted at Rackspace, in Houston Texas. (Follow that first link for all sorts of other fun stuff about Xero.com’s presence.)

Now - and this is really important for any Telecom employees involved in this effort - go to that Rackspace site. When you get there for the first time a popup appears - a real live person is actually offering to chat with you.

Close that down and browse the site - it is all about “fanatical support”. View the video testomonials, check out the offers and go ahead - order up a server and try them for real (or maybe just call some of their customers)

That’s the standard to aim for - fanatical customer service, 24/7. That’s what you’d need to offer for this service in order to make a difference, and sadly you’d need to do it at prices that are competitive with getting services straight from the USA.  (and that’s not a lot).

So - overall - it is good that Telecom is targeting small businesses, and I hope that they’ll stick to investing in providing reliable, speedy access to the internet and not get diverted into competing away from their core.

Falafulu Fisi asks an excellent question to the previous post on Auckland Airport:

“Aren’t both Auckland Airport & Telecom private companies? Why would you want to say that the government is an interventionist regarding the CPPIB attempt to buying shares in the Auckland Airport but not saying the same thing about Telecom?

I am a defender of property rights, and the state has no right at all to meddle in the affairs of private businesses such as Telecom or Auckland Airport. That decision to sell or not to sell is entirely up to the rightful owners (ie, the Airport Shareholders) and not those Commissars in Wellington .

That was a great question, but I feel I am being entirely consistent here.

I am a fan of Govnerment intervention when the market is so inefficient and the company is out of control that the other stakeholders (beyond shareholders) are under threat, and unable to do anything about it due to monopoly power.

I’ve been wandering around NZ this week and frankly the broadband situation is beyond a joke - it is shameful crime that has left us in the dark ages of the internet.

There is a very well run dot com that I visited yesterday that is unable to even hold phone calls over Skype to the UK or USA as their connection keeps dropping out. This means increased costs, but even more importantly, that they are not part of the global internet business community that lives, wheels and deals on Skype. (Try putting together a 6 way phone call using traditional services at a moment’s notice.)

Now their customer base is almost entirely overseas, but they should be able to operate from NZ. But despite Wellington’s other advantages they would be not without cause if they uprooted and headed for the first world.

Government intervention into Telecom is the only way that the primary stakeholders (customers and the economy) could get the service that the country needed. There were plenty of warnings, but the head was stuck firmly in the sands of short term profits.

There are plenty of other monopolies and duopolies in NZ that understand how to play the game when you own a market. You set your prices well below monopoly prices, you are great to your customers and you know if you step out of line then the ComCom and the Government will be all over you.

Auckland Airport has not exhibited poor behaviour - they are running a good business, and are even upgrading the domestic terminal. An equivilent case for intervention would be if they put prices up, ran the terminals into the ground (and so spoiled NZ’s image and tourism numbers) and milked the dying cow.

All that is proposed for Auckland Airport is a change of ownership, which has no material impact on the relationship between the corporation and it’s stakeholders. It’s not as if the new owners are going to roll the airport up, put it on the back of a ship of unusual size and transfer it to a field outside Toronto. This intervention is uncalled for from the customers that use the airport, and to compound it has a negative effect on FDI for NZ.

Where is Infratil while this is going on? They are conflicted - on the one hand they own Wellington Airport and would love a piece of Auckland, so they should keep quiet. However on the other hand they own Preston Prestwick (edit - thanks Tylersdad) Airport South of Glasgow in Scotland, and they should be deeply protesting our Government’s ham-sized fists which will make it much harder for them to buy other foreign airports in the future.

Over on Kiwiblog DPF guiltily confesses to using someone elses open Wireless connection for some internet time, and a trivial amount of data. There are several things wrong with this picture:

1: It isn’t normal to find open wireless connections in NZ. The reason for this, of course, is that we pay for MB usage, unlike in the USA where things are typically uncapped.

The implications of this are manifold, but the first is that if you open your laptop in any reasonable dense area in the USA the you are bound to find several open connections to borrow. The second is that if you surf in pretty much any US based cafe, then you are surfing for free, and the third is that the sheer volume of stuff you download for free means that Apple through iTunes can reasonably expect people to use GB’s of bandwidth to rent movies. Te reverse is true n NZ, and as a result the internet is not pervasive nor that useful.

2:  David felt guilty about using the open connection. To me, unless you crank up the P2P programs or hit pr0n sites, you should not feel guilty about using a free wifi port instead of getting raped by mobile data charges. But you should make sure that you are playing the game fairly by having an open connection at home.
3:  We are miles away from mesh networks - to me these are the logical future, where we wirelessly connect to each other to send local traffic and reduce our dependence on the telco lines to the house. We’ll still need huge pipes conneced to the global internet, but this will reduce last mile costs. Until we have critical mass of wifi ports open, and until we get rid of any ideas that you can charge money for wifi, then we are not on the path to maximising our bandwidth for least infrastructure cost.

The master speaks, and Lance reaches for his wallet to feed his insatiable addiction for all things Apple. At least it is a better addiction than Methadone/P/ice or other ilicit drugs. Probably just as expensive though.

MacBook air: ordered, but not with the tiny solid state drive which costs AU$1400 more. I’ll use this in some upcoming travel, but really I am struggling to justify this on logical grounds. It’s definitely, as Juha says, a second mac - not the primary computer that I’ll connect to a huge 30 inch screen. I will say that I have yet to use my DVD drive on this MacBook Pro for anything other than installing software, and that happens only every few months.

Apple TV: Awaiting to upgrade software when I am reunited with mine, so it will become useful - right now it is a gleaming cute white…elephant.

(Microsoft) Mac Office: Ordered, really for the speed. I’l still use Parallels for most of my spreadsheeting.

Time Capsule: While I had it on my shipping cart, I removed it at check out as I have no real use for it at the moment - I already have the WiFi extreme (highly recommended) and a 500GB backup drive.

Apple Stock: I doubled up on this a few days ago (along with eBay), so my purchases would have an impact on my portfolio.

Its amazing though, living here in Perth, how the internet is just so much more useful with high speed and almost limitless bandwidth. Bring on the iTunes with movie rentals - the ultimate way for me to feed my Apple addiction - and a nice earner for Apple as Jim mentions. However the Apple downloadable movies will be painful to useless in NZ, as Rod points out that we have a real infrastructure fight on our hands.

Indeed I am dreading returning to the inadequacies of broadband in NZ. I’m not kidding - it’s close to being so bad that I’ll find another country to live.

Via the economist this chart and shows VOIP taking about 20% of all international call minutes for 2006.

Amazingly though regular international phone calls grew 10% between 2005 and 2006. I wonder how much was driven by falling prices, in turn driven by cheap and free VOIP.

Looks like Telecom’s xtra debacle of a migration to Yahoo! mail is not alone. News Corp owns an ISP called Sky in the UK, and they are migrating customers to the Google Apps.

Well trying to. To start with there’s a 10 page pdf on how to change your POP settings over.

Slashdot has more .

Tokelau’s three atolls have no airport nor harbour and are two days sailing away from Samoa and just two years ago its 1100 Polynesians looked and sounded like they were in another time and space in the past.

Now they have free broadband

Tokelau is, of course, still part of NZ. It’s a great story.

Tokelau has no Internet cafes - in fact it has no cafes at all and its solitary bar, the Luna Liki Hotel on Nukunonu, serves warm beer - when it has any.

But a good Internet wireless service embraces the tiny islands that house the people. The three schools and three hospitals are all online and the service is being upgraded to a high-speed satellite service.

Part of the blame for the underinvestment by Telecom, and under0-reaction by the NZ Government has to go on the National Party’s Maurice Williamson:

A rare written question from National Party communications spokesman Maurice Williamson to Communications Minister David Cunliffe in May… …asked Mr Cunliffe how New Zealand’s {broadband} ranking compared with its position in 2000

The written question was one of only a handful levelled at Mr Cunliffe by Mr Williamson since he took back National’s communications portfolio in August 2004. Since the last election he has made no media statements on IT or communications policy, maintaining a low profile that led Mr Cunliffe to dub him “the invisible man”.

This is not what we expect from the loyal opposition. Why the heck were National not all over this one - pounding the table in reaction to the pent up demand from a frustrated New Zealand?

Why?

It’s great news. Score plus one for Paul Reynolds, who is making all the right moves as he embarks on the Telecom turnaround.

I’m running on the promised ADSL2+ here in Perth, and it is fast enough for most purposes, with an upgrade path to 20 MB per second ahead for TCNZ.

Sadly - that 20 MB is in 2011, whereas it should have been right now. But it will still put us ahead, in 2011, of where everyone except Finland, Korea and Japan are today.

(yup - I can see the bad in almost anything)

As Mauricio predicted, we now have downunder local versions of YouTube. Does this mean better delivery as well? or is it just a branding thing?

If so, then the branding needs work.

I’ve always looked at Youtube as a repository of video rather than a browsing site. This changes little for me, though perhaps the browsing will be more relevant now.

Meanwhile we still have that little lack of broadband issue to deal with.

Oh - and the top video on the Aussie site is Free Hug Guy. It seems you now have a free place to stay when you are in Sydney…

Continuing a series of comments on the excellent NZ Institute Broadband report, we turn to page 8: Digital media.

NZ Institute estimate $800m in extra benefits, with the tree showing $680m to $1.03bn. Here’s the top half:

Let’s look the right hand sides.

Current cost base = $2.1 billion.

The source for this is unclear, but stats NZ is listed as one of the sources, so let’s assume that this is derived from the total revenue from digital media companies in New Zealand.

But, err, what is a digital media company? Is Stuff a digital media company? (it is after all part of Fairfax, a media company, and is in the Fairfax NZ “Digital” group). The box further down the page shows numbers from film and video games, and also shows ‘over $2bn” for film, so are we to assume that ‘Film’ is the Digital Media space? If so then the report misses the online media space, which is growing really quickly, and is also suffering from the shonky broadband.

But back to the definition, which is mainly film. The next assumption is that 80% of the revenues from these film industry companies is costs. But is that low margin fair? It seems not to me when you take Peter Jackson’s various successful empires into account, empires which no doubt have much higher margins.

Moreover, are the numbers sustainable, or do they assume that Peter Jackson will keep delivering LOTR scale hits? Without digging deeper into the source data, I’d assume that the actual historical costs are lower than $2.1bn, and suspect that the revenue over the next few years for film will be lower. (While sincerely hoping that they are higher, and that Wellywood can keep growing.)

Productivity gains: 15-20%

These gains are all about reduction in time to move and manipulate data, not about increased sales, which is tracked further down the page. If this productiviety gain is true, then I’m shocked that the cost structure of the movie industry is so biased towards the movement of data.

Indeed, it is surely is a relatively small part of the industry costs, 3 simultaneous locations LOTR productions not withstanding. Perhaps Weta Digital has big costs in this area, but surely what data transfer solutions they have now are adequate for most of their work, else they would have flown the coop years ago.

I’m also dubious about ‘productivity gains’ as this implies that people will be able to do more in less time. I would imagine that people are not currently sitting idle watching data move at a snail’s pace, but are concurrently working on whatever data that they have on the local servers, and at local speeds. The increased broadband speeds will certainly increase speed of delivery to the internal and external customers by reducing waiting time, but not necessarily increase the amount of work done per individual, or even the costs (aside from BB costs).

The second half of the tree estimates growth benefits from better broadband. I feel it is really understated.

Firstly, let’s bring back the online media industry. Last year the ASA tallied $65m of online advertising, and the latest numbers imply we’ll hit $120m or more in 2007.  That’s pretty good, but over in the UK the online penetration is over 10%, which would imply over $220m in online advertising income.

I estimated in a conference presentation a few months back that the difference in speed of online advertising penetration between here and more advanced countries has meant the industry lost $500m or so of income over the last few years (total, not annual. Annual would be about $160m last year). That income would have spawned any number of innovative online media companies, some no doubt with world wide appeal.

This to me is where the growth is - not just the transfer of advertising spend, but the creation of companies fueled by NZ dollars that can compete around the world. This is the sad loss we have suffered, and will continue to suffer unless something is fixed.

But back to the tree, which is film focussed. Frankly I guess that the film industry here gets by on reputation, not speed of delivery. However, I’m willing to bow to the industry experts and accept a 5-8% kicker. This could be in Weta Digital (and spin off’s) post production work perhaps.

There are more tales of companies leaving the NZX, and the question is asked (via a workshop) whether the Government could step in. I really fail to see what more this Government would materially do to solve for a market that is simply too small. Not that there aren’t any possibilities, just that most would be unpalatable for this Government.

Cullen has already started Kiwisaver, and distorted the capital gains rules to skew investors towards down under markets, both of which will bring more investor money.

So here are ten more things the Government could do:

1: List a big chunk of remaining the State Owned Enterprises, including more of  Air NZ.

2: Change the laws that currently require too much paperwork before people can invest or move money. Let me apply and get a brokerage account instantly.

3: Push for a full merger of NZX with ASX  - which has critical mass, and global companies listed. This would also mean the Australian owned NZ assets would be back in the “local” market.

4: Lower the corporate tax rate for NZ publicly listed companies (and other companies). This needs to be a dramatic lowering, not a few percent. Think Ireland.

5: Bring them back - lower the top personal tax rates and bring in other measures to attract and retain some of the Kiwi diaspora. This talent will help create the next wave of companies.
Along with 4 and 5, make sure we lose the disjointed tax system where the top corporate tax rate is different from the top personal tax rate, thus creating a booming industry in tax avoidance, at the expense of time and money spent on helping industry boom.

6: Legislate, or push NZX to insist, for much greater depth and frequency of disclosure for companies listed in NZ. Back it up with real teeth.

7: Legislate against insider trading and dealing - NZ has a reputation for cozy deals, and it is time that reputation was eliminated. Mandate what boards should do when an offer is received. Make sensible, not SOX level, corporate governance procedures - simple,  friendly and transparent. Think Delaware.

8: Cajole Fonterra into listing. We all want a slice of those payouts, and we could create some very wealthy farmers along the way.

9: Double the dollars and efforts around all levels of education. This investment always pays in the long run.10:  Finally, but quickly, drop a billion dollars on decent broadband infrastructure. Just make sure we do not end up beholden to one supplier of technology or service.

Went to sign up for Tomizone, but their list of routers is - well there are just three. That’s a shame. Otherwise it is awesome, but they need to get the router list up to get critical mass.
Wake me up when there are more, and really wake me up when you have the Apple Airports figured.

Finally I have broadband again. It took Perth based iiNet about a week to arm-twist Australian monopolist Telstra into connecting me. Their communications and service (24/7 help desk) has been faultless - which is stunning in this industry.

iiNet uses ADSL2, and here’s what I get:

From me at home in Perth to a local Perth server.

From me at home in Perth to  San Francisco

and from me in Perth to Wellington

Meanwhile Telecom’s Broadband test shows a speed of 3300 Kbps - which is almost 50% above the maximum on their meter:

Finally - do check out the cool graphics on speedtest. It knows where you are, and lets you test your speeds from where to are to anywhere in the world.

Next time you are in Fremantle (visiting me for example), make sure to drink lots of coffee, and eat breakfast and dinner at Gino’s cafe.

Why?

They are the only place in town offering free Wifi internet. The other cafe’s and restaurants have nothing, which is frighteningly archaic for a funky seaside tourist town.

Meanwhile I’m waiting two weeks for broadband to be connected at my new pad. That’s two weeks thanks to Telstra, who will deign to connect me on a date chosen at whim. My actual ISP is local iinet, who seem to be pretty good aside from their dependence on the monopoly provider.