Why we need NBN, UFB and Pacific Fibre

Ben Kepes stirs the pot over at Diversity, questioning why we need fibre the home. It seems he’s happy with 1 Mbit/s. He questions the benefits of broadband, and references the MOTU report, without referencing the considerable body of work done by the NZ Institute. Both studies are flawed. The MOTU report tries to find productivity changes in companies who adopt broadband, but with a methodology that would fail to fond productivity improvements with the arrival of the PC. If they truly believe this then perhaps MOTU staff would like to ensure that their office and all of their homes are connected with dial-up.

Frankly I had thought the time for these sorts of arguments had long past – the MOTU report was back in 2009 and the Australian election, which was won on the commitment to the NBN project, shows that most people understand. To hear someone like Ben, who is a cloud computing advocate, try to reason that 1 Mbit/s is enough for anyone was a bit shocking.

So here was my reply to his post.

Imagine a bell curve. At one end is your ‘Grandma’, still on dial-up and perhaps just migrating to broadband now so that she can maintain a low resolution Skype chat with your children. Also on that end are families that cannot afford broadband connections, and so their kids are unable to properly join the online world. (Perhaps those kids are lucky, and are at somewhere like Pt England school where they give every kid a laptop for $15 per month and connect to the KAREN network to provide decent connectivity.)

At the other end of the bell curve are people that consume vast amounts of data at high speeds. They might need it for media consumption (of increasingly high definition video), for work (I’m using Dropbox as I write this to transfer large files) or for Skyping their grandkids on high definition. Or perhaps they are creating a business that requires those services. Or perhaps it’s like the majority of Christchurch schools who want to get HD video connections so that students from one school can attend classes over video conferencing with teachers and students from another school, saving us money and increasing the knowledge of our kids. That’s happening right now, thanks to some tireless workers and the support of Enable’s fibre to the schools project.

But regardless of where we are on that curve, that entire bell curve moves each day, as the carriers deliver and we require higher and higher speeds, and as we increasingly accept always-on high speed internet as a requirement. Sadly NZ and Australia are well behind the rest of the developed world on this, while the definition of developed world itself expands as countries like South Korea invest in fibre (and other areas) and leapfrog their economy over ours.

In the future it will be normal to have some of your kid’s classes conducted remotely at school or even to your home. Teaching material such as Khan academy will become the norm and for the video resolution of everything to be such that it’s ‘just like being there’.

It’s the same for work. Skype may work for start-ups, but for dealing with corporates we need high quality vide conferencing that is not only increasingly higher in resolution, but also never drops out and just works. That’s not Skype, and it’s incredibly expensive to deliver right now.

It’s critical that we all understand that what’s sufficient today is insufficient tomorrow. Just as we all laugh now at Bill Gate’s assertion at 640 Kbytes should be enough for anybody, we in the technology and business communities also natively understand that in 5 or 10 years time 1 Mbit/s is going to be ludicrously slow. Imagine trying to load the homepage of Stuff (over 1Mbyte) on a 9.6 kpbs connection. Imagine trying to watch SHDTV emergency alerts about the latest ChCh earthquake over a 1 Mbit/s connection.

Fibre, copper and wireless are all bound by physical limits. Proponents of each show that the capacity that can be delivered over each keeps rising, and that’s true. However it’s also consistently true that fibre is the technology that can deliver the most capacity, and by quite a margin. It’s expensive to deploy, but once in the ground it’s relatively cheap to upgrade. Meanwhile in New Zealand the copper network to the home is most often ductless – and thus exposed to be corroded and difficult to maintain. There’s a place for wireless, be it networks generated in the home or business, or cellular networks that cover the populated country or, via satellite, an entire hemisphere.

The UFB and NBN programs are not abut 2011, nor even about 2015. They are long term focussed and are ensuring that the necessary infrastructure is in place. Copper just won’t cut it in 2020, but fibre will still be working and expanding in 2050 and beyond. Consider that the base case for Pacific Fibre is 2.56 Tbits/sec for a fibre pair on a 10000 km+ fibre leg, and we can see that the potential for the link from the exchange to the home is huge.

Consider also that what I regard as pretty conservative externally commissioned projections show Australasia running out of international capacity before 2020. A project like Pacific Fibre takes a long time to set up, and a long time to build, but like the NBN and UFB we’ll all be glad it is there in 2020.


Published by Lance Wiggs


14 replies on “Why we need NBN, UFB and Pacific Fibre”

  1. Thanks Lance. Not stirring the pot, just interested in the discussion. As you say, both the MOTU AND the NZ Institute studies were flawed – it seems a little suspect then for your side” of the debate to throw the NZ Institute report around as the end point in justification.

    And re me being a “cloud”guy. Yes I am, I earn 99% of my revenue from the US and work all day and every day with folks in the US, Singapore and Europe. I do all this over a decidedly dodgy BB connection and while I concede that I’d be a little more productive if that connection was a little faster or a little less dodgy, I don’t see that a move to 1Gbps would be transformational for me.

    Your colleague has talked about how UFB would be transformational to his global business by allowing multiple simultaneous vidcasts – and therein kind of lies my point – if businesses NEED fibre, they’ll locate where they can get fibre. So the question is really;

    How transformational is ultrafast rather than merely regular broadband to the percentage of citizens/businesses who cannot build a business case to move to where the speeds are higher. That’s a two stage discussion that I’m interested in pulling apart…


  2. I’ve heard many times that the NZ Institute reports were flawed but with out any real justification.

    A key aspect of the work was to attempt to quantify the ‘public benefits’ of broadband. The report stopped at $2.7-4.4 billion per annum without really breaking a sweat. Sure individual cases might be torn apart but to me the benefits were so large it was just a big number. Certainly more than the 1.5B capex to be spent on UFB.

    As such it was a useful bit of work and contributed to the national awareness fo fibre.

    I’ve always thought FTTH was a worthy goal but International was the best bang for buck.

    As for not needing more than 1Mb at home and copper being OK. I’ve lived with less than 1Mb and now I’m on Fibre and it’s already allowing me to do so much more, but the International bottleneck means the benefits of FTTH are capped.

    Being able to do reliable video calls now only feeds the hunger for more. Why can’t I have a 10 way meeting at home.

    On Tuesday morning I’ll be starting web meetings at 6am. It’s so much better and sustainable at home.

    There are those that can envision the future and those that can’t. That’s pretty natural and expected. But those that can’t would contribute best by not putting obstacles in front of those that can.



  3. I wasn’t going to, but here’s my 2 cents worth. I have been on the 100mbps Telstra Clear trial at home, and have been (pre-earthquake) on fibre at work. Did they chance my life? Not one iota, except making things “a bit faster”. Sure some things became more feasible, like remote backups etc, BUT, it’s not the speed that is the constraint, it’s DATA cost. There is absolutely NO point in having superfast speeds, if we get 20GB allowances, or that additional data costs $3/GB.

    And then if we “look to the future”, is it fibre to the home, as promoted by John Key? Personally, I don’t think so, I believe the future is mobile. And what a state that is in right now. We have poor and slow coverage, and it is this that is going to constrain us in the future, far more so that 10mbps vs 100 mbps in our homes or work I believe. Let’s think about there are major export earners are currently? Agriculture and tourism. And where do the majority of those productive assets lie? Outside cities. Okay, we want to develop the knowledge economy. Well, first let’s get all the ducks lined up, like R&D rules, so that at least we have an attractive environment.

    Sure, we need fibre to main access points, for mobile, but seriously, in 10 years’ time do you expect to be connecting your device into a socket in the wall? Probably not. So yes, we need a high speed network, but we don’t need it to every home, and yes, we do need it to non-urban areas.

    So, we do need high speed access, but do we seriously want a network where we have city dwellers streaming TV over their connections and rural people and visitors to our country still struggling to connect. Here’s a crazy idea. Nationalise the 3 mobile companies and build a nationwide high speed mobile network. That I would vote for.

    So yes Rod, I think some of us can envision the future. But digging holes in the ground to lay wires (fibre) is pretty old school. In my opinion.


  4. I agree that FTTH is not required for most people. If you really need it then pay for it yourself (I did).

    I agree that it’s about data costs, which is largely international which is what we’re doing something about it with Pacific Fibre.

    I agree that it doesn’t need to be fibre for the last mile. It’s actually about contention. But we can’t re-litigate UFB.

    I don’t agree that just because you don’t get see the benefit of hi-speed broadband that you can pronounce it isn’t high value. I and many others see it every day by virtue of what we do so I’m not even going to argue that point again if you haven’t.

    The cliche that those in the City don’t contribute like farmers and tourism operators is very unproductive. I’m comfortable that enough of us in the hitech industry have created enough new jobs to make that claim near insulting. And we’re not waiting for Government R&D subsidies to do it. It’s not a competition between town and country, it’s doing both.

    I’m sure we’re actually in violent agreement.



  5. Oh yes, and we’re moving into new premises soon (post-earthquake) and we’ve been quoted (from Enable) $495/mth for the fibre connection, and $2/GB. That’s for a 10MB circuit. Price pre-UFB announcement – they are now reviewing.

    I appreciate that the wholesale price has been set at $55 or so for a 100mb circuit for residential. But that isn’t going to include data obviously and who knows what the business rate will be. Do you seriously think many smaller businesses will take it up if it’s a few hundred dollars per month? The answer in my opinion is absolutely not. No point having a fancy network if people can’t afford to download their movies, or work.


  6. Rod

    I’m not sure I suggested that city dwellers don’t contribute. I live and work in a city and employ 20 people in the hi-tech sector. Personally I think it would be insulting for me to consider my business more important than any other ..,

    But I absolutely agree that a major constraint is international, we need connections like Pacific Fibre to provide some competition.

    What I am far from convinced on though, is that we need to deliver “superfast” services to the cities, primarily funded by the taxpayer when so many other areas are being left out in the cold. We’re literally going to create a digital divide in our own country. And may of those (currently) are our primary producers.

    As I have said, I’d far rather a comprehensive, faster mobile network, in conjunction obviously to a high speed backbone. That would deliver value to everyone, be more flexible, and be more forward thinking. Gosh, even now I know people choosing not to have phone lines or wired internet connections, think ahead a few years.


    1. > What I am far from convinced on though, is that we need to deliver superfast services to the cities, primarily funded by the taxpayer when so many other areas are being left out in the cold. Were literally going to create a digital divide in our own country. And may of those (currently) are our primary producers. The answer is that firstly the cities are where the bulk of the people, businesses and economy are, and that we are, in fact, reaching out to the rural areas.

      By prioritising the cities and aiming for less than 100% coverage the UFB project is costing us $1.5 billion rather than the, say, $10 billion that it would cost when we relate it to the NBN project spend to get 100% coverage. I prefer this 80/20 approach that gets results rather than shooting for the sky and failing politically and economically.

      Meanwhile the fibre network will, in fact, extend to rural areas, and we can expect to see plenty of farmers plough their own trenches to connect themselves and their neighbours. The RBI initiative gets the fibre out there, and the cell sites will spread 3G and 4G data networks to many rural areas. I expect we will see a few more lean ISPs deliver to their rural base.

      Like Rod I’d rather we focussed on supporting and doing what we can to get to a higher speed and uncapped system – just like the rest of the world. In the words I heard on Friday from one immigrant “NZ is an incredible place, except for the lousy internet.”

      Let’s fix that and get more awesome immigrants and Kiwis back home. L


  7. The data caps are the next major problem for users of high bandwidth systems. I use dropbox for shuffling small amounts of data between home and work and a number of wifi-enabled devices. I would invest in a real account with a serious capacity if I did not have to worry about the amount of data I sent.

    A business I would like to see in NZ is one whereby you backup your (home) computer(s) to a data centre over your internet connection so that if your laptop get trashed, lost or stolen you can get your data back. However, I am reluctant to sign up to such a service whilst i have a data cap to worry about. Now I am sure such a service could have a profile so that only a small amount of your data cap gets used a month but such throttling would mean that I could not be sure my data was backed up safely over-night (say). I am sure I could do a deal with each and every ISP so that such traffic gets zero rated. But why should I? Why should it matter what ISP I use if I want this kind of service.

    Data caps are preventing certain kinds o businesses making a go of it here. It would be easier if bandwidth was what you paid for and everything was as much as you can eat.

    Nice fantasy eh?

    Our telcos have got so used to a scarcity pricing model that they cannot think of anything else.


  8. Cabbagetree said…
    Nationalise the 3 mobile companies and build a nationwide high speed mobile network. That I would vote for.

    Mr Cabbage, what you’re proposing is called, legalized theft. Mobile companies are private properties of shareholders and their owners.

    How do you feel, if someone proposes to Nationalize your own company (whatever it is) simply for the greater good of the society? You wouldn’t like it , would you? Let the market decides it and not mob rule of the majority.


    1. It was a hypothetical statement assuming a perfect world, a sort of “in hindsight we should have done …”

      But, now you mention it. You’d rather these companies continue to rip you off (theft) and are now being regulated because they can’t behave? And you’re willing to accept sub-standard mobile services and coverage?

      So instead, we’re going to subside people to download movies, and hope the real problem of (national) business connectivity and data caps resolves itself.

      Good luck with you market driven idealism.


    1. In the US, however, data caps are a new and growing trend. In NZ they have always been here, well for all broadband plans. I guess the joy of dial-up is that it goes so slow there isn’t any need to limit the amount you download because the pipe you suck data over is the equivalent of a capillary to the fire hose that is any broadband plan.

      There is some (albeit small) hope that data caps in the US on residential plans will not stick. Here, we are used to be squeezed in two directions at the same time so we will (mostly) end up accepting data caps. Unfortunately that means certain types of service will never be economically viable here.


  9. Carbagetree said…
    You’d rather these companies continue to rip you off (theft) and are now being regulated because they can’t behave

    You need to understand property rights first before you can start an argument. The rights belong to the property owners first & foremost. The markets set the price. The fact that you choose to subsribe to Xero’s online service or Telecom or Microsoft, doesn’t give you the rights to what is theirs. If you feel being ripped off, then take my advise, don’t buy in to those services. Startup your own to compete with them. May be you’re going to win their customers over to you.

    The fact that a price of something is too high equates to ripoff is somehow the producer of that particular good or service does owe the potential customers is pure socialist.. In other words the society as a whole expects, you to surrender your rights to the labour of your own hands to them. This is exactly is what Mugabe is currently doing in Zimbabwe and also Chavez in Venezuela. Look at their respective economies.


    1. I’m not sure what you’re background is, but I did economics 101 at university, in fact I majored in it.

      The issues here are complex. Public good vs private good. Regulated vs unregulated markets.

      You are exactly right, anyone could start up and challenge the market. But barriers to entry are high. Again, economies 101; monopolies & duopolies vs a market economy.

      The reality is that we have had a rather unregulated duopoly, that is maximising business profits. We’d all do that, if we could.

      But the problem is, as mentioned here, we’re dealing with what is now considered a public good. And one that is essential for economic growth. And one where the barriers to entry and extremely high, as are the costs.

      We’re off topic to some extent now, but my key point is why spend $1.5 billion of taxpayers money for fast Internet, to download TV shows, when vast tracts of the country have yet to get ANY decent internet service. In fact much of our productive sector. Shoot, in the weekend I was 15 minutes north of Christchurch and had NO cell phone coverage (Spencer Park). Personally, I’d give and arm and two legs for a decent mobile network, before UFB.

      I take it you don’t, or maybe you never leave the café with free wifi?


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