Not too long ago the high-pitched robotic noises of a modem connecting served as our only gateway to an online world that was typified by webpages that slowly lagged into existence. Over time, the lag has reduced and ongoing roll out ultra-fast broadband (UFB) holds the promise of snuffing it out entirely.
UFB is defined by the Crown Fibre Holding’s website as a service that deliver download speeds in excess of 25 megabits per second (Mbps) as opposed to broadband which provides transmission capacity in excess of 2.0 (Mbps).
Rolling out UFB entails the massive job of laying thousands of kilometres of fibre optic cable and ducting and will take until the end of 2019 to complete.
Crown Fibre Holdings was established to manage the Government’s whopping $1.5 billion investment in ultra-fast broadband infrastructure, which involves the rolling out of the service to 75 percent of New Zealanders within the next ten years, focusing on “priority broadband users such as businesses, schools and health services, plus green field developments and certain ranches of residential areas” for the first six years.
The organisation has contracted four parties to deploy ultra-fast broadband: Northpower Limited; Waikato Networks Limited; Enable Services Limited; and Chorus, which is contracted to deliver it to over 830,000 properties accounting for almost 70 percent of the entire UFB deployment.
So while New Zealand has ticked along quite nicely so far with Copper (so long as there aren’t too many people using it in one household) since the release of different SVOD platforms in New Zealand there appears to be much higher internet traffic and the need for UFB seems to have increased greatly just in the past few months.
According to the Herald, streaming services such as Lightbox, Netflix and other on-demand services are causing internet congestion, which could help hasten the pick-up of ultra-fast broadband.
Broadband speed-monitoring service TrueNet says an explosion of video-on-demand streaming services has caused isolated congestion with speeds dropping and even some buffering. It says indications are that the problem was worse in April.
CallPlus chief technology officer Adrian Dick says a report ranking the performance of New Zealand and Australian Internet Service Providers illustrates the impact faster technologies are having on the telco industry.
He says the Netflix index shows New Zealand is the 14th fastest country out of 29 monitored. When looking at individual ISP [internet service provider] rankings, the New Zealand ISPs with the highest ratio of VDSL and fibre customers are higher up the list, while those with more rural and ADSL customers are lower down the list.
“This is what we would have expected to see,” Dick says. “What’s worth noting is that the ISPs with more customers on unlimited plans have performed better, as people with capped plans may see speeds drop once they reach their cap.”
Dick says the CallPlus network, which includes Slingshot, Orcon and Flip, is seeing customers happily streaming 4K (the highest TV resolution available) at 20Mbps – something that is very achievable on fibre and some VDSL connections.
“Also interesting in New Zealand and Australia was the almost instant popularity of Netflix," Dick says. "Kiwis have taken to the service in droves since the New Zealand launch, with Netflix traffic accounting for between 15 and 20 percent of all traffic on the CallPlus Network already.”
The telcos appear to be responding to this increase in streaming with each of them pushing out different SVOD platforms.
Spark essentially kicked this off by offering all of its broadband subscribers 12 months' access to Lightbox. And since then Vodafone has followed this up by giving its consumers the choice of either Netflix or Neon, depending on which deal is chosen.
Vodafone has drawn a line between the two promotions by focusing the Neon deal on broadband subscribers and the Netflix one on mobile users. And, as explained in a Vodafone release, the aim of the new promotion is to encourage users to stream via their mobile devices: "Armed with Vodafone’s reliable 4G mobile network, customers will be able to unlock a world of movies and TV series while on the go. Using smartphones, tablets or laptops, Netflix members can choose from a range of content…”
In the meantime 2degrees has purchased internet service provider Snap and says it will launch fixed-mobile services this year, accelerating its growth as a full service communications provider.
A release issued by Spark says we are indeed in a transformative phase of how we use the internet. Spark home, mobile & business chief executive Chris Quin says New Zealand consumers are embracing a digital lifestyle.
"We’ve believed for several years that the video streaming revolution was coming, and now the proof is here with spectacular growth this year. Average monthly data use per household for Spark broadband customers has grown an incredible 29 percent in just three months, from 42.5GB in February 2015 to 55GB in April 2015. The average New Zealand house is now using approximately as much data in a year as the whole of New Zealand used in a month back in the late 1990s. Growth rates over the last two years had been reasonably steady at around 50 percent per annum, however the last three months shows there has been a real acceleration. Overall internet traffic volumes on the Spark Network alone has grown a record 26 percent in the last three months to the end of March, with initial April estimates looking even higher, and we know that other industry players are seeing similar trends, both here and overseas.”
Spark head of corporate communications Richard Llewellyn says that by adopting UFB, New Zealanders are future-proofing themselves for technologies that we can’t even imagine yet but that will likely emerge over the next five, ten or 20 years.
“After all, 15 years ago, how many of us had our email inbox in our phones? Or had heard of Dropbox, Xero or Facebook?”
He says to accommodate for UFB, Spark is constantly monitoring demand and making changes to improve its ability to manage traffic and improve its overall network performance. It’s also investing in the kind of things that will encourage people to shift to fibre: the ability to deliver HD, cloud computing solutions for business and internet TV.
“Spark is giving customers an even more compelling reason to switch to its Ultra Fibre plans with new competitive pricing for the majority of its plans and Fibre Landline (voice-over-fibre technology) for landline calling. Spark has also launched new Fibre 200 plans (up to 200Mbps download and 20Mbps upload) available with a Fibre Landline service or as a standalone naked broadband service.”
Llewellyn says there’s plenty of consumer demand for fibre, the challenge is for the local fibre installation companies like Chorus to keep up with that demand: “Right now more than 90 percent of New Zealanders are still reliant on the copper network for their broadband.”
“…So for those Spark broadband customers wanting to take advantage of Lightbox, shifting to fibre makes sense. Lightbox gives our customers access to more than 6,000 ad-free hours of insanely good TV. This means fibre broadband speeds are suddenly a whole lot more attractive, as they’ll allow you to binge-watch your favourite TV shows on the smoothest, fastest connection available,” he says.
Lightbox chief executive officer Kym Niblock says that the rise of video streaming services like Lightbox is also having a big impact on the way New Zealanders use the internet.
“New online entertainment services such as Lightbox are rapidly becoming part of the lives of ordinary New Zealanders. Our figures show that peak bandwidth delivered by Lightbox has increased by over 400 percent since the beginning of January 2015. Lightbox has streamed the equivalent of 7.4 million hours, or 844 years, of content since launch and that number is growing by the day.”
2degrees corporate communications manager Charlene White says 2degrees will have broadband plans available soon and that changing its business from just a mobile operator will be profound.
“It will build on the fantastic work done by Snap to date and we’re especially encouraged by this week’s comment from Netflix about Snap’s network being the fastest in New Zealand.”
White says over the past six months 2degrees has seen a significant increase in data usage across both its fixed and mobile networks as consumers continue to adopt more streaming services and find new ways to use their devices.
“We are also seeing an increasing number of customers moving to unlimited data plans as people become more familiar with the streaming and on-demand services available,” she says.
She says 2degrees will continue to build on the work that Snap has already done in the UFB area.
“Snap has always been a strong supporter of UFB – it was the first to offer UFB services in 2012, first to offer the latest 200Mbps services last year and also among the first to launch 1Gbps services to Dunedin, as winner of the Gigatown competition. Snap’s network has been built to support the delivery of high speed UFB service, with over 60 percent of new customers taking UFB services. 2degrees will continue to champion UFB as we think it delivers the best possible consumer experience.”
White says 2degrees has noticed a significant increase in data usage across both its fixed and mobile networks as consumers continue to adopt more streaming services and find new ways to use their devices.
“We are also seeing an increasing number of customers moving to unlimited data plans as people become more familiar with the streaming and on-demand services available.”
One of the key advantages of fibre is consistency, she says. “Fibre removes the traditional mid-afternoon/early evening slowdown. In recent years we have seen a huge increase in the number of connected devices per household and also a significant shift in the way people are using them. A typical household is now using a number of different devices at the same time and they all expect a consistent experience – especially when they are using on-demand TV services. Fibre has much greater bandwidth to handle this and to also provide reliable connectivity.”
With SVOD platforms making a splash in New Zealand, piracy appears to be on the decline. Slingshot general manager Taryn Hamilton told StopPress earlier that the increase in paid streaming directly corresponds with the decrease in peer-to-peer file sharing, through sources such as BitTorrent.
He puts the increase down to the fact that streaming sites are becoming more accessible.
“Sometimes you click on international sites like Hulu and it just won’t work, but now that there’s Global Mode," says Hamilton. "They can subscribe and pay for the service if they want to and they obviously have, as traffic volumes have gone through the roof, so clearly there’s demand for that. Our statistics show that BitTorent traffic is dropping at the same rate that paid streaming is increasing, which gives an indication that people are trading piracy for paid streaming…”
Hamilton also shared a few of his predictions for this year, which would see arrival of 4K (the next step up from HD) streaming slowly gaining momentum and that an increase in streaming services would result in a much higher percentage of traffic served from within New Zealand due to local content delivery networks. He also predicted that unlimited data plans would be the default.
However, there has been speculation as to how so many SVOD platforms will survive in such a small market as New Zealand, with Quickflix shares slumping to a record low on the Australian stock exchange, according to MediaWatch.
Quickflix and Foxtel have however entered into an agreement, which will see the streaming service gain access to Presto movie TV catalogue, which includes shows from HBO, Showtime, eOne, 21st Century Fox and a varied range of Hollywood movie titles. But with the entrance of Netflix into the Australasian market, it's yet to be seen whether this move will be enough for the struggling brand.
Although Netflix has a strong international track record, the local market looks set to serve up a few challenges of its own. With Australia's announcement that it was introducing a so-called 'Netflix tax' (a tariff on online intangibles), the Herald has speculated that New Zealand might follow suite.
This tax has been on the cards for a while now, and it extends to software, music, movies and ebooks. Joe Hockey, the Australian treasurer, believes GST on digital goods will bring in A $350 million ($377 million) over four years starting in July,” says the Herald. “Don't be surprised if the Netflix tax appears in New Zealand as well, perhaps next year, as the Australians will seek support from other countries to make the likes of Amazon, Microsoft, Google, Apple et al collect GST.”
StopPress has been in contact with Vodafone and is awaiting a response to its view on UFB, which will be added here when we receive it.
And how will these greatly improved streaming services affect other media companies who rely on advertising for their survival? In the US at least, Zype says Tivo-owned research company Digitalsmiths claims that approximately 1.5 million people in the U.S. this year will leave cable behind.
“Analysis of the survey at FierceCable concludes that the study of more than 3,000 U.S. adults points to 38.1 million dissatisfied Americans," Zype says. "Many of them will apparently take action such as the 4.2 percent that plan to end their cable service within six months and the 7.9 percent that plan to alter their service (perhaps by downgrading). Those figures, while impressive, are not enough to take cable out of the game entirely, but they are chipping off the block. FierceCable again points to industry commentary with media analyst Craig Moffett predicting that the gains for over-the-top streaming services (you know them: Netflix, Roku, SlingTV…) will continue to trickle. However, he does not expect even the most impressive of the group to eliminate cable from the equation.”
Chorus says its UFB network deployment continues to be ahead of schedule with fibre passing about 312,000 premises at 31 December 2014 – this means 421,000 end users are within reach of UFB. Fibre connections have also grown to 47,000.