Broadband

LTE as Fibre Killer? Vodafone’s Quick Win for Fixed Mobile Substitution

kiwibrew 3G, Broadband, Cellular

Fixed Mobile Substitution (FMS) is the concept of replacing fixed telecommunications lines with mobile technologies.

In New Zealand the number of fixed lines in use has remained steady from 2006-2011. In Europe over the same period, the number of households without fixed lines increased from 18% to 27%. At the same time, penetration of broadband has increased in both markets.

High prices for data have kept New Zealand tied to its landlines for data while many Europeans have made the leap to all-mobile.

In support of high prices, New Zealand carriers have argued that spectrum is scarce, cellular equipment is expensive, and the cost of building towers is prohibitively expensive due to local councils and the Resource Management Act. As of this time last year all three carriers had the added operational expense of leasing fibre or Ethernet services to their towers for backhaul. These barriers have added up to networks that are generally running at capacity, with only high data costs to prevent users from overloading the network as in the case of Vodafone Australia.

All this changed in 2012 when Vodafone NZ made two strategic acquisitions. In May they performed a spectrum swap with CallPlus, converting what had been a fairly useless block of radio spectrum in to one compatible with a common variant of LTE. In October, the Commerce Commission approved their purchase of fixed-line carrier TelstraClear.

The TelstraClear purchase, in addition to bringing along a pile of radio spectrum, positions Vodafone as the only cellular carrier with their own metro fibre network. Vodafone has the added bonus of dense suburban reticulation through Christchurch and Wellington, in place to provide TV and broadband over a Hybrid Fibre Coax (HFC) system.

With metro fibre across most of New Zealand’s population and a new LTE network, Vodafone is positioned to be a strong competitor to UFB already. Their new LTE service using existing infrastructure is already twice the speed of the basic 30mbps UFB offering, but data pricing is being kept high to ward off network slowdowns. With a new fibre network and 2.6GHz spectrum, they could massively increase their network capacity without expensive equipment, tower builds, compliance costs, or backhaul OpEx using outdoor picocells. For example:

Pictures of four outdoor piocells installed
Alcatel-Lucent and Ericsson Outdoor Picocells enabling LTE coverage
  • Alcatel-Lucent’s MetroCell: A laptop-sized cell site designed to mount to a utility pole, requiring only 45 watts of power and IP backhaul and requiring no resource consent.
  • Alcatel-Lucent’s LightRadio: A distributed cellular architecture for 3G and LTE comprised of tiny, fibre backhauled cubes that are spread throughout an area on utility poles. They’re usable alone for low densities of users and stackable for higher densities.
  • Ericsson’s Bel-Air LTE Picocell: A laptop-sized LTE cell site that hangs from the same overhead coax lines that are used to provide cable TV – taking its power from the existing TV distribution network and using existing Ethernet services for backhaul.

All three can add an LTE sector of capacity to Vodafone’s network for less than $10k without new consents, tower leases, or backhaul costs. The Ericsson option could be rolled out to tens of thousands of customers in a matter of weeks. The combination of abundant spectrum, the ability to use cheap equipment, inexpensive or free access to utility poles as towers, and own-network metro backhaul are unique amongst New Zealand carriers.

Table comparing Vodafone, 2Degrees, and Telecom advantages
A Year Has Changed The Game

Using LTE picocells to provide increased network capacity, Vodafone could easily offer products in to the market with UFB equivalent speeds – without any of the startup costs or long-term contracts required for fibre installations. Given the savings over paying an LFC $37.50/month for a UFB circuit, shifting just 5% of the fixed broadband market on to an LTE solution could add an extra $26M p.a. to Vodafone’s bottom line.

LTE Picocells + New Spectrum + Metro Networks could be a quick win Vodafone, who now have the option of providing a “Fibre Killer” solution.

NZ NetIndex Ratings Skewed By Self Selection

kiwibrew Broadband

Ookla’s Speedtest.Net is a popular and well-known test that allows home users to visit a website to measure the speed of their broadband connections. Results are provided to users as immediate feedback, and entered in to a database used by Ookla to provide country and ISP benchmarks available at www.netindex.com. Unfortunately by analysing the raw data behind Ookla’s NetIndex, NZTelco has found the index is not an accurate representation of broadband in New Zealand. In fact customers of small providers who have chosen to visit the site often have significantly skewed the results.

Ookla’s business is providing speed tests, and they are good at it. A number of technical articles in Ookla’s Blog explain the test methodology and rationale behind their test design. Ookla has a highly distributed system with a number of end points in New Zealand, and given ideal circumstances (user connected directly to their broadband modem, no backhaul congestion) Speedtest.Net results can be a good indication of how fast an end user’s connection can be.  It’s no surprise that Speedtest.Net results as below are often shown on websites like Geekzone.net or posted on Twitter.

A recent Speedtest.Net result
A recent Speedtest.Net result run by the author

It’s when these tests are recorded, aggregated, and presented as statistics characteristic of the broadband quality of a particular region or ISP that the good ends. For example, Ookla’s NetIndex rankings for Upload, Download, Quality, and Value are calculated on tests recorded in the last month. By these tests, New Zealand’s Download Speed Index is 10.47Mbps, and the country ranks 52nd in the world for Download Speed. On the Upload front, New Zealand’s index is 2.8Mbps, with a ranking of 62nd in the world for Upload Speed. As the NetIndex is calculated on a daily basis, today’s rankings have been captured below.

Download Index
Download Index
Upload Index
Upload Index

Browsing through the data of the NetIndex site provides an initial indication that the rankings and results provided by the Index may be inaccurate. Companies like TrustPower Ltd, Broadcast Communications Limited, and Rurallink LTD are listed as “Major ISPs” when in fact they account for a tiny percent of user in the New Zealand market. Results from niche players Vector, Voyager, Vibe, Fastcom, Netway, and EnterNet Online are given equal billing with major providers like Vodafone, Telecom, and TelstraClear.

Ookla has been an excellent corporate citizen and member of the Internet community by providing the world access to the raw data behind their index. On the 16th of January I downloaded and evaluated this data. My methodology involved extracting New Zealand results from a 2.4GB text file using Unix shell scripts, cleaning that data (combining results such as Vodafone Ltd and Vodafone New Zealand Ltd) using a data mining tool called OpenRefine, and then importing it into Google’s Fusion Tables cloud database. The resulting data set looked like the lines below:

New Zealand,NZ,Nelson,F5,Nelson,Snap Internet Limited,2013-01-06,34488.8,15285.4,238,129.839
New Zealand,NZ,Nelson,F5,Nelson,Snap Internet Limited,2013-01-07,34749.8,15311,228,130.828
New Zealand,NZ,Nelson,F5,Nelson,Snap Internet Limited,2013-01-09,35755.9,15353,216,131.182
New Zealand,NZ,Nelson,F5,Nelson,Snap Internet Limited,2013-01-10,36851.3,15153,217,131.862

Columns after the date above are averages of Download Speed, Upload Speed, Number of Tests used in Average, and Distance to Speedtest Server.

I then created two summaries of number of tests by ISP – one for the entire five year data set, and one for calendar year 2012. Ookla claims to have results from 1.2 million unique IP address in New Zealand. If these were a random sample of broadband users, by the Commerce Commission’s reckoning at least 49% (and up to 57%) of these tests would have been done on the Telecom New Zealand network. In fact in the five year data set Telecom only represented 31% of results, and in the 2012 tests only 26% of results. The chart below shows how Telecom is vastly under-represented and Orcon and other providers are vastly over-represented in the NetIndex.

Broadband Market Share by Data Source - Telco2 Ltd from Ookla NetIndex Data
Broadband Market Share by Data Source – Telco2 Ltd from Ookla NetIndex Data

Given the differing levels of investment in infrastructure and provision of bandwidth between Telecom and smaller providers, it is likely that the NetIndex rankings are significantly skewed, and should not be seen as a valid measure of Internet access speeds in New Zealand.

Television White Space for Rural Wireless Broadband

kiwibrew Broadband, Radio, Regulation

This week Telco2 (publisher of NZTelco) has released an InternetNZ-funded study of the practical application of Television White Space Broadband for use in rural New Zealand communities.

Television White Space Broadband (TVWS) is an inexpensive, light weight technology – priced closer to wireless broadband equipment than it is to the cellular equipment typically used to cover rural and remote communities. Through its use of television spectrum TVWS can allow broadband coverage far more effectively than technologies like Wi-Fi while emitting just four watts of power – orders of magnitude less than a typical cellular tower.

Using the technology, wireless broadband providers are now able to take advantage of unused television spectrum, while the rights of broadcasters are preserved. In the most straightforward example of TVWS use, if a television broadcaster isn’t using their spectrum in a particular area, and if its use for broadband wouldn’t compromise a broadcast elsewhere, that spectrum is available for use delivering wireless broadband in a dynamic yet controlled way.

To evaluate the potential utility of TVWS in New Zealand, three rural communities that will be missed by the RBI were identified and evaluated. Radio coverage models were constructed simulating common, off the shelf Wi-Fi technology and new TVWS equipment. The models were then compared for coverage potential of each technology – with TVWS broadband showing a clear advantage in some situations.

The full report is available online: http://tinyurl.com/bph5amf from InternetNZ.

Kordia’s Strategic Review

kiwibrew Broadband, Cellular, Radio

Kordia are undergoing a strategic review as reported by Computerworld. It’s about time. Kordia could have been the shared infrastructure company of New Zealand’s wireless ecosystem – as dominant and profitable player as Chorus is set to be on the fixed line side of things.

Instead of sticking to its core business of maintaining towers and transmission to a high standard, Kordia attempted to grab everything it could. Gallingly, in almost all the cases of their numerous commercial failures, they went head to head with their existing infrastructure and wholesale services customers instead of cooperating with them. And they did so with appalling personal and organizational arrogance.

The bigger failures:

  • Metro Wi-Fi network that didn’t meet the needs of its users
  • Rural wireless product that had massive functional issues
  • Metro wireless Ethernet product that was expensive and based on dated technology
  • The KorKor network – inferior coverage to TeamTalk and inferior technology to Telecom’s XT.
  • AIS network – too little, too late, and too expensive for many harbourmasters and port companies
  • OptiKor – might have done well but since handed off to Axin, a secretive shell company hiding secretive inves* tors
  • A strident bid for the government’s Rural Broadband Initiative that had them partner with Woosh and FX, which featured unbelievable technological claims

Aside from DTV (and remind me who paid for that) where have they headed in the right direction?

  • Offshore contracts – bringing cash back to NZ. Nice work.
  • OnKor Wide Area Network Services – a technically excellent product taking advantage of fibre rights held from the Clear days and a microwave network built to move television broadcasts around – complimentary to Orcon
  • Odyssey – control international transit and you can provide QoS to your customers – nice long term partner to Orcon
  • Orcon – a real competitor in the market, but are Kordia committed to it long term?

Keeping in mind that Onkor and Orcon compete against Kordia’s wholesale clients, and Odyssey is most useful as a part of that ecosystem, here’s some strategy:

1. Package Orcon, OnKor, and Odyssey up & divest them. Stop competing with the best potential customers of your huge (and maybe overvalued) asset base.

2. Go to Vodafone, Telecom, & 2degrees, JDA, local councils, and other tower owners, hat in hand, and say “hey guys, we know we screwed this up a few years ago, but from now on how about we start working together on tower and transmission infrastructure. Oh, and LTE with its 700MHz rural towers and high density 2500MHz urban microcell requirements might be a great time to start”

That would be a good day for Kordia, and its owners, the people of New Zealand.

Vodafone & CallPlus Swap Spectrum for LTE

kiwibrew 3G, Broadband, Cellular

Vodafone and Blue Reach, the wireless subsidiary of CallPlus, have traded blocks of spectrum in the 2.5GHz spectrum band. The trade will allow both carriers to operate Long Term Evolution (LTE) networks using standard frequencies supported by hundreds of phones and broadband access devices on the market today.

Although not yet announced or reported by either company, the swap was recently registered in the Ministry of Economic Development’s SMART database, with commencement of the change 30 May 2012. Just nine days before this license change, NZTelco commented on unusual activity in Vodafone’s 2.5GHz spectrum band, and speculated on what Vodafone might be doing. A spectrum swap was not foreseen or discussed.

Prior to the spectrum swap, Vodafone and CallPlus each held single blocks of spectrum suitable for use with Time Division Duplex (TDD) WiMAX or LTE band 41, a recently ratified band for which no base stations or mass market devices are yet produced. CallPlus had been operating a WiMAX network using their spectrum in Auckland, and Vodafone had not used their spectrum for anything. The diagrams below show a “before and after” picture of the 2.3 & 2.5GHz spectrum bands and how they were affected.

Since the swap, both providers now have 15MHz pairs in LTE Band 7, a key band for offloading data traffic in congested urban environments. The utility of such spectrum is immense, especially to Vodafone, who have a higher user to deployed capacity ratio than either Telecom or 2Degrees Mobile. 2.5GHz spectrum has very small cell sizes, high capacity, and high potential for re-use. It is likely to be used in the most crowded of locations to take pressure off of Vodafone’s network in areas of peak demand.

The alignment of the spectrum with an internationally supported band is also important. The map below shows countries where LTE Band 7 networks are active today. With a 2.5GHz LTE network Vodafone could offer lucrative LTE data roaming services to users from these countries.

Band 7 is likely to be the most common band for in-home and in-office LTE Femtocells, and is today the best choice for providing LTE to crowded locations like train stations, conference rooms, and sports stadiums. Vodafone’s spectrum swap with CallPlus can only mean good things for its customers.

UFB Residential Connections: The Last Mile, Almost

kiwibrew Broadband, Regulation

On the 21st of May, the Commerce Commission published a draft report on their demand side study of high speed broadband. One of the more interesting bits has to do with the connection of houses to the Ultrafast Broadband (UFB) network.

Not All Contracts Are Equal

The sharp negotiators at Chorus managed to strike a last mile UFB deal with the Ministry of Economic Development that’s twice as good for suburban areas as the Local Fibre Companies Ultrafast Fibre, Enable, or Northpower received. This has implications for uptake, as retail Internet Service Providers marketing UFB products who will have a higher upfront cost for adding UFB subscribers to the Chorus network than they will for other networks.
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