Posts by Duncan Blair
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Duncan, can I ask if Telecom have a business case to build their cabinets then why don't you? As in, why don't you build out from the exchanges yourself on your own fibre and own cabinets?
You certainly may.
First allow me to provide some of the economics around why we can't build into the Chorus cabinets:
The answer is a simple market share equation. Telecom (group - i.e. Chorus + Telecom Wholesale + Telecom retail) have effectively 100% market share outside of Auckland, Wellington and Christchurch. There are no competitors. We certainly have customers in these areas, but we are serving them via Telecom Wholesale connections. Potentially we could move these connection on to our own network if we built it, but all told Telecom's competitors have substantially less than 40% market share outside of the main centers.
The main problem with the determination from our perspective was that the only option for backhaul presented is Gigabit Ethernet @ ~$1300 per month. The port price of ~$11 was actually kind of ok.
The largest cabinets are serving around 300 households (compared with about 10,000 per exchange), and this is where the economics get tricky.
If we went in and captured 10% market share pretty quickly, that would still mean that the cost of serving that customer was in excess of $55 per month before we even start looking at providing any kind of service to them or recovering the cost of installing the gear (i.e. just for the port and backhaul). Realistically you would need in excess of 30% market share before it started to deliver a meager return. Our experience thus far unbundling has been that despite offering faster broadband, more data, more features, better support and generally better value than the incumbent the exchanges where we have been the most successful we have still only captured around 20-25% market share over the past 18 months.
Remember also that only around 60% of NZers currently have broadband, making this equation even harder.
Now to your original question, why can't we build our own:
If the economics of building into an existing cabinet were hard, then building a business case around getting a return on the captial outlay required to build our own cabinets is impossible. As mentioned above, Telecom can do it because they effectively have 100% market share (and only plan on losing at most 15% of it ever according to Paul Reynolds - speaking to Telecom shareholders a couple of weeks back).
More importantly though, why would we build a second set of infrastructure? Dig up the same street twice? Have 2 cabinets sitting on your front lawn rather than one?
The purpose of regulating the industry is to foster competition ensure that we use existing infrastructure efficiently. Surely that means that if we can all use one set of gear then we should.
Hopefully that answers your question. Let me know if there is anything else I can help out with, or if you want me to clarify anything further.
Duncan Blair
Head of Brand and Communications
Orcon -
Thanks Paul.
What maybe wasn't clear enough in my post is that you wont have to jump ship to take advantage of the new found goodness. We will still be able to wholesale this from Telecom Wholesale, just as we do now.
We would love to spread the love around the country a bit, but unfortunately it does cost more to operate a DSLAM out of a cabinet in Dunedin, or in fact anywhere other than Auckland, than it does in Auckland. Having said that, this is kind of moot, as it stands right now the business case for building infrastructure into cabinets anywhere in the country is impossible (Auckland included).
Duncan Blair
Head of Brand and Communications
Orcon -
Speaking of broadband I've been trying to figure out where to jump next - the problem here in Dunedin is that we've been cabinetised ... all the dslams are in the neighbourhoods now (or at least are in mine) - that means that my ISP Orcon wont ever get around to installing their equipment in my local telephone exchange - no 25mbps for me
Locally at least it appears that Telecom has snookered all the other ISPs - sure they've split into bits but given the commerce commission's recent ruling no one can compete with them now that they've forced us into cabinets.
Orcon's been quite rightly crying 'foul' - but, they've also shown little enthusiasm to move faster broadband out of their cherry-picked markets in central Auckland and Wellington - unless something changes soon I may be faced with holding my nose and, despite my past bad experiences, moving to Telecom
Hi Paul,
I hope I can provide a little bit of clarification here. Firstly, the fact that Chorus (the network infrastructure arm of Telecom) are rolling out cabinets around the country is a good thing in principle - moving the broadband equipment closer to your house makes it much more likely that you will get that magical 24Mbps/50Mbps if we start talking VDSL2 (or closer to it at least).
The problem is that the Commissions pricing has effectively shut us (and our fellow unbundlers) out of the sub loop. Not only this, but not being able to go into the cabinets means that our business case for unbundling further exchanges gets much harder as we have had a rung removed from our ladder of investment. So basically, it sucks.
However, we are still able to provide our customers broadband via the cabinets via Telecom Wholesale, it just means that we are not able to be as aggressive with our pricing as we are in unbundled areas. You still get all the benefits of being an Orcon customer (including things like being able to watch TVNZ video online without the data counting).
We are still working away in the background on this, and have yet to hear any response from the Commission to our open letter. We are hopeful that we may be able to come up with a solution.
In the mean time we have put together a website: www.saveourbroadband.co.nz which was originally intended to cover just the sub loop decision, but we now intend to keep updated with general information around ensuring that we maintain competition in the NZ broadband market. It may be useful to you if you are keen to find out more.
So to sum up, yes, we still want to bring you super fast broadband (where ever you might be in the country) this decision may mean that we aren't able to do it at the price we would like to.
I hope that clarifies things.
Thanks for your support,
Duncan Blair
Head of Brand and Communications
Orcon -
We are really looking forward to this one. Our planning sessions have been awesome - think that there is going to be plenty of entertainment, great content, and lots of laughs.
Looking forward to meeting some more of you down there on the night.
Duncan Blair
Head of Brand and Communications
Orcon -
Hi guys,
There are a small number of customers who are experiencing issues with their transfer to the Orcon+ network, and while I realise this is of little comfort to those of you who are among those few, I will try to give a bit of background:
There are a variety of different things causing these faults (including the sheer number of people that have taken up the offer), and there are people here working to fix all of them. For example, we are finding that some copper lines have faults that have gone undiagnosed on Telecom's network, probably just manifesting themselves as substandard sync speeds. When these customers come over to our network the fault is causing major problems for that customer - in terms of performance and stability.
While I am not trying to excuse these problems, the whole LLU process is a new process - right from provisioning through to fault resolution. Our guys are all working overtime to do everything that we can to ensure that the problems are resolved. Unfortunatley in some cases we are reliant on third parties, and we are managing these relationships as actively as possible.
So apologies for your experiences, and I have definitely taken the better communication message on board.
Duncan Blair
Group Product Manager
Orcon -
Travelling through Pt Chev last weekend I saw the beginnings of the first Telecom Cabinet installations there, only slightly behind schedule. Roll on Grey Lynn I can't wait!
Now the question is will any other operators have access to those cabinets and the final loop? Perhaps the probable changes to environmental regulations will allow rows of cabinets resplendent in competitors livery.. or maybe not. Bitstream and perhaps access for private backhaul from the exchange nodes then i guess.Grey Lynn is served by the Ponsonby exchange, and in most parts the speed delivered by the new Orcon netowrk is pretty good as the exchange is on the Grey Lynn side of Ponsonby.
Re: competitors access to roadside cabinets - the industry is in the early stages of negotiating this access through working parties (this process is called sub-loop unbundlling - allowing us to install equipment in the roadside cabinets). This is the same process that we went through for LLU, hopefully with all parties now having some experience of playing nice together we can move this one through a little quicker.
Cheers,
Duncan Blair
Group Product Manager
Orcon -
I'm gonna tell my mum you said that tonight. Been trying to convince her to get broadband for ages, but when I lent her a Vodem it made her think that broadband was actually slower than dialup. They're in Herne Bay...how's that situated for high speed Orcon goodness?
Great! Herne Bay should be right smack bang inside our coverage area. You can get a pretty good idea by checking our coverage map, or just run her number through the phone number checker on our site.
Cheers,
Duncan Blair
Group Product Manager
Orcon -
I would also like to add that at Orcon we welcome your, or indeed anyones mum to join.
Cheers,
Duncan Blair
Group Product Manager
Orcon -
when is orcon going to do what other providers don't, and string some central wellington apartment blocks with fibre?
With LLU we are doing what no one else is doing right now :)
But to answer your question we are pretty excited about potential applications of FTTP in the future. The biggest problem is the massive investment required to get to any kind of scale whereby things become economically viable ($4 - $5 billion to reach 75% of the population according to David Skilling) .
That's definitely not to say that it wont happen, just that it might take a wee while yet. We think delivering ADSL2+ and VDSL2 (once we are allowed to) is a step in the right direction.
Cheers,
Duncan Blair
Group Product Manager
Orcon -
What's the ETA for the roll out to Remuera? I switch to Orcon in a heartbeat!
We should be live in Remuera in April. For a more complete list of the next suburbs to get access to the good stuff check the website: Orcon's next unbundled exchanges
Cheers,
Duncan Blair
Group Product Manager
Orcon