2018 / ISSUE 8Championing better broadband for New Zealand

HEALTH AND BROADBAND

Moving ahead after a slow start

JASON PARIS

Vodafone CEO on technology transforming lives

DEVOLI

Enabling virtual internet providers

B R O U G H T T O Y O U B Y

Beyond the classroom

Students, like these from Naenae’s Rātā Street School, test schemes extending educational networks into neighbouring streets

Contents 2018 / ISSUE 8

REGULARS

1 EditorialOn the night, fibre was the winner

thedownload.co.nz

8COVER STORY Learning doesn’t stop at the school gate. Chorus and Network for Learning are working on pilots so that all students can study after hours

16

JASON PARISVodafone’s new CEO is no stranger to telecommunications. He plans to use his role to bring the best technology home to New Zealand.

12

CONNECTED HEALTHHospitals and medical centres now have fast broadband links, does this mean better health care?

20

VoIPWhat is Voice over IP and what can we use it for?

22 VoIP products and servicesVoice calls on fibre networks24 DevoliAuckland-based Devoli smooths the path for new service providers27 Rainbow ArtChorus cabinets get a diverse splash of colour

2 In BriefNetflix surges, business class broadband, 5G coming

33RANTHolly Cushen sips the telco sector’s alphabet soup

28

HUGH UJHAZYEnterprise is the business case for 5G mobile30 ConsolidationHow the industry has changed, and not changed, in the fibre era

POTS

VDSL

ADSL

UFB

HDTV

IoT

AVFFP

XaaS

WYAH

PDA

BOOTP

2

2018 / Issue 8

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Editor Bill Bennett

Chorus Editorial Consultants Ian Bonnar, Steve Pettigrew, Holly Cushen

Contributors Scott Bartley, Heather Wright, Hadyn Green, Johanna Egar, Holly Cushen, Sarah Putt

Senior Account Director LauraGrace McFarland

Designers Julian Pettitt, Jessie Marsh

Account Executive Paige Fleming

On the cover Photo supplied by Rātā Street School

Published by ICGPO Box 77027, Mt AlbertAuckland 1350, New Zealandwww.icg.co.nz

ISSN 2624-1137 (Print) ISSN 2624-1145 (Online)

The Download is championed by Chorus PO Box 632, Wellington 6140www.chorus.co.nz

The contents of The Download are protected by copyright. Please feel free to use the information in this issue of The Download, with attribution to The Download by Chorus New Zealand Limited. Opinions expressed in The Download are not necessarily those of the publisher or the editor. Information contained in The Download is correct at the time of printing and while all due care and diligence has been taken in the preparation of this magazine, the publisher is not responsible for any mistakes, omissions, typographical errors or changes to product and service descriptions over time.

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SPORT WASN’T AN obvious application when the UFB network was first planned. Video-streaming was far from everyday. The nearest the planners got was to talk of high quality video-conferencing.

We have that too. But when it comes to wooing people onto fibre, video chats are nothing compared with streamed media.

Consumer interest in fibre first took off when Spark launched Lightbox in 2014. If you look at historic uptake number graphs, there is a clear uptick at this point.

The next time the dial moved was when an official local version of Netflix appeared. New services like Amazon Prime, Neon and Stuff Pix kept the momentum going. Since then, New Zealand's traditional broadcasters have joined the streaming throng.

Now we’re seeing a third growth cycle. Sports fans are getting their technology ducks in a row in time for next year’s Rugby World Cup.

Spark and TVNZ's joint bid for the rights to New Zealand’s most popular sporting code coincided with fibre's arrival in the mainstream.

Around half the homes that can get a fibre connection now have one. In June the number of fibre broadband lines overtook the number of ADSL copper lines. Orders continue to flood in. Numbers will be higher again by the time you cheer the first try scored in Japan.

Today’s uptake numbers are far higher than

anyone expected in 2009. When the government first announced its UFB plans, officials hoped 20 percent of us might choose fibre by 2020.

High interest levels gave network builders the confidence to extend fibre's reach further into

the bush. By the end of 2022, fibre will reach 87 percent of the population.

On page 5, Spark’s head of sport, Jeff Latch, says sport is the “ultimate premium content”. Unlike entertainment, it is perishable. There are a limited number of key events and the supply isn’t likely to increase.

Thanks to on-demand apps, fans can now watch games at a time that suits them without needing a recorder. That's important when the fans are on the

other side of the world.People are happy to pay a decent price for

sport. Likewise, advertisers are willing to pay top dollar to capture that audience.

In the past, pay TV companies sold sport as part of an expensive package. Depending on your choices, this could also include television shows and movies. Internet media companies break up these packages. You only need buy the parts that interest you.

Services like Lightbox and Netflix convinced half the population to choose fibre. Sport can likely convince the rest – or more of the rest. That’s something else to cheer about.

Bill Bennett

Sport unlocks door to high fibre uptake

The Download | Editorial

Sport is the "ultimate premium

content." Unlike entertainment, it is perishable. There

are a limited number of key events and

the supply isn't likely to increase

2

MYREPUBLIC PLANS VIRTUAL MOBILE NETWORKMyRepublic plans to launch a mobile virtual network operator (MVNO) service in New Zealand.

Malcolm Rodrigues, who heads the Singaporean parent company, told media the company plans to follow its Singapore MVNO launch by offering with similar services in New Zealand, Australia and Indonesia. He says this will happen within a year.

MyRepublic was the first new foreign-owned retail service provider to enter New Zealand after the announcement of the UFB network in 2009. In Australia, MyRepublic is an NBN retail service provider. There are few MVNOs in New Zealand, and collectively they account for less than one percent of mobile connections.

thedownload.co.nz

In briefNetflix clocks up close to two million NZ viewers Roy Morgan research says Netflix now has almost two million viewers in New Zealand. The service saw subscription numbers grow 35 percent in the last year, to reach 1.9 million viewers.

“Now over three million New Zealanders have access to some form of pay or subscription TV, up 13.9 percent on a year ago. The growth in pay and subscription TV is being driven by the likes of Netflix, along with a suite of rival streaming services, including Lightbox, Sky TV’s Neon, and Amazon Prime Video,” says the research company.

Viewer numbers are growing more slowly for Sky TV's Neon service. They were up 1.7 percent on the previous year, to reach a total of 1.6 million viewers. Lightbox is the second most popular video on demand service, now with 830,000 viewers. That's a 43 percent increase on last year, which means it is growing faster than Netflix. Vodafone TV has 295,000 viewers.

Spark to start 5G in 2020 Spark says it is on track to begin rolling out a 5G mobile network in

2020. The company expects services to go live later that year. The target date depends on whether the government allocates and auctions the necessary spectrum in time.

The carrier wants the government to allocate large blocks of spectrum in the C-Band, that's 3400 to 4200MHz. It says it needs 80MHz blocks at least, and preferably 100MHz blocks, to build networks with 5G performance. It is also calling for even larger blocks at higher frequencies.

Earlier this year, Spark conducted successful 5G trials. Customers using the outdoor trial in Wellington experienced download speeds

of up to 9Gbps. An indoor trial in Auckland saw speeds as high as 18.2Gbps.

While some overseas telcos plan to build new networks from scratch, Spark says it will start by adding 5G services to its existing 4G and 4.5G sites. These will be extended when there is enough demand.

Spark managing director Simon Moutter says the company is working on mapping expected 5G cell densities to learn where there is a need for new sites.

“We have already begun a build program to increase the number of cell sites in our existing mobile network, which will enable us to meet near-term capacity demand, as well as lay the groundwork for the network densification required for 5G,” he says.

2018 / Issue 8

3The Download | In brief

CHORUS OFFERS BUSINESS-CLASS FIBRE Chorus now offers a wholesale business-class fibre service. From early next year this will include a 10Gbps option.

Chief customer officer Ed Hyde says he expects the new higher speed option will help businesses become more effective.

“This service will allow employees to work more effectively through video-conferencing and better connect them to important business tools in the cloud. It will also help businesses trade more effectively on a global scale,” he says.

“It’s also about running bandwidth-intensive businesses, using multimedia software and tapping into hosted or

cloud-based applications. This is where the service comes into its own.”

Vocus Communications’ general manager, Susie Stone, says the “demand for bandwidth is increasing at a staggering pace. A 10Gbps circuit will allow businesses to access services and technology that would have been unthinkable even a few years ago. More importantly, it will be affordable, so it will appeal to a range of sectors – from smaller organisations, like animation studios that have massive uploading requirements, to large organisations with hundreds of seats.” 

Ed HydeCHORUS CHIEF CUSTOMER OFFICER

Online shopping up 13 percent in 2017 NZ Post says we spent $3.6 billion online in 2017. That's 13 percent more than 2016. It says online shopping now accounts for 8.1 percent of all retail spending. The figures come from a report commissioned by NZ Post and used anonymised card transactions data from 2016 and 2017.

The total number of online transactions was up 23 percent. That’s faster than the growth in the amount spent. NZ Post says this shows people

are now buying smaller value items and shopping online more frequently.

Gisborne was the region that recorded the fastest growth. Online sales there climbed 19 percent.

Not all the money spent online went overseas. NZ Post says New Zealand retailers saw a nine percent increase in online sales. In comparison, sales in traditional retail stores grew less than one percent during the period surveyed.

Chorus, Nokia work on 130Mbps VDSL roll-out Chorus and Nokia are working on the latest version of VDSL2 vectoring which could see copper broadband users get speeds as high as 130Mbps. Vectoring improves connection speed and stability.

The vectoring upgrade will see noise-cancelling technology remove cross-talk interference. This happens when many signals share the same copper connection. The technology also means people in areas outside the UFB footprint will be able to get fibre-like speeds. Among other advantages, this will allow them to watch high-quality streamed video.

Chorus’ head of network technology, Martin Sharrock, says getting the fastest possible broadband experience to customers is a priority. “Vectoring has improved average VDSL downstream speeds by over 40 percent and upstream speeds by over 30 percent. This is especially important for rural New Zealand where fibre-to-the home has not yet been planned.”

Nokia’s Federico Guillén, president of fixed networks, says: “Nokia’s copper solution with its vectoring technology complements Chorus’ fibre roll-out and provides another way to deliver significantly higher speeds that enhance the way customers experience digital content.”

SPARK AIMS FOR 5G AMERICA'S CUP IN 2020 Spark has signed on as the official telecommunications and connectivity partner for Emirates Team New Zealand and the America’s Cup event, which is expected to take place in Auckland in late 2020 or early 2021.

The deal means Spark will provide telecommunications both on and off the water. It also gives Spark exclusive rights to provide telecommunications within the areas controlled by the company organising the Cup.

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4 The Download | In brief

NETWORK FOR LEARNING

UPGRADESNetwork for Learning has upgraded its school managed network service. The upgrade includes Fortinet’s combined

firewall and internet filtering tools.Network for Learning says the

upgrade will help schools deal with student attempts to bypass internet

filtering by using virtual private networks. This is an increasing

problem and, apart from the issues with students seeing unfiltered

content, the VPNs consume a lot of bandwidth. There is also greater protection against threats such as

phishing and ransomware with the upgrade.

HAWAIKI LIGHTS TRANS-PACIFIC CABLE July saw Hawaiki Submarine Cable's 15,000km trans-Pacific fibre link open for business.

The privately owned cable cost around $450 million to build. It links New Zealand to Australia and the United States. There are – or soon will be – spurs connecting it to New Caledonia, Fiji, Tonga and American Samoa.

The cable boosts New Zealand's international capacity by 43 terabytes. While New Zealand wasn’t short of international capacity before Hawaiki was built, there were only three links on two networks. That’s not usually considered enough for an economically vital connection and

has previously been given as a reason why internet and cloud giants have not invested here.

It is significant that Amazon Web Services was one of the anchor customers that helped Hawaiki get the project over the line. Vodafone and government-supported REANNZ (Research Education Advanced

Network New Zealand) are the other important anchor tenants.

Hawaiki is an international project, yet most of the leadership and funding originated in New Zealand. Investments from CallPlus founder Malcolm Dick and Sir Eion Edgar helped get the project underway.

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SPARK SPORT EMERGES WITH LATCH IN CHARGESpark has doubled down on its sports investment by picking up the rights to the English Premier League football. The company has formed a new business unit, Spark Sport, to focus on sports media. Jeff Latch, formerly director of content at TVNZ, will head the new unit.

Earlier in the year, Spark won the rights to cover both the 2019 Rugby World Cup and the 2021 Women’s Rugby World Cup. It also has the rights to Manchester United Television. These will all be wrapped into Spark Sport, which plans to offer subscriptions from early next year.

While the move looks like a departure for Spark, the company has been involved in sports content for four years. In 2014, Spark's Lightbox business formed a 50:50 joint venture with Coliseum Sports Media called Lightbox Sport. At the time, Coliseum had the local Premier League rights.

Latch says: “Spark has been interested in sport for five years. It learned a lot from the joint venture with Coliseum.”

One of those lessons was the value of sport. “Sport is the ultimate premium content. There is a limited number of

events and the supply isn’t likely to increase,” says Latch.

He says that Spark now has a far greater understanding of the content business and an awareness of the opportunity. “The size of New Zealand’s pay TV is substantial. We have Sky, Neon, Netflix, Amazon and Lightbox. The revenue from these is growing all the time.”

Spark Sport will be a standalone entity and will run separately from Lightbox. “The dynamics of sports media are different from entertainment. Sports content is perishable, which is one of its beauties,” says Latch.

“It is also well suited to streaming. With, say, the Premier League, there is no need for fans to record games. All games are available as VoD (Video on Demand). You can watch games live or you can watch at times that suit you, on the device that suits you.”

Latch says the goal is for Spark Sport to stand on its own two feet. “It needs to be profitable in its own right.”

Spark’s strategy is to partner with overseas players to get the right delivery technology. Latch says, “We’ve learned

from others involved in this area. There are a small number of expert companies who know how to do this well. We have the opportunity to work with the best in class.”

Latch doesn’t plan to stop at rugby and football. He says more is coming and that Spark will bid for rights on a case by case basis. “We’re looking at other opportunities.” But for now, Latch’s focus is on getting everyone match-fit to deliver the Rugby World Cup. It’s a massive opportunity for the entire industry, he says.

Jeff LatchHEAD OF SPARK SPORT

BY THE NUMBERS

221GB Average data use across the Chorus network

AVERAGE FIBRE CONNECTIONS USE

307GB70 percent of users now on

100Mbps or faster connections

50,000 NEW CHORUS FIBRE CONNECTIONS

IN THE SEPTEMBER QUARTER

Motu: fibre roll-out has improved UFB access A study from Motu Economic and Public Policy Research Trust says New Zealand’s fibre roll-out has positively addressed a lack of access to fast broadband. The study examined access based both on material deprivation and – within urban areas – ethnicity.

Motu senior fellow Arthur Grimes says: “Within urban areas, Māori are more likely to live in areas that have UFB access. However, because main urban areas, which have the best fibre access, have the lowest proportion of Māori residents overall, Māori as a group are slightly less likely to have fibre access.”

The research looked at whether areas that had the best railway access in the 1880s now have the best access to fibre. It found people in areas that lacked 19th century rail access, because of remoteness or terrain, are much less likely to have prioritised fibre access. They are also slightly less likely to have current or future fibre access.

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6 The Download | In brief

Australian National University device promises more fibre bandwidthScientists at the Australian National University have built a device that can change the colour of light used in fibre networks. They say it has the potential to boost internet speeds.

Professor Wieslaw Krolikowski, one of the lead researchers at ANU, says the device is a new type of non-linear photonic crystal. It is as thin as a human hair and is a major advance in the field.

“Our device can produce different types of light, and in different colours, simply by changing the angle that we shine a laser beam into the device. And it is reusable for different purposes,” he says.

“Scientists had previously been restricted to one- or two-dimensional structures in non-linear photonic crystals, which had limited the scope to change light. But we found an innovative way to modify them in three dimensions to unlock exciting new capabilities.”

Vodafone Smales Farm HQ is now official Although some Vodafone employees have been working from the site for years now, the company officially opened its Smales Farm headquarters in September. The renamed Innov8 building originally housed TelstraClear. Vodafone acquired the company in 2012.

Smales Farm was New Zealand’s first large sustainable office development. Vodafone’s Smales Farm site on Auckland’s North Shore, can accommodate 2000 people. It has 70 meeting rooms, over six levels. Part of the modernisation saw Vodafone install Internet of Things sensors that, among other tasks, manage building, room and locker access.

Frost & Sullivan: 61 percent of NZ enterprises plan SD-WAN deployments Frost & Sullivan says 61 percent of New Zealand enterprises plan to deploy SD-WAN in the next two years. Banking and the wider financial sector will lead the way, says the research company. Researchers asked 150 companies in New Zealand and Australia about their network plans. They found 49 percent intend to replace their branch routers with SD-WAN.

SD-WAN is an acronym for software-defined networking in a wide area network (WAN). SD-WAN makes managing these networks’ complex operations easier and simpler.

Orcon lures Gigantic plan customers with Google Wi-Fi Orcon is running a Google Wi-Fi promotion. Customers signing up for Orcon’s top-speed Gigantic plan get a Google Wi-Fi device as part of the deal. The hardware device is a mesh router that helps home wireless networks reach places not served by a single central wireless router.

Orcon says Gigantic plan sales are running hot at the moment, at around a quarter of all sales. This is higher than for most other retail service providers. Orcon says one advantage of the promotion is that support calls are down. This is because people are getting better home Wi-Fi performance.

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Telecommunication Dispute Resolution report highlights performance issues Billing remains the largest source of complaints for the Telecommunications Dispute Resolution service. In the TDR’s latest quarterly report, it accounted for almost four in 10 complaints to the body. The TDR says complaints and inquiries about disputed charges are rising.

Customer service and faults were the next two biggest sources of complaint. Fibre installation made up around seven percent of complaints, and network performance less than five percent.

The latest report offers data about the various companies. In the past, raw numbers were reported, this time the TDR report shows the number of complaints per 10,000 connections. On this basis, Vocus and Trustpower have the most complained

about services, while Vodafone, 2degrees and Spark (in that order) all picked up one or fewer complaints per 10,000 connections.

In the first quarter of 2018, the TDR received a total of 666 complaints and inquiries. This is a comparatively low number when compared with similar complaint services in other industries and countries, particularly when put into the context of the number of connections managed by the industry.

Geoff Thorn, CEO of the NZ Telecommunications Forum, says the numbers for local service providers compare favourably when measured against their overseas counterparts.

The report is online at www.tdr.org.nz

NOKIA OPENS WELLINGTON HQNokia's new Wellington HQ will house local teams supporting network design, engineering, delivery and operations, and is at 1 Grey Street in the city centre. Staff will also work on software integration, services and sales.

Zoltan Losteiner, who heads Nokia’s Oceania operation, says: “Nokia has more than 90 years’ heritage in New Zealand and our new head office is a great platform to support the next phase of industry development, combining the scale of our global technology with local expertise.”

The company, which includes the former Alcatel business, employs over 200 people in New Zealand. Of these, 120 are Wellington-based. The company also has offices in Auckland and Christchurch.

There is also a network operations centre in Hamilton and an integration lab in Wellington. Nokia’s New Zealand organisation looks after operations in the Pacific Islands as well.

Minister of Finance, Grant Robertson welcomes Nokia’s new Wellington head office

Minister of Finance Grant Robinson and Nokia Head of Oceania, Zoltan Losteiner

Talk to anyone involved in the Haeata Community Campus or Rātā Street school pilots providing

free Wi-Fi access to the safe, filtered internet service they get at school and they’re all in agreement that today’s schooling isn’t what most of us will recall from our school days.

Digital and the need for digital literacy, dominates both school work and homework, with both frequently done online. Today’s schools have fleets of laptops, Chromebooks and tablets, with high speed internet connections allowing always-on access to educational programmes and reams of information for research.

S T R E T C H I N G S C H O O L

N E T W O R K S

“We have examples of students who have continued their passions

and projects from school and they can

only do this with access at home”

Andy Kai FongPRINCIPAL AT CHRISTCHURCH’S

HAEATA COMMUNITY CAMPUS

But for an estimated 100,000 Kiwi students, internet access – and the learning that comes with it – ends when the school bell rings at 3pm.

That’s a big problem, according to Andy Kai Fong, principal at Christchurch’s Haeata Community Campus.

“I don’t think learning can happen without 24/7 access to the internet. So much of what we do either happens using it, on it or with it,” he says. “We know that home internet access allows and enthuses our students to continue their learning at home. We have examples of students who have continued their passions and projects from school and they can only do this with internet access at home.”

Chorus and Network for Learning are piloting projects to extend N4L’s managed internet service so that learning can continue beyond the school gate and after the bell. By Heather Wright

2018 / Issue 8

9Cover story | Education

In September, pilots to provide connectivity for students without internet access at home kicked off at Haeata Community Campus and Lower Hutt’s Rātā Street School. The 2013 Census showed 40 percent of Aranui, where the trial is being held, didn’t have Wi-Fi at home. At Rātā Street School that figure increases to around 50 percent.

The pilots, which are both being led by local community trusts, are part of the government’s Equitable Digital Access for Students initiative.

While both schools are addressing the same problem, they’re using different technologies with Haeata extending its school Network for Learning (N4L)

managed network using Wi-Fi, while Rātā Street’s pilot uses fibre to homes. Both tap into the Crown-owned N4L network, which provides safe, filtered web access for students.

Mike Lott, Chorus head of innovation, says the Haeata Community Campus solution is ‘a classic community Wi-Fi network’, with 66 wireless access points deployed on telephone poles across an area bordered by Anzac Drive and Wainoni, Breezes and Pages roads. The network, accessible only by students whose devices are registered on the Haeata Community Campus network, provides filtered web access to 360 students in 190 homes.

One of the challenges with Wi-Fi

outdoors is powering the wireless access points. Chorus worked with Eaton, a power supply company, to develop a way of powering the radio transmitters using the copper network.

“We wanted to know if you could actually put effectively small cell sites on telephone poles, power them with the copper network and backhaul them using fibre,” says Lott. “The answer is yes, you can.”

The Haeata Community Campus Wi-Fi deployment is the first time copper has been used to power a Wi-Fi network in New Zealand. While that’s been a success, speeds for the trial have only been around 5-10Mbps.

The Haeata Community Campus network was a team effort. Local MP Poto Williams and Haeata principal Andy Kai Fong celebrate the launch with representatives from Network for Learning, Chorus, Cyclone, Ministry of Education, Greater Christchurch Schools Network and Linc-Ed along with Haeata staff and students

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10

“You get brilliant coverage on the street, but not so much in the home because you’ve got walls and trees and so on in the way,” Lott says.

That prompted a new model for Naenae’s Rātā Street School, where Chorus has installed fibre to 125 homes of year five and six students, 70 of which previously didn’t have any internet access. The proprietary solution sees Ruckus Wi-Fi units connected to the optical network terminator providing wireless access to the school’s N4L network, without the need for a commercial broadband service.

“Over the next 10 years we will all be migrating to fibre, so putting in fibre now makes sense,” Lott says. “This is a technology trial to see if it works and then we can figure out if it’s a good idea commercially.”

Lott notes that not having internet access at home isn’t necessarily an infrastructure issue.

“Where we’re doing the trial in Christchurch there are three broadband networks – the Chorus fibre to the node network, the Enable fibre network and Vodafone’s HFC network, plus you’ve got three mobile operators,” Lott says.

“A lot of the time we’ve been focusing on how do you get the technology there, but it’s actually an issue of affordability – so it’s how do you articulate the problem and then make the business case to solve it.”

MORE THAN A SIMPLE TECH ISSUEBut providing access is only one part of the issue, with a lack of devices being one of the key challenges.

While Rātā Street School is providing its year five and six students with Chromebooks, Haeata Community Campus has partnered with IT reseller Cyclone and Acer to provide a finance offering which allows families to purchase an Acer

Cover story | Education

TravelMate Notebook, insurance and laptop bag for $5 a week over three years.

Arnika Macphail, programme manager for the Greater Christchurch Schools’ Network (GCSN), says the deal means students, and their families, get the benefit of a computer of their own. “It’s also having that ownership of something, which means we tend to look after it better,” she adds.

Both projects are being led by community trusts – in Haeata’s case, the GCSN, and in Rātā Street’s, the Taka Trust.

Matt Reid, chair of the Taka Trust, says three out of five kids who currently live in poverty are forecast to stay that way for life.

“We want to break that. We know the greatest difference we can make is by lifting these kids’ learning and engagement, ambition and dreams, and education is a key part of that. Through technology and modern learning in particular, we can make a massive difference to these kids’ lives, as is evidenced around the world.”

The community aspect, and having them drive the project, is critical, says Hamish Girvan, Chorus product development manager.

“The government or a school saying ‘here’s a free internet connection’ is not going to work. There can be trust issues about it all.”

Lott agrees. “It’s not something you just roll out in general and hope you get a result. You need lots of committed people who want to make a difference in how kids learn.”

Reid adds that that extends to the schools themselves, with school boards and principals needing to ‘totally buy-in to this way of modern learning’. He says it’s that leadership and culture that will be key in selecting additional schools for any expansion of the trial.

It’s no fluke that Haeata and Rātā Street were chosen as pilot schools; both were already embracing modern learning. Haeata, which opened in 2017 and was formed from the closure of four schools, offers individualised, self-selected studies, with students working mainly online.

Macphail says one major plus for the pilot is that it doesn’t require big changes for Haeata’s teachers. “They’ve got learning set up online for students, it’s just how they work when they’re at school, and it’s part of the school culture, so there’s no extra pressure for teachers,” she says.

Arnika Macphail, GCSN, at the Haeata launch

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2018 / Issue 8

Additional funding through the GCSN is being used to provide a facilitator to work with every teacher over the next six months to ensure support around digital fluency, but Macphail says “we are very confident that there is already great practice at Haeata.”

Macphail says as well as reinforcing students’ learning and enhancing their future career prospects, Haeata hopes its trial will open the doors for whānau to engage and support students in their learning. It also hopes people gain a better understanding of what the school is doing and the potential of the internet, while improving their own IT expertise.

“Haeata has a really great student management system called Linc Ed where all of a student’s learnings are documented. As they get older they can post in there themselves for them and their whānau and kaiako (teacher).

21ST CENTURY LEARNING“We really want parents and whānau to engage in that space and see the successes their students are having at school. It’s about opening the doors to be able to see what 21st century learning looks like,

will help to develop all of those skills. It will begin to even the playing field with their peers in higher socio-economic areas.”

All involved are hoping that the pilots will be expanded.

Chorus is covering the costs of all Wi-Fi and fibre deployments for the pilots, but Lott is clear that he views them as a potential new line of business for Chorus.

“There might be as many as 100,000 kids around the country who don’t have access to broadband at home. We’re trying to work out whether we can create a more cost effective service that meets everyone’s needs."

And Lott doesn’t believe the benefits are only for high deprivation areas.

“It could work anywhere. We talk about low deciles, where we have been looking at, but equally, you’ll have high decile schools that have pockets of deprivation in them and it’s important to get these sorts of solutions to them so the kids there don’t feel excluded,” he says.

“New Zealand has such good infrastructure now with UFB, this could be done nationwide, providing all students with access to their school material in a safe and secure way, both at school and at home.”

"It’s about opening the doors to be able to see what 21st century

learning looks like”Arnika Macphail

PROGRAMME MANAGER FOR THE GREATER CHRISTCHURCH SCHOOLS’ NETWORK (GCSN)   

because parents haven’t had that access and that experience themselves.”

It’s a view shared by Glenda Stewart, Rātā Street School deputy principal, who says the project will develop stronger learning partnerships with whānau.

“It will create opportunities for spontaneous learning in the home and it will be easier for students to share their learning with their family,” she says.

“We don’t know what the future holds for our students, but we do know that they will need to be digitally literate; they will need to be able to access information from a range of sources, think critically about it and communicate effectively. This project

Deputy principal Glenda Stewart with students from Rātā Street School

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12 Broadband | Health

Delivering telehealth solutions to regional New Zealand was no easy task in the first decade of

this century. Mobile Health, which operates a mobile

surgical unit and also provides virtual training to rural health professionals, at first used Kordia’s digital microwave radio service to broadcast to 12 locations around the country. The equipment was housed on hospital roofs and cost $1200 per location, per month. The organisation employed a team of four IT staff to maintain the telecommunications networks and infrastructure that delivered ‘standard definition’ broadcast content at 4Mbps.

But since the advent of Ultra-Fast Broadband and the Rural Broadband

Initiative, maintaining connectivity is no longer part of Mobile Health’s business model. The hospitals, health clinics, doctors’ surgeries and other organisations it broadcasts to now connect to Mobile Health via fibre, VDSL and, on occasion, satellite and cellular services.

“Now we’re able to focus solely on the content,” says Mobile Health’s CEO, Mark Eager. “We aren’t part of delivering the connectivity, we just tell our clients to get a good internet connection.”

Mobile Health’s marketing manager, Andrew Panckhurst, says the organisation is contracted to deliver 4000 hours a year, and it typically creates content based on the needs of the various health clinics. Along with

better connectivity, video-conferencing platforms have also improved greatly and it is rare that a site won’t be able to install a set-up to support a good education session.

Panckhurst says that the use of telehealth solutions varies between District Health Boards. While the technology has improved immensely, Eager says what is lagging in many DHBs are the systems and processes.

“Telehealth is starting to remove some of the barriers for healthcare delivery, so there is less of a rural/urban divide,” says Eager. “But there is not enough happening to change the system, and some of the barriers that are put in place are regulatory. It needs to be led from the top.”

A HEALTHY OUTCOME OR NOT? Health was one of three priority areas selected for the initial roll-out of Ultra-Fast Broadband and the Rural Broadband Initiative. So, has connecting the nation’s hospitals and health clinics resulted in better care enabled by faster broadband? Sarah Putt investigates

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So, is the New Zealand health sector falling behind when it comes to adopting new technology? Ernie Newman certainly thinks so. He was the chief executive of TUANZ (Telecommunications Users Association of New Zealand) when the organisation lobbied for local loop unbundling (this allows multiple operators to use a telephone exchange’s connections). He then went on to lobby for nationwide fibre connectivity.

Newman delivered a scathing assessment of the sector, entitled, Health – A Digital Laggard, at the ITx Conference (New Zealand’s IT conference) in July. And he is preparing for an encore performance at the HiNZ (Health Informatics NZ) conference in November.

In his ITx speech, Newman claimed that the health sector is operating under models devised in the 19th and 20th centuries, and is therefore unable to deliver in the modern digital age.

“The sector’s failing because it continues to put digital band-aids randomly on a system designed for the last century that is totally unfit for purpose in the digital era. There is no shared vision of the destination, nor a master plan to get there,” he says.

MIND BOGGLING COMPLEXITY“Health service delivery and funding is a system of mind-boggling complexity. A mixture of public and private sectors, with a labyrinth of cross-subsidies, interactions and processes dating back to the time when the medicine man was the wisest and most revered person in the village – nobody would ever think of challenging him. Doctors today still hold that status in society – rightly so when it comes to the practice of medicine, but perhaps wrongly so when it comes to fronting the evolution of the customer interface, structure and funding of a 21st century health system. Clinical caution is admirable when they are wielding the scalpel, but when they are holding the key to the next generation of funding and service delivery it can quickly turn to ultra-conservatism, change resistance and patch protection.”

Since leaving TUANZ in 2013, Newman has worked as a digital consultant with a focus on the health sector. He believes that if change can’t be affected by those working in this sector, then pressure needs to be applied by consumers. This is likely to take the form of lobbying the Minister of

"Clinical caution is admirable when they are wielding the scalpel, but … it

can quickly turn to ultra-conservatism, change resistance and patch protection"

Ernie NewmanFORMER TUANZ CHIEF EXECUTIVE

Health, David Clark, whom Newman says has a massive job.

He says: “The moment you get into that portfolio you are battered by crisis after crisis. But you need to stand back and take a helicopter view, with a digital bias”.

He says it was “visionary ministers” such as Paul Swain, David Cunliffe and Steven Joyce who successively broke Telecom’s monopoly and enabled the UFB and Rural Broadband Initiative. This at a time when the general public didn’t fully realise how necessary better connectivity is to the development of a small nation like New Zealand.

Newman points to the banking sector as an example that health could follow. He points out that you don’t see a bank manager when you want to withdraw money from your account, so why see a doctor when you have the flu?

“Financial services are a great example – everything starts with the self-service option such as internet banking or ATM

machines. Banks in regional areas have disappeared and left prime real estate open for an explosion of two-dollar shops. Aviation and travel have also totally reinvented themselves – airline bookings, check-in, baggage tags and accommodation bookings are fully automated. Education has changed dramatically too. The digital divide aside, most schools now teach digitally. They expect students to bring a digital device to school during the day and use it from home after hours to learn collaboratively or contribute to the class blog,” he told the ITx conference.

“Every one of those sectors and more have achieved those gains by fully embracing the digital era. Crucially, they have re-engineered their customer interface from the start of the digital era, taking the view of a customer looking in rather than a service provider looking out. They have totally transformed the way we bank, travel, learn and interact with

14

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government services. The efficiency gains and financial savings have been colossal.”

Newman has written to the Minister of Health and received a perfunctory reply, but he is marshalling resources and is working with TUANZ and HiNZ on creating a “well-informed consumer group to come up with a vision for a 21st century health system and promote it through the political system.”

HEALTH SECTOR CATCHING UP Are Newman’s criticisms of the health sector unfair? Scott Arrol, chief executive of New Zealand Health IT (NZHIT) thinks so. NZHIT is described on its website as “an industry group of health software companies, partners, consultants and healthcare providers, with a broad range of supporting members, including academia, clinicians, researchers and policy makers.”

Arrol says that health may be slower than other sectors, but innovation is starting to occur.

“In any debate or discussion, it’s worthwhile having someone at the extreme edge, that’s how I would describe some of what Ernie says. Some of that is based on historical situations, and not where things are, and where they are heading in the future,” says Arrol.

“Health tends to trail other industries and that’s because physicians are dealing with people’s lives. It takes longer for the exponential curve (or Moore’s law) to come into play.”

In Arrol’s view, the health sector is at the beginning of an exponential curve, and he cites applications such as Melon, Vensa and iMoko (see panel on page 15). These patient or customer-focused solutions are gaining traction. Arrol says part of the issue lies with legislation that is decades old and is in some cases impeding

Broadband | Health

"Health tends to trail other industries and that’s because physicians are dealing with

people’s lives. It takes longer for the exponential curve (or Moore’s

law) to come into play"Scott Arrol

CHIEF EXECUTIVE OF NEW ZEALAND HEALTH IT

the innovation taking place in the sector.

“The good news is that this is starting to be addressed by the sector, with the Ministry of Health playing an important leadership role,” he says.

In a statement to The Download, the Ministry of Health group manager for digital strategy and investment, Darren Douglass, said that health services are already being delivered to people in their own homes, or on their phone, via a video-link with their doctor.

“Patient portals and other applications provide people with access to their own health records and help them complete routine tasks such as booking appointments or requesting repeat prescriptions. And connected devices allow remote monitoring of patients. Websites provide access to useful information and the ability to connect and collaborate online with their chosen community,” says Douglass.

He says that while healthcare is becoming a more inclusive

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culture, there is a concern that those without access to reliable connectivity – for either economic or geographic reasons – will miss out.

“Broadband supports this transformation, but we know that those who do not, or cannot access the internet and use digital services, are often those with high health needs. The digital divide is real and we need to close connectivity gaps in rural and remote areas, and address cost barriers for those who cannot afford to access the internet, to ensure that all New Zealanders benefit from access to health information and digital services.”

Meanwhile, Arrol agrees with Newman that the structure of New Zealand’s health sector, with its 20 DHBs, is complex. “I haven’t spoken to anyone who disagrees with that,” he says.

But what are the alternatives, asks Arrol. “If you remove the DHBs in favour of four regions, that could result in an organisation covering an area from the Bombay Hills to Cape Reinga, so how would you cater to the needs of urban Auckland alongside rural Northland?”

Arrol notes that some DHBs have come together to provide co-ordinated solutions. For example, HealthOne (Shared Care Record View) is a secure record that stores patient information. The initiative involves all five South Island DHBs and stores a lot of health information, including GP records, prescribed medications and test results.

Part of the issue with the DHBs lies in their governance structure, Arrol believes. While there are ministerial appointments, the bulk of their governing committees are made up of elected representatives who have a mix of community and business experience. In other words, Arrol questions if many of these well-meaning

people who sit on DHB boards have the skills and capability required to govern complex, multi-million dollar organisations.

Reforming the DHB system is an “idea that has to be parked at the moment” says Arrol, at least while the Health and Disability Review is underway. According to the terms of reference on the Ministry of Health website, the review’s purpose is to “identify opportunities to improve the performance, structure and sustainability of the system, with a goal of achieving equity of outcomes and contributing to wellness for all, particularly Māori and Pacific peoples.”

There are two out of 10 areas of consideration that specifically mention digital technologies, and they involve the role of data, as well as the potential of current and emerging technologies to help.

The wide-ranging review is being chaired by Heather Simpson, whose previous roles include Chief of Staff when Helen Clark was Prime Minister. The review committee is expected to deliver its interim report in August 2019 and its final report in March 2020.

BLOCKCHAIN While the health sector is taking some steps towards digitisation, the potential for transformation is huge, says Arrol. Blockchain technology, for example, would allow patients to have complete control over their own health record, allowing them to see it and to authorise who can view it.

Going a step further, Arrol thinks initial patient consultations could be carried out by responsive “digital humans”, the kind of emotionally responsive artificial humans being created by Soul Machines. And artificial intelligence, also called machine learning, could be used to analyse the huge swathes of healthcare data generated to produce much more effective diagnostic tools.

“But it all comes back to people, hence the frustration that stuff moves too slow, and I’m one of those people who is frustrated,” says Arrol.

“It all takes longer than it should take. I’m a strong advocate for change, except that you have to try to understand the unintended consequences when you are dealing with people’s lives.”

WHAT’S HAPPENING WITH HEALTH APPS?There are some interesting applications in the New Zealand healthcare space. New Zealand Health IT’s CEO, Scott Arrol, provided the following examples.

MELON HEALTH Melon creates applications that help people self-manage their health conditions. Melon Health has developed programs for people with pre-diabetes, osteoarthritis and breast cancer, as well as applications that help people with at-risk behaviours such as binge-drinking and smoking. Melon has partnered with the Ministry of Health, the Heart Foundation and Arthritis New Zealand. It has offices in Wellington and San Francisco.www.melonhealth.com

VENSA Vensa’s portal connects people around the world with health services and information about healthcare and well-being. To date, Vensa has delivered over 41 million health reminders for medical centres and practice teams across New Zealand. The company is based in Auckland and its goal is to help 500 million people in 10 years. www.vensa.com

IMOKO iMoko is a mobile application that enables teachers at participating kohanga reo (Māori childcare centres), day-care centres and schools to electronically send health information about students to a “digital health team in the cloud”. The team then responds with a diagnosis and plan of action for students. Conditions such as eczema, head lice, strep throat and dental infections are monitored using the app and, where appropriate, prescriptions are sent directly to a family’s local pharmacy, bypassing the need for a doctor’s visit. www.imoko.comSarah Putt has previously been employed

by both TUANZ and Orion Health.

Playing your own gameWinning new business is important to new Vodafone CEO Jason Paris, but it’s not his only focus. He talks to Bill Bennett about Vodafone giving Kiwi businesses an international edge and bringing the best of telecoms technology to New Zealand

thedownload.co.nz

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Interview | Jason Paris 17

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Incoming Vodafone New Zealand chief executive Jason Paris is no stranger to the sharp end of the telecommunications business. He joined Vodafone

Group, the local company’s parent organisation, late last year. For six months or so he worked in Europe as the director for convergence acceleration in the company’s Africa, Middle East and Asia Pacific region section. Now he is back in the country to run the local Vodafone operation from its Smales Farm headquarters on Auckland’s North Shore.

Until last year, Paris was chief executive of Spark’s home, mobile and business unit. In the past, he has worked in senior roles at Television New Zealand and Mediaworks.

The formal handover from Russell Stanners to Paris was at the start of November. Stanners is a tough act to follow. He led Vodafone New Zealand for 12 years. In his time, the company went from being a mobile carrier to a full-service telecommunications company. It also added a sizeable enterprise practice. During his time Vodafone also acquired TelstraClear, WorldxChange and Farmside. It made a bid to merge with Sky TV too, although the Commerce Commission turned that one down.

Vodafone New Zealand is part of a worldwide business. The headquarters are in London. This makes working for the company quite distinct from working at Spark, which lives or dies in New Zealand.

For Paris, Vodafone’s international status is an attraction. He says it was a big driver in his choice to move to the company. “There are very few organisations in New Zealand that have the capability to transform Kiwi lives and businesses through technology like Vodafone can. There are a lot of successful technology and telecommunications companies in New Zealand. But none have Vodafone's global reach and network.”

Hence, he says, his first challenge is to make use of all the things Vodafone’s global reach can deliver. Paris points to the company’s relationship with New Zealand Police to illustrate how this might work.

“I always wondered why I’d only seen pockets of Vodafone mobilising its global advantage. [Now I know] the reason the relationship with the Police exists is because Russell Stanners and his team demonstrated how advanced Vodafone was in other markets when supporting emergency services, especially in the UK.”

“I saw there was an opportunity to do more of this in other sectors. We can bring the best of the world to New Zealand. At the same time, there is the possibility of taking some of the best New Zealand businesses, which sometimes struggle to reach worldwide scale, and use Vodafone’s global network to help them do business internationally.”

“In the six months I spent overseas, I visited 16 different markets, building relationships, seeing what the best in class looked like. On a personal note, I wanted to see how the best in class could be relevant to New Zealand.”

CHANGE OF BRAND Paris played a leading role when Telecom re-branded as Spark. At the time, the company needed to shed its fusty old image, to better reflect modern New Zealand values and attract younger customers.

While there is no need for a similar re-branding exercise at Vodafone, Paris wants to work the company’s brand harder. He says many New Zealanders already like the brand, but now there’s an opportunity to make it something that New Zealanders love and admire.

Winning new business is important, but Paris doesn’t see the market as a zero sum game. He says it is less about Spark versus Vodafone and more about being the best at things customers care about.

He says: “You change their lives, improve their businesses and transform the country. Competition is great. If Vodafone, Spark and 2degrees all do that and we lift the level of capability, innovation, partnership and commercial success, that’s good.”

Competition isn’t without its problems though. Paris worries about a damaging race to bottom on price.

“Commoditising is great for customers because they get great pricing, but it’s not sustainable for the industry. You can’t be in an industry that requires so much capital investment and operational investment to meet customer expectations, yet where customers are not prepared to pay for the cost of that investment.

"There are very few organisations in

New Zealand that have the capability to transform Kiwi lives

and businesses through technology like Vodafone can"

Jason ParisVODAFONE NEW ZEALAND CHIEF EXECUTIVE

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18 Interview | Jason Paris

"There is the possibility of taking some of the best New Zealand businesses, which sometimes struggle to reach

worldwide scale, and using Vodafone’s global network to help them do

business internationally"Jason Paris

VODAFONE NEW ZEALAND CHIEF EXECUTIVE

Nor can you survive when the industry drives prices down through intense competition,” he says.

This is especially true in broadband, which Paris says is a very competitive market. “There are close to a hundred broadband brands out there. You’ve got a regulated input price. There’s a fixed wireless access component for us and Spark. This makes it difficult to create a margin, which, in turn, makes it hard to justify further investment when you’re not getting the returns.”

Competition doesn’t have to mean playing cat and mouse with rivals. Paris explains his approach is to play your own game. He says: “If you’re distracted

by what competitors are doing, you’re not focused on what customers want. More importantly, you need to focus on the people in your organisation, what they do and how they can do better. Great people drive great customer outcomes, and that’s more important than watching competitors.”

There is another aspect to telecommunications industry competition. The rivals you are up against one day are likely to be your partners another day. Paris says: “Vodafone, Spark, 2degrees, Datacom, Chorus and others often end up working together. We share many clients and co-operate when dealing with them.”

One of the challenges facing an acquisitions-focused player like Vodafone is bringing together the disparate parts of such a growing business under one umbrella. Paris can see upsides to this process.

“There’s been a bunch of acquisitions and these have brought with them two challenges. One is the technology challenge. There are many legacy technology stacks coming together. That’s always difficult, especially when you’re trying to be a dynamic, fast-paced, agile business.

“The other is cultural. The organisations built their own different cultures. They were all successful in their own right. Bringing those tribes together as one isn’t simple, but there are benefits. If you look at our group strategy, with the current acquisition of Liberty Global assets in Europe, then New Zealand looks like the best in class that Vodafone Group is trying to get to.

“Here we’ve got 50 percent mobile, 50 percent fixed. There’s 50 percent consumer, 50 percent enterprise. We are a complete, integrated, converged telecommunications company. That’s where Vodafone Group wants to get to,” he says.

Paris says this complete, integrated, converged telecommunications business is the starting point for his ambition for the local company. When asked what he will do differently to Stanners he says: “I want to accelerate past this. It’s not only about the connection itself, but connectivity plus – that’s the additional services that connectivity enables. I want us to be an important part of that.”

However, Paris says, his first months in the job will be about building on what Stanners put in place.

“When I was working in the Group, there were six or seven things that the various companies were doing well that made them disproportionately successful in their markets. These marry exactly with what people in the local organisation here tell me are the opportunities for us.”

“[But] all of this is underpinned by the strategies Russell has put in place. These are clear things like market differentiation, accelerating investment and our data strategy; making sure we’re competitive in the market and focusing on digital. So, rather than doing things differently, I’m going to accelerate his strategy. We need to move even faster than today to keep up, and faster again to win.”

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CALL TO RUN VODAFONE NEW ZEALAND A SURPRISE Paris says when he first joined Vodafone Group he expected he would be overseas for three or four years.

“My wife had resigned from her job as a partner in Bell Gully. We had enrolled our kids in schools. We had sold our cars. We were going overseas. We wanted to live on the other side of the world again as a family before our oldest son hit high school.

There was a discussion about whether a move back to New Zealand with Vodafone would be possible.

After all, Stanners had been in the job a long time. But that wasn’t the immediate plan.

“Then all of a sudden Russell decided the timing was right for him to step down. On the morning of our going-away party at home, I got a call from Vittorio and Vivek, my two bosses. They said, ‘Congratulations, you are now the new CEO of Vodafone New Zealand’.”

At the time, Vittorio Colao was Vodafone Group CEO. He has recently left the company. Vivek Badrinath is in

charge of the company’s Africa, Middle East and Asia Pacific region.

The restraint agreement with Spark meant Paris couldn’t move immediately, so he spent six months with the company in Europe. It was a long induction period, but it meant Paris could learn more about the company and how it operates elsewhere in the world. He says he also made valuable contacts that he will be able to go back to so as to better run the New Zealand business.

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20 VOIP | What is it?

Voice over IP is becoming the standard for how all voice calls are delivered, including landline calls. However, VoIP is

still not well understood. Johanna Egar explains

What is VoIP and what is it good for?

FEWER THAN HALF the calls Spark customers make now go over the traditional PSTN (Public Switched Telephone Network) telecommunications network, says the telco. It is moving to a new IP-based voice network. Despite this major move, there is confusion about what VoIP (Voice over Internet Protocol) is and what it means for people and business.

Our decades-old copper PSTN is being replaced by the Ultra-Fast Broadband fibre network that is being rolled out across New Zealand. This roll-out means many voice calls will be delivered over fibre. These have to be VoIP calls because UFB is digital only. Spark’s new IP-based voice network – the Converged Communications Network (CCN) – is also digital only. The IP part of VoIP stands for Internet Protocol. In other words, the signals are digital.

But what is VoIP and what is it good for?

When you make a voice call using a traditional telephone on the copper network, it is sent as analogue signal. Modern IP networks are digital, they deal with data which transmits as a string of 0s and 1s. VoIP converts analogue voice signals to digital.

CODECSCodecs handle the conversion. The term is short for coder-decoder. A codec is a piece of software that converts analogue electrical signals into digital ones. Converted signals then travel over the internet as a data stream, like everything else. Codecs are used in analogue telephone adapters called ATAs (or VoIP adapters) that are now widely available. Some ATAs also allow fax machines and pagers to work with VoIP systems too.

To your computer and to the network, your VoIP call looks the same as an email you sent earlier.

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VoIP calls often travel over the public internet. They can also go through private IP networks. Call quality varies on the public internet as, in general, you have no control over what happens between you and the destination. By contrast, call quality can be of a guaranteed standard on private IP networks.

Delivering voice in data packets is far more cost efficient than sending it in analogue form. That’s because you don’t need to maintain a constant connection. So a VoIP call uses less bandwidth than a traditional analogue call. Instead, the data packets use routers and travel on the internet.

While packet switching, as it is termed, is more efficient and cost-effective than traditional call transmission on the PSTN, there were early issues with call quality. It could be bad at times. In recent years, these problems have been largely ironed out. Nowadays, provided enough bandwidth is available, call quality is usually good.

OTHER BUSINESS COST SAVINGSVoIP can save on business costs in other ways. Because calls are sent as data packets from one computer router to another, they don’t need a dedicated phone line. Skype, which is a type of VoIP service, took advantage of this early on and undercut traditional call rates – especially international ones – by a considerable margin. The price gap

has narrowed in recent times. However, there are now other VoIP for business services that offer call rates cheaper than traditional ones.

There is also the flexibility that comes with VoIP. If a business moves or expands, it doesn’t need to add new physical phone lines. All that’s needed is more bandwidth and a software update. If you want to add more phones and related services like, say, instant messaging, that’s also only a software update. Adding new hardware is difficult and expensive with PSTN-based telephone systems, and, being analogue-only, they are also restricted to voice.

 

YOUR LANDLINE IS SAFESpark is keen to embrace VoIP as it sees it as the telecoms future. Earlier this year, Spark announced it had completed the first phase of its transition from its old PSTN copper network to a new IP-based network, the CCN (Converged Communications Network). This will handle landline, mobile and other wireless calls.

Colin Brown, who is leading Spark’s evolution to the CCN, says the landline as we know it will change as a result. But this may not be that noticeable to many users. “Phones will still have a normal dial tone, connect to voicemail and act very similarly to the phone you have today.”

This is especially the case if you already use a wireless phone, as these are very similar to VoIP phones and can often be used as VoIP phones. An old-fashioned landline phone will need to be replaced though.

One drawback with the move to fibre and wireless broadband networks – from the old copper PSTN – and to VoIP calls, is the need for a battery back-up for your mobile phone.

Brown says that “in a disaster, a mobile service will likely be brought back up faster than a landline service. But even today’s wireless handsets need power to operate. Only old-fashioned phones don’t,

so there is a bit of a shift.” Brown says the new CCN network will

also eventually enable Voice over 4G. This will provide a dedicated voice connection, enhancing mobile calls so they are more like traditional high-quality voice calls but are seamless too. “4G will be integrated into your dialler, so when you hit ‘Call Mum’ it will activate straightaway, rather than you having to go into a different application.”

Transition to the CCN network is well in hand, adds Brown. A hundred of the old PSTN switches have now been turned off – out of 680 – and customers are being steadily moved to the CCN.

either a Skype-compatible headset or your computer’s microphone.

VoIP does have drawbacks. Historically, as already mentioned, the most notorious was call quality, with call drop-outs, jitters and latency being common in the early days.

Installing a full VoIP business service involves higher set-up costs than buying a simple PSTN service. But where the PSTN really scores is on reliability as it is largely unaffected by power outages and internet issues. For instance, if there is a local power cut that doesn’t affect telecom cabinets and exchanges, the PSTN service will carry on working as normal. A VoIP system will not.

This is why many companies retain a conventional telephone line for those services that need to be very reliable, such as alarm systems, fax services and elevators that are connected to a monitoring agency.

THE UNIFIED FUTURE A major plus with VoIP services is that they can grow into something much bigger: unified communications. Because VoIP allows more than voice and can work with other data, it has many other uses. Notably, it is now being used to deliver telemedicine to remote parts of Vietnam. This service is being delivered as a cloud service that packages up email, instant messaging, conferencing and voice. This kind of consolidation would not be possible at all without VoIP technology.

Some VoIP services use handsets – these look like everyday cordless phones and are often the same – but a handset isn’t always necessary. For example, Skype is a VoIP service and it can use

"Phones will still have a normal dial tone,

connect to voicemail and act very similarly

to the phone you have today"

Colin BrownSPARK NETWORK EVOLUTION LEAD

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22 VOIP | Accessories

The landline isn’t quite dead yet, although it may be heading for the intensive care unit. Yet many homes and certainly most businesses still have some form of voice phone service. In most cases, this is Voice over IP. Scott Bartley looks at the technology and some of the products service providers are offering customers

IN A NUTSHELL, Voice over Internet Protocol simply means making voice calls using the internet, as opposed to the old (and we mean old, as in first-used-in-1876-old in New Zealand) copper phone network.

VoIP can take many different forms – think Skype, Google Hangouts or Facebook Messenger for a start. But in addition to these free, app-based methods of making voice calls, VoIP services provided by ISPs and dedicated vendors allow anyone with a broadband internet connection to make calls using real phone numbers and handsets just like Nana used to make. Since all voice calls will eventually be made using VoIP (whether we realise it or not) thanks to the phasing out of the traditional PSTN (Public Switched Telephone Network) and the endless march of fibre,

let's take a look at the options available right now and get ahead of the curve.

VOIP THROUGH AN APP Skype (www.skype.com) became the de facto standard for free voice and video calls over the internet for a while, although its star has faded over the years thanks to increased competition from all manner of freebie upstarts like Facebook and Google. However, when it came to making free calls over the internet, the widespread use of Skype made it fairly easy to talk to people (with or without video) using the internet, and it’s still a major player.

If you’re willing to stump up a few bucks, Skype lets you make and receive calls from landlines and mobiles. For New Zealanders, (we’re annoyingly billed in US dollars) there are two plans – US$4.59 per month gets

VOICE OVER IP coming to you soon

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you 100 minutes of calls to New Zealand landlines and mobiles, or US$8.04 gets you 300 minutes. You also get a local New Zealand landline number that people can use to call you. These calls will come in via your Skype app either on your smartphone, tablet, PC, games console or from anywhere else that has the Skype app available.

Other app-based VoIP options include such familiar names as Facebook Messenger, Google Hangouts, Snapchat, WhatsApp and Viber.

VOIP THROUGH AN ISPA step further up the VoIP ladder lands you in the world of ISP-based internet calling. These services from your local internet provider are more akin to the traditional landline we all grew up with – featuring handsets and phone numbers – the difference is these calls aren’t routed through the old phone network, they are funnelled through the internet instead.

To pick one example out of the bunch, Orcon Genius brings VoIP to the home-user as a bundled internet and voice calling package. While Orcon also offers a traditional landline, anyone signing up for the Orcon Genius service will be using VoIP. It’s about as seamless as it gets – plug your old phone into the back of the Orcon modem (instead of the old wall jack, which will no longer work) and start calling.

Orcon lets customers bring their old landline number with them and offers all the usual landline services and calling plans, and is usually a bit cheaper overall compared with old-school phone lines.

One caveat virtually all VoIP services have in common is that older-style monitored alarm systems or emergency medical communications no longer work with them. People using such services will need to seek out a newer, internet-enabled system instead. This is hardly news though – anyone who has ever signed up for a naked broadband connection will be familiar with this very situation.

It’s worth checking with your ISP to see if VoIP calling is available. Most of those services will be broadly similar to Orcon’s offering and a few will even show off a few interesting extras – Stuff Fibre’s Voice App (stuff-fibre.co.nz/home-phone) for example. The $10 per month add-on lets you answer calls coming into your home landline using an app on your smartphone, just as if you were at home.

If the offerings from your ISP don’t chop your parsley, take a look at one of the third-party VoIP providers. Typing ‘VoIP provider NZ’ into Google will yield plenty of hits. However, they tend to be mostly aimed at businesses, but never fear, because a few offer plans for the home user too.

DEDICATED HARDWARE Business VoIP set-ups can get pretty serious, with dedicated hardware installed on-site being designed to support multiple lines and users. However, home offerings tend toward the hosted variety. In short, all you will need is a VoIP-supporting DECT (digitally enhanced cordless telecommunications) phone that plugs into your home router.

hard work of connecting your incoming and outgoing calls to the rest of the world.

Plans for home users range from free to $30 per month with various amounts of local, national and international calling minutes included. In fact, 2Talk makes it very easy for VoIP newcomers to try it out using its free plan (it has 15 minutes of national calling included) and its softphone – this is an app that doesn’t require a DECT handset. If you do decide it’s for you it might be time to spring for a handset and a paid plan.

One pitfall, however, is that, along with certain monitored alarms and emergency medical communications, 2Talk doesn’t support making 111 calls.

Other providers that will likely pop up in your search results will be Kiwi VoIP (www.kiwivoip.co.nz), Vodafone-owned WorldxChange (www.wxc.co.nz) and Conversant (www.conversanthq.com/nz/). Conversant only offers business plans and is owned by Voyager.

DECT PHONES There are dozens of VoIP phones available in New Zealand, some of these will be designed for use in business settings only and likely won’t be suitable (that is, compatible) with cloud services like 2Talk. However, that still leaves plenty to choose from.

It pays to check with your VoIP provider before buying a handset, but generally you’ll be looking for a ‘SIP’ compliant (SIP stands for Session Initiation Protocol) phone that supports the same audio codecs (coder/decoder) used by your VoIP host. As well as turning voice calls into digital data (see story on page 20), codecs also compress data and there is more than one type, so you need to check.

To get you started, here’s one phone example: the Yealink SIP-W52P DECT cordless phone. This is available from Nicegear, costs around $230 and comes loaded with features. The base station lets up to five handsets connect to it (extra handsets cost around $160) and supports a broad range of VoIP services, making it a great home phone or even a starting point for a small business.

Other VoIP phone-makers include brands like Panasonic, Siemens, Grandstream and Polycom, and can be found in any number of retailers, including PB Tech and Nicegear.

"One caveat virtually all VoIP services have

in common is that older-style monitored

alarm systems or emergency medical communications no

longer work with them. People using

such services will need to seek out a newer,

internet-enabled system instead"

DECT phones have been around for years, and if your luck is in your cordless phone may already support VoIP. If not, don’t fret, they’re not overly expensive (see below for a brief run-down on phones).

From here, it’s a case of finding a VoIP provider – we’ll use a company called 2Talk as an example.

2Talk is an offshoot of Vocus (the company’s other brands include Slingshot, Orcon and Flip) and is a cloud-based VoIP host. In theory, so long as your DECT handset is configured with the correct settings, a 2Talk log-in and password, it should be good to go. 2Talk does all the

thedownload.co.nz

24 Company focus | Devoli

USING AUTOMATION

CREATING‘beautiful interfaces’

News-sites do it, power companies do it, so why wouldn’t you do it? Become a Retail Service

Provider, that is. You don’t need a network, provisioning capability or an engineering team. All you need is a front-end website and someone to provide help desk support. And customers? Well, you need a few of them.

That’s the pitch from Karl Rosnell (or at least an interpretation of his pitch). Rosnell is CEO of Devoli, previously Vibe Communications. Established in 2008, it has 30 employees and provides wholesale services to customers in New Zealand and Australia. During its evolution as a service provider, it developed software that automates the provisioning and management of voice and data services. This is now its main product.

“Using a combination of in-house software, combined with our robots, a huge capability in machine learning and the advances of AI [artificial intelligence], we’ve managed to solve a challenging set of problems across diverse networks, and long distances, to provide a beautiful interface for our customers,” says Rosnell.

Rosnell says that although Chorus is currently the only fibre provider which has a complete set of APIs (Application Process Interfaces*), Devoli is able to provision the services of all local fibre companies using its automation software. It presents all the options it develops to its wholesale customers in a unified view or ‘single pane of glass’.

Its customers include Stuff Fibre, whose offering is provided by Devoli as a white-label service. Stuff Fibre offers

two products: 100Mbps or up to 1Gbps. And it uses its association with the Stuff website (which, according to Nielsen, has 2.1 million unique visitors a month) to reach new customers. It is a virtual internet provider or, as Rosnell puts it, “an eyeball aggregator”.

In a case study on Devoli’s website, Stuff Fibre’s commercial director, Scott Brown, credits “a seamless on-boarding process” now provided by the company with generating its high customer satisfaction scores.

“Stuff Fibre now has one of the highest customer satisfaction scores in telecommunications at +55 compared with an industry average of -5.”

According to Devoli’s relationship manager, Sam Excell, provisioning telco services is time-consuming and

Enabling virtual internet providers is fast becoming Devoli’s core business. Sarah Putt checks out the company

working with new fixed-line market newcomers like Stuff Fibre to create easy-use customer interfaces

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2018 / Issue 8

25

monotonous, and a single mistake inputting an address can cause delay and confusion. Automating the process improves accuracy and takes away “all the chair swivels, all the keyboard strikes, all the bits and pieces that occur when you put a human in the process.”

Automation is also where Rosnell sees growth coming for Devoli. Shortly after becoming CEO of Vibe Communications in November last year, he led the “pivot to Devoli”.

The new name and steampunk branding are designed to express the company’s focus on developing software for automation purposes; the “evolution” of services that help propel businesses forward. It also differentiates Devoli from its competitors.

“I wanted to be 100 percent professional, but absolutely not corporate. Because, if you look at the players we are competing against, they are all corporate – as in slow-moving – in the traditional sense of the word,” says Rosnell.

The adoption of the Devoli brand has meant de-coupling the software element from the company’s network business, so both can be offered separately or in tandem.

“I consider Devoli to be the aggregator of Chorus, Ultra Fast Fibre, Enable and Northpower – so, if you’re an ISP or IT provider and need one interface to provision and manage your services, you simply log in to our portal. And, if you’re an existing network owner or telco, you simply bolt your own network on and use our automation tool to speed up the provisioning of the accounts you already have.”

STICKY TELCO SERVICES Devoli currently has two portals that are customer-facing. Vumeda is its Australasian telco interface. “You can log in to the Vumeda portal, or build to its APIs [write your own code to work with Devoli’s site], and perform address searches, price and

quote, provision services. You can manage the entire build journey and perform diagnostic checks on installed equipment. And, once you’ve done that, you can use it to bill the customer and manage voice termination points, or port numbers. We’ve provided you with all the tools you need in one place, regardless of who your upstream provider is,” says Rosnell.

The second of Devoli’s tools is called Granulier. it is an elastic, bandwidth-on-demand platform that allows customers to dynamically provision bandwidth between data centres and cloud providers.

“We’re seeing more and more consumption of cloud services like Azure [from Microsoft], AWS [Amazon Web Services] and Google Cloud, so we built our platform to be able to take all the ‘heavy lifting’ out of that process, and also offer a smooth, transparent and dynamic ability to turn these services on as required.”

In addition to RSPs, the customers Rosnell is chasing are the IT companies, PH

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26

many of whom have seen their margins shrink over the years. Rosnell was previously CEO of Connect NZ, a business technology provider of unified communications, cloud and IT services, so has experienced these changes first-hand.

“We were selling lots of servers and phone systems, and sending engineers out to support them, which worked really well until cloud-delivered technology changed the landscape. We needed to find alternative ways to add value for our customers.”

Rosnell says that by providing businesses with telco services an IT company can “sell the internet and voice services, and charge for that capacity on top of its traditional business model and so get additional recurring income streams and make some proper margin over and above hardware.”

In addition, telco services make customers more “sticky”. This is why many electricity companies are bundling telecommunications into their service offerings.

CHALLENGING AUSTRALIAN MARKET Devoli is also targeting IT companies in Australia, where, Rosnell says, the challenges are “tenfold compared with New Zealand”. There are five Australian network providers: NBN, Telstra, Optus, AAPT and Vocus. So far, only NBN appears to have a “repeatedly reliable set of APIs,” says Rosnell.

In New Zealand, the fibre network has been rolled out geographically but in Australia fibre is lit “building by building, so you can have any telco, or combination of telcos, in any building.”

Practically, this means plugging into five portals and understanding the results that come back from each one in order to provision a telco service. Rosnell cites the example of a pizza company with 40 locations around Australia. The provisioning manager would need to find who the network provider was in every location and then try to work out which telco, or combination of telcos, offered the best product.

“In practice, this can mean the provisioning team spending a couple of hours per address just to work out who provides the telco services. Multiply that out

Company focus | Devoli

over many locations and all of a sudden this becomes a huge task,” says Rosnell.

“I’m really excited about the opportunity in Australia as I’ve met hundreds of really passionate business owners that ‘get it’ when it comes to recurring revenue streams, but they wrestle with the reality that in order to grow they need to keep employing people to do the ‘cutting and pasting’.”

Despite the complexity, Rosnell is bullish about the company’s prospects when asked about competitors in Australia.

“Notwithstanding the obvious geographical challenges, the telcos have a long way to go to get their systems to the point where the market can elegantly consume their data. They have so much competition internally and that rightly consumes their focus, so our current competitors are people who do it manually by outsourcing to call centres. These guys do a great job and we work with a number

of them, but we’re confident that we deliver a faster, simpler and, ultimately, more economical solution via automation.”

Back in New Zealand, Devoli offers services for fibre, copper and wireless. And, Rosnell says, they aim to work more closely with the rural network owners, the WISPs (Wireless Internet Service Providers) too.

“We see the WISPs as being a vital part of New Zealand’s technology ecosystem and we’re continuing to integrate tightly to help them build and deliver stunning solutions to the whole of the country.”

While Devoli is comfortable in the fixed-line world, and confident about facing the challenges in Australia, the company has yet to tackle mobile services.

“While we don’t have any desire currently to build a mobile platform into our network, we’re very confident that we could apply our tools to help existing companies that provide mobile services.”

*Not all of us are techies, so… an API (Application Programming Interface) is, effectively, the part of a server that receives requests and sends responses. An example: think about how appointments are set up automatically in Google calendar. Basically, your website’s server talks to (interfaces with) Google’s server to make this happen. This is just one example, but it illustrates how the automation of simple tasks can create significant efficiencies.

"We’ve managed to solve a challenging set of problems…

to provide a beautiful interface for our customers"

Karl RosnellDEVOLI CEO

2018 / Issue 72018 / Issue 8

27Community | Rainbow art

SINCE 2010 CHORUS has run an art programme using its cabinets as canvases to discourage graffiti and brighten up the environment. These otherwise drab metal cabinets provide the perfect base for would-be taggers so instead of tempting them, the company offers the opportunity for talented local artists to create meaningful works in prominent public spaces.

To date, over 800 cabinets have been turned into symbolic murals embellishing communities nationwide.

Chorus decided to show its support for diversity and inclusion by creating a Rainbow Cabinet Art competition for members and crusaders of the LGBTI+ network. Four cabinets were identified, one each in Auckland, Christchurch, Hamilton and Wellington.

The call for submissions was made. At the beginning of October, Chorus reviewed the wonderful designs that had come from all over the country.

A group of individuals at Chorus had the tough job of choosing the winners. The works are yet to be completed, but here is a taster of what is to come in Auckland and Christchurch.

Auckland artist, Sharron Woodward, was selected for her ‘Tree of Life’ design and the wonderful Pride colours which spread and grow throughout the branches of the tree. Sharron says “I was inspired to do the ‘Tree of Life’ after my 16 year old son told me he was transgender.

“Painting this picture helped me to see the growth of my child into the person she is today. It also symbolises the many colourful people in the world.”

Christchurch based sign writer and artist, Anne McDonald, said the idea of designing a mural to celebrate the LGBTI+ community really appealed to her.

“I have several members of my immediate family and a number of friends who are part of the LGBTI+ network.

"I've never understood how a person can be judged on the colour of their skin, their race, religion or sexual preference. None of those things make any sense to me,” she says.

These works of art will come to life on cabinets over the summer.

Rainbow Cabinet Art

by Holly Cushen

'Tree of Life' sketch by Sharron Woodward

'Pride' sketch by Anne McDonald

FOLLOWING THE 5G MONEY TRAIL

Everyone wants 5G mobile technology, says IDC associate vice-president Hugh Ujhazy. It means you’ll be able to watch 4K videos while on the move.

Yet, he says, while there is a focus on 5G's offer to consumers, the real business case for building new networks lies with enterprise customers. Bill Bennett reports

SPARK MANAGING DIRECTOR Simon Moutter plans to build a 5G network in time for the 2020 America’s Cup. Many of the top carriers around the world expect to have live networks at around the same time.

Which means we are two years away from a worldwide launch of next generation mobile.

That’s not long. In some respects, the technology is already here. Spark tested 5G outdoors in Wellington earlier this year. More recently, the company held indoor trials at its Auckland headquarters.

28

While Vodafone has yet to announce its timetable, it has also run a successful pilot.

IDC’s Ujhazy says that over the long haul, carriers will spend vast sums of money building new 5G networks. This won’t happen all at once. He says the first stage will see towers in key locations upgraded to the newer technology. The real cost comes later when they add lots of small sites and upgrade the backhaul (links between core and smaller networks) to cope with more data.

He says: “If you follow the money trail, you can see that carriers won’t get all that build-cost back from consumers. Users

may be willing to pay a small premium for faster data, but not enough to give carriers a return on their investment. That return is going to come from selling business-class services over the same network.”

Ujhazy says carriers need business users and enterprise customers to make 5G pay. Two things matter to carriers: the number of customers and ARPU, the average revenue per user. ARPUs for enterprise users are far higher than for consumers. That’s where carriers can find a healthy profit margin.

The good news for carriers is that enterprises will pay a premium for key 5G characteristics. He names low latency, high

performance and beamforming (a radio frequency filtering technique) as useful. But they won't attract high margins on their own.

In contrast, network slicing has the potential to be a real money spinner.

Network slicing plays a similar role to software defined networking in fixed networks. It allows carriers to offer customers private, dedicated virtual networks. There is no need for extra infrastructure, it depends on software.

2018 / Issue 8

29Interview | Hugh Ujhazy

Carriers can optimise network slices for specific functionality. If they want it, customers can buy guaranteed uncontested bandwidth. Ujhazy says this can even mean giving certain customers their own spectrum.

He says: “Enterprise customers will be most interested in the carriers’ ability to use network slicing to create segregated networks within a 5G network. These segregated networks will be far more secure and reliable than the public network.”

NEW USES FOR MOBILE NETWORKS This opens up new ways of using mobile networks. Take, say, autonomous car companies. They might buy network slices that give cars a way to communicate with each other, and with the road infrastructure, without using the public network, which can get congested. Ujhazy says: “This is all about safety. You wouldn’t want to be screaming down the road in a fast autonomous car at the same moment everyone switches on to watch a streaming high-definition rugby test match.”

Likewise, a railway company could have a network to control its driverless trains. The application might only have low data throughput, but it needs low latency and high reliability. Ujhazy says the economic value of, say, being able to run trains two minutes apart, instead of four minutes apart, through a crowded central city train network, would justify the cost of buying a network slice.

Away from transport, Ujhazy says remote health will be a key application. He also expects the finance industry to want secure segregated networks. Putting point-of-sale transactions on a private network is worth a premium.

Another key target market is those organisations with remote, high-value physical assets they need to manage. A civil engineering firm could use a secure network to operate construction vehicles and specialist equipment.

Seeing enterprise as the main 5G business case turns industry convention on its head. Ujhazy says until now carriers always built and optimised networks for consumers. They talked of putting towers where people lived, worked and played.

With 5G, carriers will prioritise enterprise customers’ needs. He says it means different ways of deciding when and where to upgrade towers. You can expect to see

"Enterprise customers will be most interested in the carriers’ ability to use network slicing to create segregated

networks within a 5G network. These

segregated networks will be far more secure

and reliable than the public network."

Hugh UjhazyIDC ASIA-PACIFIC ASSOCIATE VICE-PRESIDENT,

IOT AND TELECOMMUNICATIONS

an emphasis on business districts and industrial zones, less on suburban networks.

One consumer application of 5G could be to deliver fixed-wireless broadband. Ujhazy doesn’t think this will pose a threat to established fibre networks. He says it will play an important role in places where there isn’t a lot fibre now or likely to be soon. He also sees this as significant for those industries in remote places, like mining.

MAKING IOT REALLY HUM Many of the enterprise applications using 5G, and the business case for the upgrade, boil down to the Internet of Things (IoT). It may seem strange that we need a new network for IoT applications when there are already many IoT networks.

Ujhazy says: “5G will become the standard. It unifies the market. It brings

together high-speed applications, the mid-market and the low-power providers under one common platform. Until now, IoT delivery has been at the experimental stage. Over time, all the networks will merge under 5G.

“It’s very attractive if I’m an operator or a device manufacturer. I’m able to give you a low-power, long-term solution that can start off giving you little trickles of data but copes when things jump up to high throughput.

“Say you have a surveillance application. You might start off collecting a tiny bit of data every 10 minutes. Then something happens and you can switch to 4K video. If I can have one modem that does all this, then it makes it cheaper and easier to deploy the technology.”

One reason for the urgency of rolling out 5G is that, after years of hype, the IoT is now hitting its stride. Ujhazy says: “Look at all the parts available now. We’re seeing an increasing roll out of IoT platforms.

“There’s Amazon’s Lambda and Greengrass [for IoT services and devices]. Cisco has announced a new platform with greater capability. Meanwhile, you’ve got carriers offering their own platforms. The accessibility to the end-point data is all there. A successful IoT solution is something you don’t see.

“We’re getting more and more connected. When you buy a new car, it’s connected. Home lighting and heating are connected. People are putting beacons in shopping malls. There’s V2X [Vehicle to Everything communications] in transport networks, and the IoT is everywhere through the supply chain. It’s not a big bang, it’s a gradual thing, where more and more devices are connected.”

New Zealand’s 4G network is only five years old. If 5G arrives as promised in 2020, carriers will have only had seven years to recover their 4G investment. This is less of a problem than it might appear. Ujhazy says those 4G networks are not going anywhere, they will live on alongside 5G for many years to come. More to the point, the business case for 4G mobile is distinct from the case for 5G.

Sydney-based Hugh Ujhazy is associate vice-president, IoT and Telecommunications for IDC Asia-Pacific. He leads teams researching the Internet of Things, fixed and mobile networks in the region.

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30

FOR YEARS NEW ZEALAND’S telecommunications insiders have talked about industry consolidation. The talk grew louder after 2009 when the Government invested in an open access fibre network.

To date, there’s been little sign of a major wave of consolidation. If anything, the market has moved in the opposite direction. Today there are more broadband service providers than in 2009. And we’ve gone from two to three mobile networks.

Consolidation’s proponents argue that there are too many players in the market. This leads to too much competition. While this is good for consumers, it is bad for investors because it makes profits harder to secure. Supporters of consolidation argue that taking companies out of the market would mean fewer competitors. Then the remaining players will be more efficient and profitable.

Most consolidation happens when companies merge with or buy rivals. In some cases, they acquire businesses to fill gaps in their business offering. This is what happened when mobile carrier 2degrees acquired Snap, a landline business. In other cases, consolidation is about gaining customers. Or, as they say in the business, “building scale”.

In many technology industries scale has long been the touchstone to success. Microsoft swept the software world and earned billions thanks to scale. It cost Microsoft billions to develop software products like Windows and Office. Yet the marginal cost of making and selling each extra copy was close to zero.

After software sales hit the payback point, every extra sale is near pure profit. Google, Facebook, Amazon and Apple all earn fortunes by exploiting scale. How

each company turns scale into rivers of gold may be different, but their wealth comes from size.

It’s less clear what scale delivers for telecommunications service providers. Spark and Vodafone complain that they see little extra profit despite rising customer numbers. People in the sector talk of profitless growth. In telecommunications there is a cost for servicing each extra customer.

Profitless growth hasn’t stopped service providers from shooting for growth. Consolidation could be the most effective way of doing this.

Last November, Spark managing director Simon Moutter told shareholders at the company’s AGM:

“We are now at the point where it is likely cheaper to acquire a customer base from another provider through an M&A (Merger & Acquisition) deal than it is to

New Zealand reset the telco sector's regulatory foundations with the 2011 Telecommunications Amendment Bill. The move saw Telecom NZ become

Spark and Chorus, and the birth of an open access fibre network. Things changed, but perhaps not as much as you might have expected   

THE CONSOLIDATION

THAT WASN’Tby Bill Bennett

31

2018 / Issue 8

Industry | Consolidation

try to attract those customers through marketing efforts. For that reason, we expect to see, and participate in, significant consolidation of the retail broadband industry over the next couple of years.”

Moutter isn’t alone. Others in the local industry view consolidation as inevitable. After all, overseas telecommunications markets often have fewer companies than we have New Zealand. And there is an argument that says what happens there will happen here.

The expected major wave of consolidation hasn’t happened to date though. If it going to happen, then the consolidators are taking their time. The Telecom-Chorus demerger was a clear step in the opposite direction to consolidation. So was the entry of the other fibre wholesale companies. Neither Northpower, Enable or UFF came from the telco sector.

Today more retail telcos chase broadband customers than a decade ago. We’re not talking minnows either. Relative newcomer Trustpower is now one of the top broadband brands. Stuff Fibre is still only two years old but is already making headway. Both are also part of much larger non-telecommunications businesses. And both have customers, brand recognition and reach. Depending on who you talk to, between 90 and 100 companies now offer retail telecommunications services. Often broadband is not their core business.

Not only are there now more players, but the industry power balance has changed.

In 2007, the top two telcos, Telecom and Vodafone, accounted for 84 percent of industry revenue. Telecom alone was 61 percent of the market. Ten years later, in 2017, the same two companies are still the giants, but now the pair only account

for 61 percent of the market. Spark is still the biggest telecoms company, but it is now holds only a little over one-third of the total market.

Of course much of the difference is down to the Telecom-Chorus demerger.

New Zealand’s telecommunications market is competitive by international standards. Its open access model sees Chorus, Northpower, Enable and UFF act as wholesalers. This means the barriers to market entry are lower than in the past.

Wholesalers must offer the same products at the same price to all comers. This diminishes the main advantage scale might otherwise have given the largest companies. Under New Zealand’s rules, a wholesaler can’t give, say, Vodafone, a deep discount because it has more customers than rivals. The Commerce Commission regulates a fixed price per connection.

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32 Industry | Consolidation

Fixed access pricing flattens the playing field, which, in turn, squeezes margins. Much of the profit that once came from the telecommunications sector is competed away as service providers race to offer customers the best deal.

MERGERS AND ACQUISITIONS New Zealand has seen consolidations plays. In 2012, Vodafone acquired TelstraClear for $840 million. At the time, Vodafone was the second largest telco behind Telecom NZ, now Spark. TelstraClear was New Zealand’s third largest telco. The combined business was still smaller than Telecom, but Vodafone went from being roughly half the size of Telecom to around three quarters the size. That ratio has changed little since.

Vodafone has since acquired other smaller service providers, including the rural-focused Farmside. The Commerce Commission vetoed the attempted merger with Sky TV, but it wasn’t a consolidation play in the same sense as the earlier acquisitions. Yet it would have bulked up Vodafone and given it scale to compete with Spark.

Vocus New Zealand was formed from a roll-up of smaller companies. It was a clear consolidation play. Around the time Vodafone acquired TelstraClear, Vocus

Communications, then an unknown Australian telco, purchased Maxnet. Since then it has acquired CallPlus, Slingshot, Orcon, FX Networks and a handful of other brands. Today it is New Zealand’s third largest fixed-line business and the fourth largest retail telco.

When 2degrees, the third largest retail telco, bought Snap in 2015, it was more about adding capability than consolidation. Until then, 2degrees was a mobile phone company. Snap was a second tier fixed-line telco focused on broadband. The deal allowed 2degrees to pitch itself as a full-service telco. It put it in direct competition with Spark and Vodafone.

There’s another way the shape of New Zealand’s telecommunications market is changing. The big players are moving out

"It is likely any major merger or acquisition would be held up or even halted by the regulator if it looks like it would reduce

competition"

of pure telecommunications services and becoming broader-based. Telecom started this in 2004 when it purchased Gen-i and Computerland, adding business computing services to its portfolio.

Trustpower is an energy company that also sells broadband. Vocus owns a small energy company so it can now sell electricity to its customers. Spark owns Lightbox and has recently acquired the rights to a range of sports events. Vodafone’s aborted Sky TV deal was part of this trend towards telcos becoming broader-based companies.

One barrier to consolidation is the Commerce Commission. Its role is to keep the market competitive. When Vocus put its New Zealand operation on the block last year Spark declined to bid for the business because regulatory scrutiny would have taken any acquisition well past Vocus’ self-imposed deadline. It is likely any major merger or acquisition would be held up or even halted by the regulator if it looked like it would reduce competition.

But there is another part to the lessons learned from Vocus. Potential acquirers looking to expand and consolidate are not willing to pay the kind of premium sellers want. At least not yet. When this changes, we can expect to see another wave of consolidation.

Total revenue market share

Others

4.6%

Others- formally Telecom - includes TelstraClear - CallPlus, Slingshot

& Orcon- formally part

of Telecom

5%

0.6%0.7%1.6%

8.38% 3.15%

54.3%

35.34%

27%

26.34%

11.2%

22.59%

THEN

NOW

2018 / Issue 8

33Rant | Acronym Jungle

A PARTICULAR WORK conversation sticks in my head. People kept referring to ‘pots’ and I thought to myself, ‘This must be an important technical term that I need to acquaint myself with fast’. It turns out pots stands for ‘Plain Old Telephone Service’.

Turning it into an acronym made me feel like a moron as I sat in the meeting thinking I was way behind everyone else who knew all about this POTS business. It also meant I wasted time looking up the term. If they had merely said ‘plain old phone service’ I would have understood immediately and not wasted time dwelling on my supposed ignorance.

I have been working in and around the telecommunications industry for 10 years now, so it is surprising I haven’t already felt the need to get this off my chest.

The telco business is a complicated one, no doubt. But do we help ourselves by creating hundreds upon hundreds of acronyms? And this is no exaggeration. There are around 200 beginning with the letter ‘C’ alone!

We all know the purpose of these acronyms is to condense long-winded terminology and simplify work talk. In the case of VDSL – Very High Speed Digital Subscriber Line – an acronym makes sense. It is a commonly referred to term in the industry. It would add seconds, if not minutes, to work conversations and emails if we were to articulate or spell it out word by word each time. It is a similar case for ADSL, UFB, HDTV and IoT. These are justified and I am sure a few others are too.

And then there is AVFFP and XaaS, and WYAH. I mean, WTF! What are you all? We even turn names of companies that are already only a few letters long into acronyms that are a couple of letters long. We add symbols, full stops, dashes and slashes. Some acronyms have so many characters, they could be anything.

Holly Cushen is a senior communications advisor for Chorus. She has worked in telecommunications for 10 years and thinks the industry loves its acronyms way too much

Do we really need POTS when we’re not even cooking? Holly Cushen

POTS

VDSL

ADSL

UFB

HDTV

IoT

AVFFP

XaaS

WYAH

PDA

BOOTP

Now, I am no engineer and maybe that is the problem. But let’s face it, most of us in the industry aren’t engineers. To me, PDA means Public Display of Affection. But to someone more tech-minded, it will be a reference to their Personal Digital Assistant. That one has the potential to get awkward.

At what point do acronyms become unhelpful? When they turn into some sort of private language. So, back to my earlier point about VDSL, it comes down to frequency of use, and to judging your audience. Know not to talk to a marketer about BOOTP or expect a blank look.

Telco concepts are hard. Let’s not make them harder.

Anyway, that's just BTW, IMHO, FYI.

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