So the latest OECD rankings are out and the NBR writes about them bemoaning the data caps that all our domestic plans have. They back their concerns up with the following table showing prevalence of data caps on ISP plans in different countries;

datacaps

And what do we notice? Two of only four countries with 100% prevalent data caps are the furthest away from the rest of the world. Both Australia and New Zealand are both relatively geographically isolated with small populations. As an employee within a local ISP wrote to me;

Grrrr we have data caps cos we pay extraordinary sums to get data from the US. Only 5% of data is locally generated… .that means we PAY for everything else

Let’s understand that there are a limited number of pipes between our part of the world and the source of most of our data – we’re also relatively small and low density countries (OK Australia is large in terms of land mass but small in terms of population density) – compare this to the countries at the other end of the table – all close to major hubs of traffic, all with higher population densities and all able to leverage off the proximity of other countries and able to choose from multiple international pipes.

We’re simply not connecting apples with apples – we bemoan the high price, limited speeds and data caps prevalent in our plans but also expect some magic bullet to appear in terms of infrastructural improvements to solve these issues.

Sorry people but silver bullets cost money – that has to be recouped somehow…

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.

6 Comments
  • AFAIK there is still unlit fibre on the tubes between here and the US. The issue is not that we pay for it but how much we pay. Prices are being kept artificially high because there is no competition and they can simply restrict supply and keep prices high.

    I know we have to pay but I’m sure the sums just do not add up.

  • There are some ridiculous things going on with New Zealands international data traffic.

    1.We appear to have very little competition in our data links to overseas (southern cross + ?).
    2. Those data links are not at capacity so we are not resource constrained.
    3. The international data rates the local telecos pay are very high.
    4. The local telecos don’t peer with each other meaning national traffic often goes to San Francisco and back, or Sydney and back.
    5. There are no cable companies threatening to run new cables to NZ to compete.

    All this I think leads to the current “data cap” mentality on offer at the moment.

    My person and somewhat limited view is that NZ would benefit from its internet infrastructure much more if it focused on securing cheap, uncongested international traffic that can be sold uncapped to the NZ population (business and residential). The current investment in cabinetisation is wasted if the international pipes are not there to support it. We don’t need to connect to other NZ’s more efficiently, we need to connect to the rest of the world more efficiently. I would much rather see a NZ-owned string run to Hawaii or San Fran than the current local infrastructure investment.

    I think a government directive to force the local telecos to peer freely with each other inside New Zealand would be also be a very good move.

    Just some thoughts

    Andrew

  • @andrew I think you’ve summed up all the issues, international bandwidth, peering and speed. You are right in that we can’t focus on any one of these issues alone – we need to focus on all three if we want to improve. Faster broadband rollout does seem to be happening but I’m not sure what the story is with peering and international bandwidth. At last years Foocamp David Cunliff did hear about all 3 issues loud and clear and seemed to take things on board. Who knows what will happen? We can just live in hope…

  • Thanks Glen,

    Yes its the unlit fibre capacity that really worries me.

    We cannot use the internet effectively here in NZ because we are frugally watching our traffic use and on top of that receiving poor speed. If the supply increased (and with some competition to boot), then the price will fall and the speed will increase. Once the wholesale price is low enough (~ 0.3-0.5 current price i think), then internet connection will be sold purely on the connection speed and this ridiculous data cap mentality will go.

  • Andrew and Glen,
    Sure there is unlit capacity. But if you look at the profits of the cable (circa $200m, http://www.zdnet.com.au/news/soa/Southern-Cross-seen-boosting-Telecom-NZ/0,139023165,120219727,00.htm?feed=pt_southern_cross) vs the investment ($1.5bn to start and god knows how much more in up keep) and compare fact that the $200m profit is from servicing Australia and NZ then i would hardly say SX is the bad guys here. (Telstra made $3.6bn AUD last year!)
    The high cost we are charged is because of the trading arrangements in the US. The US ISP’s charge like wounded bulls to have access to their content, simple as that. Proof?
    Andrew finds some of the answer in his comment about some companies traffic trumboning via San Fran. That happens when someone signs with a US provider for internet (like MCI or AT&T) who IS a peer in the US, therfore isn’t bent over when it comes to content supply vs the local players who are.

    I absolutely agree with you guys, you cannot just look local infrastructure. But if you want cheap international data we actually need some equality with US in terms of content going ‘up’. To me that means we need to create internet based businesses too.

  • So, the market will solve it all?

    Hmmm …

    Maybe, just maybe, sometimes the market can’t sort it out because, as Ben pointed out, we’re a bloody long way away, small and not that important.

    Perhaps we need to do something

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