Now we have a broadband motorway, it's time to put the foot down
Communications Minister Clare Curran hopes to start searching for a national “chief technology officer” before Christmas to provide technology leadership for the country, and will be seeking an “action plan for every major industry”. When it comes to broadband, the Labour NZ First government has not been handed a mess, she says. The National government committed £2 billion of public funding to the ultrafast (UFB) and rural broadband initiatives after taking office in 2008.
SMEs only accounted for more than a third of total business profits in one year between 2002 and 2008 (in 2006), but they have missed that milestone in only one year since (in 2014).
Now, about 20 per cent of all Kiwi homes and businesses are connected to fibre-optic broadband, with the country passing the average uptake in the OECD at considerable speed last December. By 2022, 87 per cent of Kiwi homes and businesses should be within reach of gigabit fibre-optic broadband. Curran says “structurally, the UFB is very sound”, despite “digital inequality” and “hiccups” some people have experienced connecting to the network.
Cloud computing is ending the tyranny of distance for many NZ businesses.
* Vacancy: tech supremo to guide NZ into a new age
* Fibre-optic broadband roll-out passes milestone
* £500m Pacific internet cable arrives
* Extra £270m for rural broadband ‘more than Federated Farmers was expecting’ New Zealand’s broadband infrastructure has certainly become the envy of Australia where the local boss of business computing giant VMware, Alister Dias, says poor speeds are “a water cooler discussion”. Australia shelved its plan to roll-out fibre-optic broadband to 90 per cent of homes in 2013.
Communications Minister Clare Curran says the new government will be more “interventionist” when it comes to extracting benefits from the previous government’s investment in broadband infrastructure.
The administration led by Tony Abbott controversially decided there was no significant demand for broadband speeds above that which could be delivered by the latest copper technologies.
Telecommunications Users Association chief executive Craig Young says New Zealand should be significantly ahead of Europe and the United States when the UFB scheme is completed in 2022, and behind only a few Asian countries such as Singapore and Hong Kong. “The latest discussion in the UK at network company Openreach is about how they might be able to fund fibre-to-the-home, so they are only at that point.
VMware Australia and NZ chief executive Alister Dias (right) shows how far the IT industry has travelled by donning a VR headset to provision and fix a ‘virtual computer server’ in the cloud, during a technology demonstration in Sydney. “With the current administration in the US, I can’t see there being any public sector investment in a broadband network over there.”
IDC Research last month described New Zealand as “fast becoming a land of digital opportunities” in a report titled The Streets are Paved with Glass. “New Zealand has had the equivalent of a brand-new motorway network rolled out all over the country,” analyst Monica Collier said. “This creates opportunity for New Zealanders to start and run their business anywhere, even in remote towns.”
Hawaiki Cable’s 15,000 kilometres of fibre-optic cable had to wound by hand around six giant spools on two ships, as there is no machine to do it. Better connectivity was having a profound impact on the entertainment services Kiwis consume, such as internet television and music and online gaming, IDC found.
“In previous years we have seen New Zealand lag behind other countries in digital uptake,” research manager Shane Minogue said following an annual survey of internet usage in August. “This year’s results show that New Zealand is now in line with other countries and in many areas, is ahead of the pack.” Curran says where the new government will differ from the old, is that it will be more active in trying to capitalise on the infrastructure.
The approach of the previous government was “build it and they will come”, Curran says. “I believe there is a more constructive, enabling and sometimes interventionist role for government and that is where you will see differences. “This isn’t just looking at how we can encourage more software development or boost the gaming industry.
Those things are really important, but we need to look at every sector to see how they could lift productivity through technology.” Kiwis appear to have recognised the country’s relatively good fortune, with 64 per cent rating the quality of the country’s high-speed broadband as “very or fairly good” in an international survey released by French pollster Ispos last month. That compared to an approval rating of only 32 per cent in Australia, and 54 per cent across the 28 countries polled.
Some internet users feared they might not get the full benefit of UFB while the Southern Cross cable network, which is half-owned by Spark, held a near monopoly on internet traffic to and from the country. But the icing on the cake for New Zealand’s much-improved broadband story is the 15,000 kilometre Hawaiki Cable which is now being laid between Sydney, Northland and Oregon. The TE Subcom ship Responder began laying the western leg of the cable off the Sydney coast last week, after a six-year battle by French telecommunications entrepreneur Remi Galasso to raise the required £500 million in funding.
Hawaiki had planned to start laying the cable in the opposite direction, from Northland to Sydney, but revised its plan to avoid disturbing whales during their calving season and is now due to land the cable in New Zealand shortly before Christmas. Investor Malcolm Dick, best known as the co-founder of CallPlus, believes the cable will make a difference to consumers, saying “almost all” internet providers ration international connectivity. “I don’t know if they will see lower prices, but they will definitely get more capacity, faster speeds and more access to international websites.”
Galasso says the cable will be good for the IT industry and would hopefully attract more internet businesses and data centre operators into the country to take advantage of the country’s “green energy”. SYDNEY, CENTRE OF OUR WEB In the interim though, it may seem ironic that a growing number of Kiwi businesses are becoming increasingly reliant on cloud computing facilities in Sydney to run their operations.
Despite Australia’s poor broadband progress, the three big names in the “public cloud” computing industry – Amazon Web Services (AWS), Microsoft Azure and Google GCP – have made Sydney their local base for their global network of massive cloud computing facilities. The cloud companies are in the business of persuading firms to ditch their server rooms and “IT guys” and instead rent computing power, storage and all manner of IT services on a pay-for-use model. By and large they appear to be winning that argument.
Analyst Gartner forecasts the public cloud services market will grow 18 per cent this year – about seven times faster than the overall IT market – to value US£246 billion. NZTech chief executive Graeme Muller doesn’t see businesses’ reliance on cloud computing facilities based overseas as a big threat to “NZ Inc”. “Yes, most of the large technology exporters are probably sitting on something like AWS and Azure and probably pumping most of it out of Sydney, but their businesses are well and truly rooted here,” he says.
Rather, the internationalisation of the IT industry that has resulted from cloud computing means Kiwi technology companies can supply customers anywhere in the world, he says. “Australia’s network connectivity is not that good compared to New Zealand, so going further into that market and setting up your business in Sydney would probably not make your services any faster.” SMALL FIRMS WINNING
Cloud computing was supposed to help small firms in particular by giving them online access to technologies that previously been the preserve of large companies that could afford to invest in their own facilities. Google Apps, Microsoft Office 365, accounting package Xero and customer relationship management system Salesforce.com are all well-known examples of cloud software that businesses can log on to online to run their core functions. But there has also been an explosion in more specialised cloud-based software for different applications and industries, including open source software that comes without high licensing fees.
Figures compiled by Statistics NZ suggest the playing field between big and small businesses could indeed be levelling. Between 2002 and 2016 the proportion of company profits earned by businesses employing fewer than 50 staff has risen at a faster rate than profits earned by businesses employing 50 or more – trending up from about 30 per cent to 35 per cent of total profits. While there is no proof that is due to cloud computing, Xero chief executive Rod Drury is in no doubt it has been a factor.
Though not a disinterested party, Xero says its own research indicates small businesses using cloud software are growing their profits 30 per cent faster than those that don’t. DATA SOVEREIGNTY There are options for organisations that want to take advantage of the cloud but which are uncomfortable with the idea of seeing their data processed overseas.
Wellington firm Catalyst IT, which employs 250 staff and whose main specialisation is in open source software, has built a homegrown public cloud service. Chairman Mike O’Connor argues it is a “default position”, including in government, that moving data overseas is acceptable. But he believes that is often being driven by an assumption it is the only option available, which he says is “pretty disappointing”.
“To turn that into a positive, that presents an opportunity for us in our large investment in a New Zealand public cloud or ‘sovereign cloud’ with prices and services comparable to the big overseas multinationals,” he says. VMware’s Dias says the New Zealand government was very early to adopt a “cloud first policy” for the public sector. In February, the then-Cabinet declared cloud computing to be generally more cost-effective and secure than traditional models of organisations looking after their own infrastructure, though it acknowledged there were risks.
In keeping with that finding, the previous Government let agencies decide whether they should allow data to be processed overseas, he says – so long as they didn’t make a wrong decision that came back to bite them. Data-sovereignty concerns aside, we may be out of excuses for any big chip we may have had in the past about the country’s broadband connectivity. Galasso says New Zealand now has a “superb infrastructure”.
“UFB is a success. If you compare it with the rest of the world, New Zealand is clearly in an advanced state. The mobile access network has been well-developed by the three operators.
“We are pretty lucky.”
- ^ Vacancy: tech supremo to guide NZ into a new age (www.stuff.co.nz)
- ^ Fibre-optic broadband roll-out passes milestone (www.stuff.co.nz)
- ^ £500m Pacific internet cable arrives (www.stuff.co.nz)
- ^ Extra £270m for rural broadband ‘more than Federated Farmers was expecting’ (www.stuff.co.nz)
- ^ Ad Feedback (stuff.co.nz)