Well, that was one hell of an announcement…

Details of Chorus’ news can be seen here but in short, they have released two new fibre services that improve on the current BS2/SBF services targeted at small business, and another that makes the current BS3a service look pretty average.

The new Hyperfibre SMB services are offered at 2000/2000 and 4000/4000, with Chorus already talking about an 8000/8000 option. That’s right, we are looking at the slowest of the new services offering 2Gbps up and down.

The Hyperfibre Business service is a 4000/4000 option with varying levels of CIR.

I have been saying for a while that Chorus would try hard to make sure that PONFAS (unbundled fibre) never got off the ground, and today’s news has surely put the final nail in the coffin. Vocus and Vodafone can complain all they want about PONFAS pricing, it no longer matters.

The move to offer the 10G capable ONT as a residential gateway is another push from Chorus to find new revenue lines and is part of the reason they have made it clear that all of these services are subject to ComCom approval.

Pricing

The price point for the 2000/2000 SMB service is an insignificant step up from the wholesale price for Max/500. RSPs can get the 2000/2000 service for $80 p/month, while the 4000/4000 SMB service is $105. Install/upgrade fees are a bit more pricey as they can run as high as $480.

The 4000/4000 BS3a equivalent is priced at a lower wholesale rate than the current price for the Max/Max BS3a service. It will vary between $160 – $250, depending on CIR levels.

From an ISP perspective, the real cost isn’t in the access, it is in the hardware, backhaul and transit that must exist across an ISPs network in order to do the access speeds justice and provide greater speeds. This all feels very familiar though, I am sure I recall the same sentiments when Max/500 came out, and before that, 200/200… I think usage levels will remain as is for some time even if uptake of Hyperfibre is strong. Access speed doesn’t drive bandwidth consumption, applications do.

I have some thoughts…

  • Will this drive more small players to leave the market? The new services are not offered via tail extensions, meaning ISPs need to be present in all regions to offer nationwide service. Throw in the cost of 10G backhaul as a minimum, and it won’t be tenable for a number of providers.
  • Will Chorus and others look to lower the price of inter-metro backhaul to make the cost of these services viable? The circuit access costs look good, but that is only part of the picture, routing data around the country gets expensive when a couple of clients can max a 10Gbps link.
  • What hardware will ISPs use? The ONT can act as a residential gateway, but in the business market, we will be looking at something like the Fortigate 100F, which doesn’t come cheap. What about SSL at these speeds?
  • Are ISPs allowed to talk about access speeds in the service description? We have had to run with “Max/500” for the current fastest BS2 service as Gbps speeds could not be guaranteed, so what marketing spin will we have to work on these?
  • Are high traffic classes even relevant anymore? The amount of speed now offered is so insane that users simply cannot consume it and nearly all connections will sit below 10% utilised 98% of the time. The networks will be under-utilised so high traffic classes are irrelevant until technology changes making it possible to consume the bandwidth. With New Zealand being so small and so far ahead of the western world, technology companies targeting the mass populations will make that change very slow to arrive.
  • Is there a current use case for these services? None that can;t be handled via existing service speeds, but it is exciting to think of the tech these sorts of speeds enable when available at good price points.
  • How will people even reach these speeds? Will users just go live and immediately start smashing iPerf tests to see what speed test results they can tweet?
  • Is WiFi up to the job? Many clients access the net via WiFi, and WiFi 6 is required to achieve these sorts of speeds, how many businesses are running that currently?
  • 5G doesn’t look so fast now. But to be fair, price points are going to determine whether anyone cares about headline speeds.

So what now?

Limited rollout commences in February if the changes are approved by the Commerce Commission, and then the first major city goes live when Wellington is connected in March. The rollout is targeted to end in September 2020.

LFCs (Enable, UFF, Northpower) may not follow suit, or if they do, it is likely to be significantly delayed if past examples are anything to go by.

All ISPs will feel obligated to provide this service, but the variation in pricing models, and which areas are serviced, is going to be very interesting to see.

Brendan Ritchie

Brendan Ritchie

Author Brendan Ritchie

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