Fibre will be worth the wait…but there will be a wait

closeThis article could be out of date, as it was published 1 year 4 months 27 days ago.

IDC has issued its 11-year forecast for customer uptake of the new UFB network, based on the analysis of the past NZ adoption rates of mobile and DSL technology.

According to the study, “When Will Fibre Take Off in New Zealand?”, IDC says fibre will be worth the wait, but there will be a wait for customers across New Zealand.

Key elements of IDC’s forecast include:

· After an initial three to five year period of slow, gradual take-up of fibre services, approximately 120K premises will be connected to the UFB network.

· Between 2015 and 2017, a four year period of rapid takeoff will then begin that will see fibre take-up increase from 10% to approximately 50% penetration (600K fibre connections) by 2020.

· It will take at least nine years before fibre takes over from copper as the dominant broadband access method in NZ.

In conjunction with its forecast, IDC also conducted a study of overseas fibre markets “Driving Fibre Demand – Market Influences and Realities in New Zealand” to understand what has driven fibre demand there.

“It is very difficult to use fibre uptake rates from overseas markets as predictors in NZ because the commercial models have generally been so different,” says Peter Wise, IDC research manager.

“Singapore and Australia are about the only countries with similar national government driven rollout programmes to NZ but they are also at an early stage.

“In other countries fibre rollouts have tended to arise either on a small scale or as a result of competitive pressure, for instance from cable TV players.

“New Zealand is the first country in the world to have structurally separated the incumbent (Telecom NZ) and many jurisdictions are looking to see how the fibre rollout progresses under this new market structure of separate local fibre companies (e.g., Chorus and Enable Networks) and retail service providers (e.g., Telecom and Vodafone).

“We think that NZ is making a great step forward in its commitment to fibre, however realistically it is going to take time before it takes over from existing copper broadband.”

From its review IDC believes the following factors will be vital for driving high fibre uptake in NZ:

· Education of end users around what fibre enables as well as the improved performance and speed that fibre provides (e.g., it is generally a lot more reliable than DSL broadband as well as faster).

· Development of content and applications that leverage the capability of fibre (for consumers this might be video on demand, for business, some cloud based services).

This may be a challenge given the relative small size of the NZ market so local telcos partnering with larger overseas companies may be required. Potentially some regulation of content rights in NZ will also be necessary (something the Commerce Commission is examining).

· A robust and consistent installation process is required. Local fibre companies are busy trialling these but early reports indicate that one installation can take longer than a day and cause a lot of disruption for the householder.

Larger retail service providers will not want to risk their brands, until there is a consistent, positive installation experience for customers.

· Incentives for Retail Service Providers to embrace fibre – at present many are still recouping investments from the copper network which was unbundled in 2007.

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