Chasing customers underground

By PETER GRIFFIN

A few feet beneath the bustling footpaths of Auckland and Wellington something is stirring that threatens to get New Zealand finally rolling on the information super-highway.

It is competition - in the market for high-speed internet connectivity and the array of crucial network services that go with it.

Few realise it, but a stack of companies now have extensive fibre networks criss-crossing the CBDs of Auckland and Wellington, delivering amounts of bandwidth your average frustrated internet user would die for.

While residential internet users moan about "micro-outages" on Telecom's DSL (digital subscriber line) services and the perils of exceeding their puny download caps, in the business world, speed and choice are now available in equal measures.

Well, in the CBDs, anyway. A central Auckland business with a need to shift a serious amount of data no longer needs to turn to Telecom for frame relay or DDS (direct data service).

TelstraClear, UnitedNetworks and Vector subsidiary Tangent are all there with fibre in the ground. Walker Wireless chips in with wireless data offerings.

While TelstraClear dug up city streets to lay its cables, United and Vector, large presences in the electricity market, were able to piggyback on their existing networks.

In the case of United, the ability to set up an inner-city fibre network in less than three months came down to a smart business decision.

In March 2000, the company paid $550 million for the North Island gas networks of Orion in Auckland, Wellington, Hawkes Bay, Manawatu and Horowhenua.

Energy aspirations aside, that gave United access to a large network of "empty holes in the ground" - ancient, wrought-iron gas pipes that could easily and cheaply be filled with mile after mile of fibre cable.

The company spent $50 million building networks in Auckland and Wellington and has committed a further $15 million this year to extending them. A pre-merger TelstraSaturn, which at one stage courted the idea of working with United, spent a vast sum building its own network over United's in the CBDs.

In Wellington, UnitedNetworks has competitors in Telecom, the consortium-owned Citylink, which is based around the city's tram tracks, and TelstraClear, which has a fibre network.

United's general manager, Sean McDonald, says network expansion is largely driven by expected demand.

Therefore, fibre throughout Hawkes Bay soon is unlikely, but growing commercial and industrial hot spots will attract United's attention.

The company is already in Takapuna via the harbour bridge and pushing towards the tech centre of Albany.

A pure wholesaler, United does nothing more than sell capacity to its partners, who take care of the retailing. They include internet providers such as ihug, Orcon and Iconz, through to system integrators including Comnet and AT&T.

That allows the company to keep overheads low. It employs only 24 people and does not have to market extensively. Instead, it subsidises the advertising of its partners.

United's Auckland counterpart, Tangent, claims to have fibre in the ground running parallel to Vector's electricity network from Auckland's CBD through to Manukau and Papakura - an area of 950 sq km.

Unlike United, Tangent is in the retail game, selling its data services in direct competition with the likes of Telecom.

In December, UnitedNetworks dug a trench across Mills Lane behind the Herald building, plugging the paper into its metropolitan area network, which covers a large portion of the CBD.

Installation for prospective customers is carried out free - it's when you use the network that the meter starts ticking.

The process left me with an ethernet cable in one hand and my phone in the other as an ihug technician guided me through the set-up process (which involved little more than plugging the ethernet cable into my network card and configuring some IP (internet protocol) addresses. Suddenly I had a 5Mbps (megabit per second) link to the outside world, all to myself.

Gary Young from ihug Business said scores of companies in Auckland's CBD had such connections - ranging from hotels and medium-sized offices to web developers and internet cafes, all tapping into United's network through ihug.

The most common uses of the service are the downloading and uploading of large files, whether they be across the public internet or virtual private networks.

Some of ihug's customers downloaded more than 120GB of data a month, said Young.

File transfers from local sites such as Tucows (www.tucows.co.nz) were lightning fast. I downloaded a 9MB shareware file in 30 seconds.

Overseas sites also had download speeds averaging 70KBps (kilobytes per second). Streaming video from online news services such as www.cnn.com ran smoothly, as did audio links to a number of online radio stations.

An attempt to watch Telstra's results which were to be streamed over the web was abortive but that was because of glitches at Telstra's end.

I even got Ricky from ihug to head downtown to an internet cafe, also on United's network, to face off with me in a game of Counterstrike. The ping times we experienced beat everyone else sitting on Paradise's servers blasting away at each other.

While most companies looking for a fat pipe will be more concerned with application serving and data warehousing than high-speed gaming, the surfing I did gives a good indication of the speed available.

I even had a go at videoconferencing between the United connection and a Jetstream user using a program as simple as MSN Messenger. We got near-telephone-quality sound and good-quality video.

More sophisticated videoconferencing software is available for better results. For a business with branches in Auckland and Wellington, videoconferencing and even VoIP (voice over internet protocol) using United's inter-city link could have huge cost savings.

Overall, Young estimates ihug can offer high-speed internet access for businesses, in some cases at half the price of equivalent services from Telecom.

An entry level flat rate ethernet offering starts at $499 a month for a 256Kbps connection with upgrades possible to a 1GB connection. Another option allows customers to buy international bandwidth in bulk to receive a discount (and free national bandwidth).

An entry level account in that scenario starts at $349 a month for a 1Mbps connection with data charges on top.

With the connectivity and stacks of bandwidth in place, the various broadband vendors now have the task of convincing businesses that high-speed access can make or save them money.

What's encouraging is that there are companies offering an alternative to do just that. For residential broadband users, DSL technology is likely to be option number one for a while to come - until the gas pipes come into play.

Links

United Networks

Telecom - Build your own network

Citylink

Telstraclear

Tangent Network