z3 Networks Ltd.

Here’s my review of New Zealand’s nationwide domestic and commercial networks and their utilization since my arrival. Due to the strict nature with which ISP’s protect their network overhead and utilization levels I can’t get into specific numbers, but I can speak on what I have been told, seen, and experienced during my time here.

• What Goes Around Comes Around!

First and foremost New Zealand is currently in the early stages of for lack of a better term ‘de-monopolization’ within the transit service provider industry. I equate it to what happened with the British Telecom (BT) and the UK back around 2000. Originally 90% or so of the major networks within New Zealand were owned/operated by Telecom, along comes Telstra (from AU I think) and begins to put a little push against Telecom. This created a little bit of competition within the market and brought prices for data down a little bit. Fast forward 5-10yrs or so to the present and we’re now finally seeing a very good diversification of backbone and tier1 providers coming in and challenging the old “big iron” of the past.

• Competition is good!

As all these new providers and competition comes in it means networks (the majority of which are fiber) are being deployed quickly. One of the benefits of the timing of all of this is that the infrastructure in New Zealand is next-gen. Unlike the USA, CA, or the UK where telecoms are trying to replace old and outdated copper networks the NZ telecommunications and transit industry is much newer and has been applying the fiber technologies and next-gen networks for some time. I’m under the impression that the majority of networks within New Zealand actually have more capacity available physically on their backbones than the hardware at the end of the backbones can currently support.

• Next-gen Fiber is Good!

Next-gen fiber cabling such as that used by the CCNL here in Christchurch can push a massive amount of data, but if the switches and routers at the end of the cabling is only rated at 1Gbps vs. 10Gbps then you of course can only push that 1Gbps across the lines. Transit providers are going to build a much larger overhead into the lines themselves then they will invest in the end-line hardware as its much less expensive to upgrade the switches and routers than it is to put in new fiber cabling. In my experience here with the fact that a lot of domestic end-users have very limited bandwidth caps imposed on their accounts by the “big iron” there isn’t the justified need for the largest end-line hardware in a lot of places. I would estimate that currently nationwide the NZ networks are running at around 30% utilization of their max throughput overall. If this utilization were to suddenly double it could easily be handled with some upgrades by the tier 1 transit providers to their core routing and switching nodes.

• Bandwidth Costs

Bandwidth is something we all love, but here in NZ national compared to international is about a 1 to 3 or 1/4 relationship, as international is about 3x’s more costly then national per GB costs. This is expected with New Zealand being the end of the world’s fiber cabling. =] There are currently some new international transit providers bringing in new lines so over the next year or so these prices will be dropping as more competition comes in. Just to give you an idea on comparative costs when buying large chunks of transit within the USA/CA/UK generally you see sub $10/Mbit costs and no division between national/international bandwidth. Here in New Zealand the costs are currently well over 15x’s the North American and European cost per Mbit for domestic bandwidth and easily up to 40x’s more if its going to be traveling over the oceanic pipes (isn’t that all the internet is?) to the rest of the world. These prices are still quite high and this is still very much to do with the fact that the industry is just now starting to diverge into multiple providers which creates the competition and brings the lower pricing.

• Peering is fun!

Peering exchanges are a pretty new thing here as until recently there hasn’t been the multiple network providers, so peering hasn’t been an issue. As things expand these exchanges become a very important part of the industry as transit providers must peer in order to see a cost savings if they are to pass on this savings to customers and keep their prices competitive. Our particular provider actually hosts our local metro area’s neutral exchange point within their network core. This is very nice as it gives us quicker routing to other networks, but exchange points are primarily a tool for the transit providers themselves. The biggest benefit that is seen when a transit provider has an increased utilization of their own data network as it requires the old big iron companies such as Telecom/Telstra to begin peering in order to lower their cost of third party network access.

In the end… this is exactly the type of thing that brings prices down across the country for end-users.

It all comes down to diversification away from the “big iron” monopolized transit+infrastructure providers from the past.  Create more competition in the industry and make the backbone infrastructure a fully open network. End-users benefit greatly from this competition and the expansion of these competing networks, and the more we can support increasing the network utilization and data available within these newer networks the better the industry overall within New Zealand will be. Everything being done today here in NZ is next-gen and utilizing the latest technologies available within the market.  I have the distinct feeling that due to this in addition to the great design and software development talents within the New Zealand IT industry there is quite definitely the ability to become one of the greatest worldwide IT hubs.

Oh, and yeah its not JUST New Zealand… but now Australia has recently made some noise  in the industry that is re-enforcing my big concerns in regards to Telstra and the need for more competition within the ISP industries.  Think along the lines of Christchurch’s CCNL open access network, but on the national scale… Check it out here: Ars Technica – Massive Fiber Investment by the .AU Government! If you don’t think this is going to effect New Zealand’s transit and broadband industry’s you are nuts!

-J. Miller

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