Telecom vs Telecom

Broadband in cloud-cuckoo land.

By Geoff Palmer / Monday, May 30 2005

Quick quiz: What’s the primary function of a business?
A) To provide employment.
B) To deliver goods and services.
C) To make money.

If you answered anything but C you’re living in cloud-cuckoo land. But you’re not alone. Many of our politicians live there too.

With real competition, of course, the way to C is via B. Take mobile phones, for example. Vendors fall over themselves offering the latest technologies and the most competitive deals. If it wasn’t for Vodafone we’d still be carrying brick-sized barely-portables and think text messaging was pretty neat. And we’d still be paying 20 cents per message.

We do, however, have a brick-sized lump around our necks when it comes to “broadband” services. (I use inverted commas here to avoid confusion with true broadband, which in every other country on the planet is understood to mean a connection speed of upwards of 500Kbps.) There are pockets of competition — TelstraClear in Christchurch and Wellington, Woosh in patches — but Xtra/Telecom’s main competition is … Xtra/Telecom.

This farce was instituted last year in a trade-off of the much-cherished Kiwi Share. A new competing “broadband” service called UBS — for Unbundled Bitstream Services — was the Faustian deal the government struck with Telecom.

Competing with yourself
As I reported last November, Telecom finally came to the UBS party — reluctant, tardy and on its own terms, hands in its pockets and dragging its feet — and allowed independent ISPs to retail one of its own services at a $10 a month discount. Since then I’ve heard many complaints from PC World readers. Complaints about the product, service levels, connection speeds, latency, problems changing ISPs, and the weeks you have to wait for a connection. My only surprise is that anyone’s surprised.

Let me reiterate: a private company is being forced to compete with itself. It’s being forced to provide a service that, if it ever really measures up, will reduce its profitability and market share. That’s going to work. Yeah, right!

If you still haven’t grasped what UBS is up against, consider Voice-over-IP. The ability to make phone calls via an internet connection is the modern telco’s bogeyman. Using broadband and a free download from Skype (skype.com) I can chat to friends all over the planet. For nothing. Even if they don’t have a computer, calls to numbers in Oz, Europe, North America and the UK cost just three cents a minute, any hour of the day or night.

To fight this, telcos are coming up with a variety of cunning plans. Packet tagging, for example, allows them to identify their own customers’ traffic. “Tagged packets get both less restrictive rules for passage and a private highway lane to drive on,” according to US columnist Robert Cringely who reckons the heyday of this fledgling may already be behind us.

Telephony baloney
Of course, Telecom was well ahead of the play with its two-way ban on internet telephony. You can’t have UBS unless you have a Telecom phone account — meaning that, if all else fails, it still get its monthly rental — and the service has such appalling latency that any real-time connections are impractical anyway. Still, it’s not resting on its laurels. In a follow-up column on March 17, Cringely revealed some other dirty tricks. “Telecom New Zealand, for example, is reportedly planning to alter TCP packet interleaving to discourage VoIP. By bunching all voice packets in the first half of each second, half a second of dead air would be added to every conversation, changing latency in a way that would drive grandmothers everywhere back to their old phone companies.”

Could similar throttling technology be applied to UBS if hell froze over, pigs flew and UBS became a genuine competitor? Of course.

To summarise, we have a “competing” “broadband” service that is 1) already a dog 2) unsuitable for many of the purposes to which people want to put it 3) being provided, provisioned and carried by its only real competitor, and 4) under the total control of that competitor via sneaky tricks like packet tagging and interleaving.

So what’s the answer? Do you now:
A) Sit and fume about it.
B) Send yet another “bloody Telecom” post to your favourite newsgroup.
C) Express your concerns to your local MP.
(Hint: it’s election year!)