1840: S.E Grimstone became the first Postmaster of New Zealand. His payment for service was 20 percent of postal receipts.
1858: The Local Posts Act opened the way for the appointment of a Postmaster General and authorised Provincial Councils to establish post office services which were to be co-ordinated on a national basis. Ultimately the New Zealand Post Office would take control of banking through the Post Office Savings Bank along with telegraph and telex services, the telephone network for national and international calls and radio services including contact with ships.
1862: First electric telegraph line linking Christchurch and Lyttleton is the catalyst for a series of constructions involving private and military telegraph lines between Auckland, Christchurch and Dunedin. Kiwis can now keep in touch using Morse code. One of the first messages sent was to Mr Oakes in Christchurch and read: “Mr Oakes is coming round in schooner Colleen Baun with goods. Dog Pedro poisoned and is dead.” A second network was quickly established between Port Chalmers and Dunedin.
1863: The Postmaster-General devoted a page of his annual report to the telegraph saying he wanted to see a colony-wide telegraphic network including a Cook Strait cable. There were nine independent telegraph networks covering much of the South Island. The Government established the Electric Telegraph Department, immediately placing the growing number of independent telegraph networks under centralised control.
1865: A second attempt at laying a cable across the rugged seabed of Cook Strait in August proves successful, and communications between the Islands is possible from the 26th of that month. A telegraph office is established in Picton; the following year Blenheim and Nelson followed suit.
1872: The Wellington-Auckland line is completed, around 400,000 messages a year are being carried over the fledgling network
1876: The first undersea cable from Botany Bay in Sydney, to Cable Bay near Nelson came ashore in February 1876. Once connected to the terminal house at Nelson on 21 February, direct communication with Australia was possible and on to Asia, Europe and Britain. The New Zealand Telegraph Department employs and trains the first telecommunications operators who use Morse keys to send and decode messages.
1877-1880: On Saturday, February 2, 1878 a Dunedin electrician Charles A. Henry organised the first ‘talking telegraph’ test after manufacturing a telephone instrument based on what he had read in the October 6, 1877, edition of the Scientific American magazine. According to the Otago Daily Times a ‘telephone instrument and wire’ was attached to the existing telegraph wire at the Dunedin Telegraph office and another at the Tokomairirio (Milton) office - a distance of 57km. The newspaper described it as ‘simply marvelous’. It wrote ‘A large number of questions were asked and each was replied to instantaneously by the person in Milton….Not only could the words spoken at either end be clearly heard, but the difference in tone of voice was easily distinguished’.
On April 5, 1878, a telephone conversation took place between Blenheim and Nelson, when the officer in-charge of the Blenheim Telegraph Office, Willian Stafford Furby, who had manufactured a pair of telephones, spoke from his private residence in Blenheim, to a telegraph operator at the Nelson Telegraph Office, over the Blenheim No 1 wire.
The first telephone office was opened at Port Chalmers in 1879 with the first link between Port Chalmers and Portobello so shipping information could be relayed to Dunedin more quickly. A Mrs Sheehy, who took a call from a Roxburgh farm in 1877, was the first person in New Zealand to hold a conversation on a private line. Telephones begin to be used to supplement the telegraph in small towns which lacked the finance to employ Morse operators.
1879: Only 19 of the 214 telegraph stations were still operating independently, as the Post Office progressively took over the various telegraph networks from the Electric Telegraph Department.
1881: The New Zealand Post and Telegraph Department replaced the Telegraph Department and quickly became a state monopoly, on the advice of a government official, in order to prevent the Electric Telegraph Company of Chicago, a direct antecedent of Ameritech and Bell Atlantic, opening an exchange here. It would take full responsibility for this new fangled telephone device, training operators and developing a phone network across the country.
The first manual exchange with battery operated transmitters was opened in Christchurch allowing 30 subscribers to speak to the operator and each other. Within 10 days Auckland opened its exchange with 26 subscribers. Many other major cities follow suit. Overhead cables began appearing across the nation connecting businesses and communities. These poles with wires hanging from them were often referred to as ‘Lemon trees’ after the director of telegraphy Dr Lemon.
1892: Female exchange operators were employed to sit in rows connecting calls by inserting a plug into the socket relating to the number called.
1894: A year before Marconi’s first successful wireless transmission in Europe, Ernest Rutherford a physics graduate at Canterbury University College, transmitted a signal 18 metres across the physics department through several walls using Hertzian waves.
Early 1900s: Technology advances rapidly as does the network with telecommunications becoming an important part of the social fabric and one of the first forms of commercial employment. The phone links the local community with family and important services and begins to touch the lives of all New Zealanders. Things changed further with the arrival of the automatic exchange and increased capacity able to handle 500 lines at a time.
1902: J.L. Passmore, a Dunedin teenager, built a wireless telegraph from instructions in a magazine. By 1903 the 18-year-old could send a signal up to 10km, by which time any further experimentation may well have incurred the wrath of the government which was now had full control over any developments that might be termed wireless telephony
1903: New Zealand lawmakers recognise the potential of sending wireless messages over radio with the Wireless Telegraphy Act which was passed on September 26, 1903 a world first, and a year ahead of the equivalent legislation in the UK and two years ahead of Australia and Canada. The Act protected the government’s investment in the new ‘wireline’ telephone and telegraph networks and allowed it to manage radio spectrum to prevent interference.
1906: The first domestic radio transmission was made by the Marconi Company at the 1906 Christchurch International Exhibition and the first trans-Tasman transmission was made from HMS Pioneer in Wellington harbour via HMS Powerful in the Tasman Sea to HMS Psyche in Sydney Harbour on 3 February 1908.
1910: New Zealanders now had their first coin operated telephones.
1912: The New Zealand government passed a new Country Telecommunications Act, which enabled people in rural areas to build their own telephone networks and link into the public network. The first automatic exchange equipment came into operation in Auckland and Wellington that year, as a supplement to the manual exchange in each centre. The first town to have an all-automatic telephone system was Masterton in 1919
1915: The first telephones were wall mounted by in 1915 the candlestick telephone was introduced.
1921: New Zealand’s first broadcast concert was transmitted from the physics laboratories of Otago University on 17 November 1921 by Professor Robert Jack. He transmitted the first of a series of concerts that included live music and gramophone recordings. His transmissions were heard as far afield as Auckland.
1923: The first regulations governing broadcasting were imposed. Anyone planning to become a broadcaster needed to be of good character, include religious material at least three hours on Sundays and restrict content to “an educative or entertainment character such as news, lectures, useful information, religious services, musical or elocutionary entertainment and items of general interest that might be approved by the Minister from time to time”. Advertising was unthinkable and controversy was banned.
1925: The first private automatic branch exchanges (PABX) appeared. The first radio broadcast was made from Auckland (check).
1926: While there had been a relatively, The first Cook Strait cable dedicated to telephony was laid replacing the unreliable telegraph cable linking the North and South Islands which had been constructed in 1864.
1927: A transatlantic telephone service was in operation
1929: Carrier systems were introduced to transmit a number of voices over a single pair of telephone wires by using different frequencies (frequency division multiplexing).
1930: All the main centres were now part of the national telephone network through private automatic branch exchanges, and callers could pay a toll to call to connect between cities and towns. The New Zealand Post Office (NZPO) had around 125,000 subscribers. The square black bakelite remained the standard phone.
The 1930s: Overseas calls became possible from the 1930s. The first international call was made from Kirkcaldies and Stains in Wellington on November 25th, 1930 and marked with a call from the Minister of Native Affairs Sir Apirana Ngata and the Acting Prime Minister of Australia Mr Fenton. Mr Ngata opened with a Maori greeting. Shortly after two business calls were sent to Sydney and six people from Australia rang friends in New Zealand. The charge for the calls was one pound per minute.
1931: The international tolls service was extended to Britain with calls costing six pounds and 15 shillings. In the first year there were 312 calls to and from New Zealand.
1939: New Zealand has more phones per head of population than any country except the US. International toll rates have become more affordable and 3457 calls to and from New Zealand were recorded.
1945: At the Commonwealth Telecommunications Conference held in London, the New Zealand Government signed an agreement to take over responsibility for external communications. The assets of Cable and Wireless were purchased and the New Zealand Post Office became responsible for external as well as internal telecommunications services.
1950: There were 348,539 subscribers to the telephone service.
1953: The first subscriber toll dialing (STD) was introduced allowing people to make direct toll calls.
1959: A telecommunications ‘motorway’ was established by the Post Office for long distance calls, initially carrying just 600 circuits between Wellington and Auckland. This formed the base for the modern day networks.
1960: At 7.30pm on Wednesday 1 June 1960, a switch was flicked in a building in Shortland Street in central Auckland and New Zealand’s first official television transmission began. New Zealand was a latecomer to the television age. England had led the way when the BBC started the world’s first public service in 1936; three years later NBC began broadcasting in the United States and Australia had its first stations operating by 1956.
A Government committee had been studying the new medium since 1949, and experimental broadcasts had been allowed from 1951 (as long as they included nothing that could be classed as ‘entertainment’). The green light for television was finally granted in November 1959 with an announcement from the then Prime Minister of New Zealand, Sir Walter Nash.
By 1960 New Zealand has 686,021 telephones and the more aesthetically shaped models begin to replace the harsh black bakelite models. In November, the Treasury leases an IBM 650 mainframe, New Zealand’s first computer. Within a year Canterbury University and the Griffins biscuit factory also have computers. By 1962, Treasury considers its IBM 650 outmoded.
1962: Government owned under the New Zealand Broadcasting Corporation (NZBC) established running national radio service, Radio New Zealand.
1963: The last Morse telegram was written by Governor-General Bernard Fergusson to the mayor of Eastbourne in January 1963, in October the last domestic Morse circuits closed down.
1965: New Zealand was now third in the world in telephone density with 35 percent of the population subscribing. Around 77 percent of all phones were on automatic exchanges.
1969: First Network News bulletin was read by Dougal Stevenson and received simultaneously around the country.
The 1970s: New Zealand is rapidly evolving from rural to industrial and commercial and the phone network has under pressure to keep pace. The nation moves beyond a single TV channel, the universities begin to network their computers and communications networks go international. The so-called ‘broadband’ network is now carrying thousands of circuits and STD (subscriber trunk or toll dialling) is available in most centres by 1976. International subscriber calling, without having to go through the operator, was also introduced as were push button and speaker phones.
1970: the New Zealand Post Office had begun offering its Datel (data/telephony) service sending computer and telex data over dedicated lines at 2400bits per second.
1971: The first satellite station is opened at Warkworth. There are now more than a million phone subscribers. The first overseas on-line link was created by American Express to connect into its hotel booking network. There are now a million telephone users in New Zealand. The government, through the Vice Chancellor’s Grant’s Committee made an arrangement to purchase five brand new Burroughs 6700 (later Unisys) mainframes for the country’s university’s with a view to having them networked.
1972: There were 200 business computers in the country, mainly unwieldy mainframes that needed huge air conditioned rooms to operate. They were fed punch cards and spat out their data on huge plan printers in plain asci type characters.
1973: Plans were first discussed to connect the Burroughs B6700 mainframe at Victoria University to Aloha University in Hawaii using the Post Office’s X.25 packet network. University administrators didn’t believe the research project was worthwhile so it lapsed. In the US Vint Cerf and Bob Khan, began working on a detailed design for a new protocol which would become become known as the Transmission Control Protocol (TCP) that would more easily allow different kinds of networks to interconnect.
1975: New Zealand now has two TV channels with the arrival of, wait for it…Network Two. The NZBC dissolved and was replaced by Television One, Television Two and Radio New Zealand. The first real attempt at linking university computers occurs when Victoria University and Massey University began experimenting with their Burroughs machines, using a pair of synchronous modems operating at 4800bit/sec. The plan to share resources on-line was optimistically dubbed Kiwinet but the link was down more than it was up.
1976: Leonard Kleinrock at MIT who helped develop packet switching theory, published the first book on the ARPAnet, which helped spread the lore of packet switching networks. Telephone users were given increasing autonomy with the shift from the old party line, operator-based system, to STD (subscriber trunk or toll dialing) which was available in most centres by 1976. International subscriber calling, without having to go through the operator, was also introduced as were push button and speaker phones.
A substantial upgrade of the national telecommunications network took place in March. The Tasman 1 cable between Auckland and Sydney came into service in a joint venture between the New Zealand Post Office and Australia’s OTC (Overseas Telecommunications Commission).
The foundations for the DSIR network were established from about April 1976 when the DSIR’s Physics and Engineering Laboratory (PEL) created the Computer Research Section (CRS) at Gracefield campus in Lower Hutt. They also built its first its first wide area network based around the Digital Equipment Corporation (DEC) PDP-11 minicomputers and communications controllers.
In October some of the technology, and a lot of the lessons learned from Kiwinet, provided a foundation for what was to become VicNet, a general purpose network that would be able to link the machines on the Victoria campus to Massey University’s B6700 using the Post Office X.25 packet switching network. While it achieved modest success on the Victoria campus, Massey University missed out on funding for the leased line and never successfully linked. In March the Computer Science Department at Waikato, frustrated at not being provided with appropriate computing resources in the government’s big spend up conspired with a group of lawyers to buy a brand new DEC PDP-1170 at a cost of $548,000 which was then promptly sold to a merchant bank and then signed back to the university on a lease to buy deal. The Ministry of Education, was furious but Computer Science at Waikato University rapidly became the most sought after subject.
1976: Waikato University’s Department of Computer Science acquire a brand new PDP 11/70 mainframe at a cost of $548,000
1977: DSIRnet, the network of the government’s DSIR research arm was established using protocols modified from its Australian equivalent CSIRONET
1979: From December 1979 a link through the Intelsat IV satellite, in conjunction with new NEC 820 cross bar equipment in Auckland, enabled international subscriber trunk (ISD) dialing from New Zealand. Intelsat circuits leased to the International Maritime Satellite Organisation (Inmarsat), which New Zealand had joined in July 1979, meant local users could gain instant access to Tymnet and Telenet, two North American data networks which were part of Oasis (Overseas Access Service for Information Services). The service proved popular with New Zealand libraries, as they could access the Dialog database with its then 18 million bibliographic entries.
The 1980s: A lack of investment by the Post Office meant the network was not in a position to handle the growth needed for the next generation of services. By the mid-1980s the network was overloaded, there was massive congestion. In Auckland the exchange was verging on collapse and across the country there are frequent network crashes.
The Post Office, a government department limited in what it could invest, became increasingly inefficient. The government began to look at the problem and ways to create a more efficient department and as part of its economic reforms began looking at ways of putting it on a commercial footing. Under the State-owned Enterprises Act of 1986 it created several state trading companies including Telecom.
1980: The Broadcasting Corporation of New Zealand (BCNZ) formed to merge TV1 & TV2 channels under a single corporation. The Post Office supports about 800 leased lines and 1800 modems. When DARPA needed a team to implement its brand-new TCP/IP protocol stack on the VAX under Unix, it chose Berkeley Unix as the platform largely because its source code was available and unencumbered. This was a major turning point in the evolution of Unix and the various tools that improved connectivity, thereby assuring the success of the nationwide and global goals of APRAnet, and TCP/IP as a communications protocol for the future.
1981: In 1981 Ira Fuchs at the City University of New York and Greydon Freeman at Yale University had come up with Bitnet, which linked academic mainframe computers. It was a point-to-point ‘store and forward network’ with e-mail messages and files transmitted in their entirety from one server to the next. New Zealand’s first and only indigenous home computer systems were created. The Poly Development of the Poly named after Wellington Polytech where it was developed was targeted at school use with a colour screen and ‘obscure proprietary networking system. The Aamber Pegasus, supported multiple computer languages and had a network version which connected to a server. Both attempted to meet the requirements of the government’s computers in schools initiaitive which never produced orders large enough for the machines to become a commercial reality.
1983: United Nations World Communications Year, celebrating the imminent convergence of computers and communications technology. Janet (Joint Academic Network), a UK government-funded X.25-based education and research network, developed by British university computer networks in the 1970s goes live in April. It has 50 sites accessible at speeds starting at 9.6kbit/sec. Janet helped standardise the Coloured Book protocols, the first complete X.25 standard. It’s rival the Internet was also making huge inroads, shifting from its military origins on January 1, 1983 with all hosts required to convert simultaneously to the TCP/IP protocol. Lapel buttons declaring: “I survived the TCP/IP transition” appeared spontaneously across the Internet community.
The National Science Foundation (NSF) invested major funding in faster computers and backbone networks. The New Zealand Post Office began trialing a satellite-based X.25 packet switching data transmission service (Pacnet) and installed the first fibre optic cable in a 14km pilot system between Wellington and Lower Hutt carrying several hundred telephone circuits.
1984: With about 1000 hosts on the ARPAnet, mostly in the US, the volume of Internet traffic was growing exponentially largely through the use of email. Some even predicted the whole anarchic system was on the verge of collapse. The bureaufax service with its attendant beepers arrives, allowing busy individuals to know when they are being paged. Victoria University established a campus network based on IBM’s computer protocols.
The DSIR’s Applied Maths Division accesses the Australian CSIRO’s Cyber 205 supercomputer, for finite element modeling of the Maui gas field. Access is initially through a Post Office direct link then through its Pacnet, packet switching service. Cabinet had approved Pacnet in September 1979 specifically for business customers with dispersed terminals or teleprinters linked to a central computer, operating at 2400bits to 48kbit/sec. It became commercially available from August 1984 considerably expanding the use of the Post Office digital data network (DDN). Electronic Funds Transfer at Point-Of-Sale (eftpos) appeared on the retail scene, only five years after the country’s first Bank ATM was installed.
Digital switching and transmission took a giant leap forward in November 1984 when the first Wellington-Auckland link using digital microwave and co-axial cable technology went live after two years planning. The $24 million system had delivered a 640km digital link that could transmit voice and data at 140Mbit/sec per circuit. At the same time new computerised stored program controlled (SPC) exchanges were cut into the network. A major SPC upgrade was installed in the Auckland area from 1984 after a massive 20 percent upsurge in toll traffic caused by an election year boom and rising business confidence. Regardless subscribers continued to face delays and overloading.
1985: New Zealand was divided into 22 districts for postal services, each under control of a chief postmaster and 17 telecommunications districts, each under the control of a district or regional engineer. Computers at Auckland University Computing Centre and the Victoria University campus were connected by leased line using the 4800bit/sec modems bought for the 1975 Kiwinet project. Fibre optic cable of much higher capacity than that trialled in 1983 was in widespread use, carrying thousands of phone circuits over 50km without repeaters, between main cities and many towns.
Canterbury University Computer Services Centre established a connection from its Prime 750 computer to the Post Office Pacnet X.25 network at 10kbit/sec and set up a crude email system to log in to other university computers. Robert Biddle, a PhD student with help from programmers Ken Lalonde and Alan Bowler, used the connection to log-in to the Mathematics Department at the University of Waterloo in Canada and beyond.
The first meeting to establish a common backbone network between universities and research departments were held in August at the annual Telecommunications Users Association Conference (TUANZ) with representatives of the New Zealand universities, DSIR and MAF attending. Government departments were invited but no-one turned up. A second meeting in November 1985 was called to coordinate the development of a national research network. The only agreement reached was on a common protocol, the Coloured Book Suite. In late-1985, John Houlker at Waikato University had discussions about connecting to the Internet backbone with CSnet founder Larry Landweber at the University of Wisconsin, a key node on the NSFnet backbone.
1986: An agreement was now in place for Waikato University to connect into CSnet backbone and take responsibility for the dot.nz country code. Although it was a weird way to connect, with Waikato still caught up in a mix of protocols, at least a strong connection had been made directly through to the US Internet backbone. The fax was now a major communications tool, with 800 fax machines operating compared to 200 in 1984. The Post Office began commercial operation of its Starnet electronic mail service enabling messages to be left for business subscribers, government departments or universities in ‘electronic mailboxes’ on computers. Users would log in to the remote database to download or send messages via the Pacnet network.
Every US government agency was onboard NSFnet and gateways were being established around the world through shared infrastructure agreements with other scientific networks (including ARPAnet). The first connections were at 56kbit/sec but access excluded any “purposes not in support of research and education”. By 1986 there were 5000 connected hosts and a year later that number had skyrocketed to 28,000. Canterbury University’s Computer Science Department spent its furniture budget on a DEC VAX 750, installed Berkeley Unix (BSD4.2) and named the system ‘Cantuar’. Canterbury ended up with UUCP connections to the University of Waterloo in Canada, Victoria University in Wellington, Melbourne University and the Mathematical Centre in Amsterdam. Victoria University of Wellington (VUW) was not only a UUCP site, it was also a node on the Australian SUN-III network, a Sydney University initiative with its own homegrown protocols and an X.25 link.
VUW used this connection to get news, and in turn Canterbury got its UUCP news from VUW’s Computer Science Department. By February 1986 Victoria began providing links to the DSIR and Ministry of Agriculture and Fisheries (MAF) networks. By mid-year Waikato, Massey and Canterbury Universities had joined in using the US links for mail and access to newsgroups.
Richard Naylor, the IT manager at Wellington City Council, began clustering disparate IBM and DEC mainframes within the council to create CityNet, and facilitate the use of email across departments. This was initially done through Telecom’s Pacnet before it was discovered that connecting to a certain address would get the whole council on the Internet. After establishing an email gateway with Victoria University, Naylor began looking at ways to better use the fibre optic links between council buildings and speed up communication, ultimately creating an inter-network with Victoria.
1987: In February the New Zealand Vice-Chancellor’s Standing Committee on Computing decided to follow international precedents and have three second level domains within New Zealand. The dot.ac domain or academic domain would cover universities, polytechnics and schools. The dot.govt domain would cover all government departments and a third domain dot.co.nz would cover all commercial organisations. Under the State-owned Enterprises Act of 1986 the New Zealand Post Office was split into state trading companies including NZ Post, Postbank and Telecom Corporation. On 31 March 1987, the newly created Telecom became an SOE.
The Government-owned Telecom Corporation purchased the assets of the old Post Office for $3.2 billion and began work on improving the services and network as the telecommunications market progressively deregulated. While Telecom had launched an Advanced Technology Group headed by Dr Murray Milner, who was himself using the Internet at 2.4kbit/sec from his base in Silicon Valley where he was studying, Telecom’s focus remained on X.25. It would be another decade before it was seen to take the Internet seriously. Telecom launched its 025 mobile network and CDPD mobile data network and by the end of 1987 had 2000 customers. It cost $2.84 for a 3 minute fixed line toll call between Auckland and Wellington and $4.20 for a 3 minute off-peak call to Australia. There were 38,000 remaining party line phone customers.
All main DSIR sites were now part of the DSIRnet and all universities were connected into SpearNet (South Pacific Educational and Research Network), which used the Janet protocols for mail, file transfer and transport layer with lower layers provided by Telecom’s Pacnet X.25 network. Victoria University had managed a connection to North America (University of Calgary) and to Melbourne University using Unix (UUCP) protocols and connected to DSIR Applied Maths, Fisheries Research and ICL Computers mainly for USENET and email. Victoria operated a mail gateway between the networks but the different protocols require technical wizardry to negotiate. Sorting through this dilemma ultimately inspired the creation of second level domains service (2lds) in the .nz namespace.
While Waikato University was connected to the Internet backbone via CSnet and technically operating the dot.nz country code, it had been convinced by Telecom the way forward was X.25, and was still trying to cobble together an efficient solution to share its ‘store and forward’ access with other universities. John Houlker from Waikato University and Professor John Hine from Victoria University’s Computer Science Department, went to the US looking for a better deal. They began negotiating with Tony Villasenor, head of NASA’s scientific Internet, and Jim Hart a high performance computing specialist from NASA’s Ames research centre, who wanted to get the Internet into the Asia-Pacific region to connect a variety of science projects. They would pay for half the connection to New Zealand but there were details to work out, costs to cover and Australia wasn’t happy at the prospect.
Closed ISDN trials were planned from 1987 and it was expected that by 1990 a narrowband digital network would be commercially available, enabling users to operate telephone, videotext, packet switching, facsimile and various data networks as one integrated service. In 1990 the hype continued but very little had happened.
1988: Telecom installs large capacity fibre optic cables with up to 72 fibres around the central business districts of the largest cities. It also delivers international capacity to the Waikato University where the first Internet Exchange (NZIX) is created around an Ethernet switch using IGP routing protocols. Victoria University decides to use routers rather than bridges on the new Ethernet LAN that will link the new Computer Science building to the existing Computer Center, purchasing them from an unknown company called Cisco, rather than the better known Wellfleet or Proteon. VUW suggests that ECL (a division of the TV repair people Tisco) become the country agents for Cisco (ECL became Case, then Dowty, and later Logical, purchased by IBM). Five Cisco MGS routers were ordered, Cisco were unable to deliver them on time and substituted the larger AGS models for three of them. Clear Communications (MCI-Todd Communications) delivers two 512k circuits to Hamilton, terminated at state-of-the-art Cisco 4500 routers. Telecommunications equipment exports total $6.6 million. Telecom raises eyebrows and tempers by hiking the price of its Megaplan (2Mbit/sec premium ISDN service) by 114 percent in November ($28,000 to $58,000 per month). There are 2300 cellphone (brickphone) subscribers to the Telecom network.
1989: In April New Zealand becomes the first nation in the Asia Pacific region with a full connection directly into the US Internet backbone. NASA is paying for half the cost of the 9.6kbit/sec analogue ANZCAN undersea link from the NSFnet node at Hawaii through to Waikato University. The first IP link out of Waikato was a SLIP connection between Victoria and Waikato running over the DSIR’s internal serial network. It was to be another six months before the link between Victoria and Massey University was live and many months later before all universities joined the official New Zealand Internet node.
On April 1, the statutory monopoly enjoyed by the old Post Office was axed, allowing anyone to compete with new State-owned enterprise, Telecom. Under new management an extensive restructuring programme was underway, thousands of jobs were axed and outdated systems replaced with modern computerised equipment. However the commercial aggression of the refocused telco surprised many. TUANZ (Telecommunications Users Association) and ITANZ (Information Technology Association) slam Telecom for its huge increase in Megaplan charging and by August the first call for the Commerce Commission to investigate the monopoly telco for ‘making excessive profit and using anti-competitive measures’ is made. Some were still prepared to pay for the service. The United Building Society connected its Christchurch and Auckland offices, aggregating 30-ISDN channels, with a $500,000 Megaplan 2Mbit/sec voice and data link.
Competition arrived for state-owned television in the form of TV3. The old BCNZ was ‘disestablished’ to make way for an autonomous commercial television company, the State Owned Enterprise, Television New Zealand. UHF television frequencies were offered to private enterprise. The new Broadcasting Act resulted in the formation of New Zealand On Air and the Broadcasting Standards Authority. TV3, the first privately owned free-to-air television network, owned by Canwest, debuted. On June 6, New Zealand broadcasting and telecommunications experts engaged in an interactive satellite based videoconference between Wellington’s Victoria University and Ohio State University to discuss the possibilities of life in a deregulated environment. The Wellington students had been exchanging emails with their US counterparts using the BitNet service and voice connections. They were simulating what life might be like if widespread broadband ISDN were available in the electronic communications environment everyone expected would soon be at the heart of university education.
Pacsat, the parent company of alternative New Zealand tolls company Telpac, announced it might relocate its Skyswitch and manufacturing plant to New Zealand ahead of its proposed $21 million local network. After registering as a cut–price network operator and months of hype, Telpac manager and fraudster Glen Nicholls, having left a trail of debts behind, disappeared. US network giant Compuserve acquired Applied Computing and established a local base providing ‘information services’ to subscribers of Telecom’s Pacnet service. Handypoint (National and Westpac) and Cashline (ASB and Trustbank) merge into a single eftpos network known as Electronic Transaction Service Ltd.
Telecommunications equipment exports had doubled from 1988 to $15.6 million. PacRim, the first step in the world’s longest undersea fibre optic cable was signed off in Auckland in September. The local connection in the 124,000knm 560Mbit/ link into Hawaii would interconnect with the Tasman 2 cable running to Australia. With Waikato now operating as a gateway for the Internet, the remaining universities take a direct 9600bit/sec feed and begin operating as Kawaihiko, expanding their existing relationship with the DSIR networks. The speed of the TCP/IP connection with Hawaii had doubled from 2.4kbit/sec to 4.8kbit/sec. The IT staff at the universities operating routers, switches and other technology required for Internet access now knew more about this technology than most telco engineers. The first Internet service provider (ISP) Actrix began operation in November with a UUCP link to Victoria University’s Computer Science Department for email and news feeds. Wellington City Council replaced its UUCP link with a direct Internet connection to the Waikato gateway.
The 1990s: With deregulation in telecommunications, broadcasting and banking creating a more openly competitive environment than anywhere else in the world, the debate is how to maximize those opportunities, particularly as the Internet and the worldwide web shift from arcane terms to mainstream use. The term ‘information superhighway’ seems to promise an end to ‘the tyranny of distance’ with telcos and techno visionaries waxing eloquent about a science fictional future where New Zealand could lead the world. Talk of ‘broadband’ and ‘convergence’ of computing, broadcasting and telecommunications add to the frustration as the so-called ‘competitive environment’ fails to deliver.
1990: Pakuranga MP Maurice Williamson became the country’s first Information and Communications Technology minister in Jim Bolgers’ National government and appoints Reg Hammond and Colin Jackson to his IT Advisory Group. A special unit within the Commerce Commission is working overtime dealing with complaints about Telecom, among them six businesses facing strong opposition as they attempt to compete in the newly deregulated marketplace. Action is bought under Section 36 of the Commerce Act covering anti-competitive activity. The legal battles go on for years. Telecom itself is inundated with complaints from the public about double billing from its locally developed ICMS billing system which at $73 million is already triple the planned cost. Telecom has sacked 10,000 people by March 1990 and made a $300 million profit. It also spent $2 million on a PR campaign to try and ease public concerns.
Telecom insists ‘broadband” ISDN (30 x 2Mb channels) should be available to all New Zealand homes and businesses by 1995. It never happens. There are now 58,000 mobile or cellular telephone subscribers. Pay TV company Sky Television broadcasting on the UHF band enters the market. In January MCI-Todd Communications, having gained network operator status in New Zealand is battling with Telecom over an interconnection agreement. An ‘in principal’ agreement is reached by August but six months later final details are still being debated. The consortium involving the local Todd Corporation and the state-owned Railways Corporation in partnership with US telecommunications plans to create a nationwide network using fibre optic cabling that straddles the main railway lines. It becomes known as the Alternate Telecommunications Company and begins private line operations in December.
On 1 June Kiwi Cable Company registered as a network operator, later becoming Saturn Communications. Also in June, Telecom is sold to wholly owned subsidiaries of Bell Atlantic and Ameritech for $NZ 4,250 million. This is the biggest business deal in New Zealand’s history and the sixth biggest deal in the world in 1990. The plan is that the sale will help pay of growing public debt and ensure consumers get a much better deal. Public debt and consumer frustration continue to rise. There are now more complaints about Telecom than any other business. KCBBS makes Usenet and email available. There are a total of 386 newsgroups and a full news feed is 9 - 12 Mb. The Kawaihiko universities network upgrades from dial-up to dedicated DDS links and in November the NZGate analog link between Hawaii and Waikato is upgraded with a 14,400bit/sec cable link. Initially the cost of the international link was divided equally among six universities but as use proved increasingly disproportionate, volume charging was introduced based on traffic to and from each university, late in 1990.
1991: According to Network Wizards there were 1193 New Zealanders connected to the Internet in 1991, within two years this had rocketed to between 10,000 -15,000, one of the fastest growth spurts in the world. Richard Naylor convinced the Wellington City Council to launch Citynet, a FreeNet-based community network offering every citizen free dial-up access to council information. It is the second local authority outside the US to offer such a service. The council also introduced a Gopher server to publish council information online. In July the Victoria University-Waikato Internet link is upgraded to 48kbit/sec to cope with the growth in traffic. Telecom’s new owners having learned what they needed about operating in a deregulated environment take the money and run. Telecom was listed on the New Zealand, Australian and New York stock exchanges after Ameritech and Bell Atlantic sold down 724.5 million ordinary shares at NZ$2 each. The Alternative Telecoms Company, now owned equally by TVNZ, Todd Corporation, MCI and British Telecom, and becomes Clear Communications Limited offering a full tolls service exactly two years to the day (April 1, 1991) since deregulation. Some issues including rural connection remain outstanding. It begins services in May with 7000 customers claiming to shave 12-15 percent off Telecom’s toll charges.
Canwest, owners of TV3 launch a second free-to-air channel TV4, Telecom introduces ISDN (integrated services digital network) and on April 5th local business call charging makes that service impossible expensive as it uses two channels and Telecom charges for both. Telecom also outlines plans for full optical switching, wireless broadband ISDN, metropolitan networks running at hundreds of Mbit/sec and on-demand integrated broadband and mobile services over the next decade in its Vision 2000. In August Telecom introduces its Centrex system, a virtual PABX to centralise inbound and outbound calls or diversions to branch offices, cellphones, or voice mail systems. Fujitsu partners with Compuserve, which has 700 users across both countries and plans to set up two large databases in Australia and New Zealand. It hopes to have 100,000 local users within 5-years. Netway Communications managing director Malcolm Dick believes competing with his half owner Telecom is ‘good and healthy’. He’s using Aussat for trans-Tasman communication and considering leasing space from Clear Communications.
There is talk about the government actually getting involved in helping to fund a science and research network with the National Library joining with the universities Kawaihiko network. Dr Ian Forrester, the first chief scientist of the newly formed Ministry of Science Research and Technology (MoRST), championed the idea but when he left it languished. A bid was then put forward for funding based on a Cabinet directive in 1991 for a nationwide network initiative. All the interested parties got together but then there was a dust up with the DSIR claiming it had developed its own systems and directions which threw a spanner in the works. DSIR then made its own bid to run the network and managing the Internet While some funding for DDI links was made available, failure to agree on a common strategy, meant any government support for a common network turned to custard.
1992: At the peak of bulletin board (BBS) popularity around 1990-1992, there were estimated to be around 150,000 computers in New Zealand homes, over 100 BBS and thousands of subscribers, many logging into multiple discussion boards in search of specific information and mental stimulation. In Feb the 14.4kbit/sec analogue satellite link to Hawaii was replaced with a 64kbit/sec satellite link to NASA’s Ames spaces research centre in California.
A nz.netstatus posting on 3 March 1992 ( Message-ID: 1992Mar3.firstname.lastname@example.org) says
>We are expecting to have sun outages affect circuits from
>NASA Ames to Australia (AARNet, 139.130 net) and New Zealand (Univ of
>Waikato, net 130.217) for the next 4-5 days (March 1-5, 1992).
Victoria University Computer Science Department transformed an unauthourised debt situation, created by the cost of its international connections to keep pace with the Internet evolution, into a quarter of a million dollar revenue stream. It was charging ISPs and businesses for use of its bandwidth. Without any research funding and few who understood what they were up to they were simply being entrepreneurial. Even Auckland University handed its modems over to Victoria which was also providing services to pioneering ISP Actrix, run by John Vorstermans and Paul Gillingwater. Soon Actrix was on campus and handling the commercial side of the business.
Growing demand from home users wanting access to news groups and email resulted in the Jon Clarke’s Status bulletin board system transforming into the Internet Company of New Zealand in 1992 and relocating its equipment from a Parnell garage to Airdale St, opposite the Telecom central Auckland exchange. Soon it was expanding into the business market and one of its first customers was the Pelican bar on Elliot Street, run by brothers Tim and Nick Wood.
Meanwhile the Crown Research Institutes Act 1992 split the DSIR into nine Crown Research Institutes (CRIs) from July. MAFnet was also reworked as a profit making enterprise and they all began competing with each other for funding and resources. That delayed the formation of the new Tuianet (sew together or bound together) management group, administered by the Tuia Society, with a mandate for connecting New Zealand to the Internet and the inter-networking of universities, the National Library, the CRIs and the Ministry of Research, Science and Technology. Ultimately the DSIR network became CRInet managed by the newly formed Industrial Research Ltd (IRL) and it was agreed to go with frame relay technology to standardise and speed up the network links across the country.
Tuia continued to work behind the scenes to mange domains and cover off all the related administration issues to do with ensuring nationwide coverage, and as demand grew, increase the speed and availability of bandwidth. From late 1992 the more robust network, which now connected all seven universities, began operating at 48kbit/sec over Telecom’s frame relay network, with digital leased line links to smaller sites.
Meanwhile Clear and Telecom finally reached a full agreement on local service interconnection and engage in a price war over toll calls. Wellington City Council upgraded its Internet link to 48kbit/sec. In March Telecom switched on the $200 million Tasman 2 submarine fibre optic cable between Australia and New Zealand - the first stage in the massive Pacific Cable network due to ring the Pacific basin by 1994. Telecom introduced the No 7 signaling to add value to 0800, 0900, automated calling card services, Centrex and private networking and enhanced ISDN services, introducing the concept of the ‘intelligent network’. Telecom claimed to have invested $3.3 billion in its infrastructure to date. In the first step toward transparent and open local government using the Internet, IT manager Richard Naylor put the Wellington City Council by-laws on-line.
The World Communications Laboratory (WCL) is established to promote New Zealand as a centre of excellence for developing and using broadband connections capable of supporting voice, data, video and graphics. There’s initial funding from government, business and carriers, then after enthusiastic support from science and research leaders and senior ministers, the government and Telecom pulled the funding plug and WCL went down the gurgler.
1993: Internet governance was at crossroads, it could no longer be contained within the academic world and while the Tuia Society AGM in 1993 agreed it was no longer representative no other body seemed willing to step up. With Waikato charging Tuinet for international traffic and Tuianet was now being charged by Waikato for international traffic and had to pass on costs to its members. In October Nevil Brownlee from the University of Auckland released his NeTraMet, network traffic meter to help universities and ISPs with IP traffic accounting. The Tuianet members planned to use their collective buying power to force the carriers to deliver a better deal for bandwidth but while they were negotiating the deal, the carriers went to each university separately effectively destroying their collective bargaining stance. Tuianet effectively lost control of the development of networking for research and education in New Zealand because everyone went to different suppliers. The parties rarely met again.
The Government had failed to step in and take the lead in creating a framework or funding for this network which was essential to the nation’s future academic and research capabilities. It took a hands-off approach, leaving it up to commercial interests. And so it was, government r&d was held to ransom by market forces from that day on and demand for Internet services continued to escalate. The increased flow of traffic forced the doubling of capacity from the Warkworth satellite station to NASA’s Ames research facility in California’s Silicon Valley to a 128kbit/sec satellite circuit. The $500 million PacRim East undersea fibre optic cable between New Zealand and Hawaii, a partnership between Telecom, AT&T, KDD and Telstra, Australia becomes fully operational in June, offering voice, video and data transmission.
Victoria University undergraduate Nathan Torkington reckons he was the first to create ‘a real web site’ in New Zealand with actual useful information on it. He was part of the WWW Talk mailing list where all the software developments were posted and ended up sharing ideas and data with web pioneer Tim Berners Lee and Mosaic founder Mark Andreessen. Torkington became sought after to share his web development skills with Kiwi academics and pulled together everything he knew to created the first Worldwide Web FAQ which was published on 6 April 1993 in the Usenet news groups and was ultimately reprinted in “a ton of books”.
Colin Jackson is convinced his efforts inside government meant New Zealand was one of the first nations to get an official government web server up and running with help from the experts at Victoria University. His team also ran the first election night web server with real time results which didn’t actual melt down.
The NASA subsidised Internet satellite connection with the US backbone doubled in July for the third time in three years to 256kbit/sec. Rather than the clumsy PACCOM moniker for the access gateway at Waikato, the term NZGate began to be used. In June and again in August Simon Lyall’s ‘Internet Access in New Zealand FAQ’ was posted on Usenet to help bring ‘newbies’ up to speed on Internet etiquette and how to find their way around.
Meanwhile Bellsouth launched the first mobile phone network to compete with Telecom. Telstra purchased 20-year rights to operate a second mobile network then sold its spectrum to Bellsouth in return for mobile services. Ameritech and Bell Atlantic had by this stage reduced their Telecom shareholding to a combined 49.6 percent. According to Statistics New Zealand average residential phone call pricing plummeted 50 percent between 1987 and 1993. In July KCBBS became Internet connected with a 48kbit/sec to Auckland University Computer Center. CellularVison, an Auckland based company promises a 49 channel wireless TV and data network which could also be used for phone calls and on-line shopping is promised. It never happens. Trevor Rogers MP, introduces Technology and Crimes Reform Bill into Parliament which would have the effect of making ISPs responsible for “objectionable material” carried by their networks. It never happens. There are about 10,000 Kiwi Internet users.
1994: NASA had been scaling back its funding for the international link to Waikato University and the cash ceased to flow from 30 April 1994. However Waikato’s controversial volume charging approach ensured there was sufficient cash in the coffers to cover ongoing charges including increases in bandwidth. Later in 1994 Waikato’s international link to the West Coast of the US, supplied by AT&T, had an embarrassing outage. It failed during during a demonstration of the commercial possibilities of web connectivity at the Computerworld Expo in Auckland. A technician at the AT&T exchange in San Francisco had accidentally knocked out a plug. It took six hours to sort out. A sort time later the AT&T circuit failed again forcing Waikato to put in a back up circuit to the NASA gateway with Sprint.
Clear and Telecom are engaged in major legal battles over competition law ending up with a Privvy Council decision backing Telecom’s right to maintain its monopolistic activities. In June Telecom forms a joint venture with Taranaki Polytechnic for a cut-down Internet access product for schools and other special interest groups, called NZ Online. In September Telecom’s Netway Communications announces a retail ISP service for corporate customers will launch in six months. It doesn’t. BellSouth network is now transmitting data and soon achieves 80 percent coverage. According to Net Wizards and a report by Colin Jackson at the Ministry of Commerce, New Zealand’s Internet goes through a rapid growth spurt, leading the world in uptake before settling back to ‘normal’ 80-100% percent growth rates which are now common.
In October 1994 Naylor runs a webcast from the Michael Fowler Centre of the Tawa Schools Music Festival. There were 16 viewers in 12 countries but it was something few people had done before. At this stage Mbone tools were just starting to emerge, and the Rolling Stones famous Internet concert was still a month away. The third stage of the Pacific cable network connecting New Zealand and Australia with Asia via Guam comes into operation by the end of the year.
Early in 1994 the number of registrations of dot.co.nz exceeded dot.ac.nz registrations. Waikato University was keen to back off from its management role of what was now clearly no longer an academic network but a commercial enterprise. If the trend continued dot.co.nz commercial registrations would overtake the rest in May 1994 and that’s exactly what happened. Frank March, John Houlker and others proposed an independent democratic organisation to take over the domain name service. In November, the Tuia Society held a public meeting to establish a new body to manage Internet infrastructure development.
1995: Internet Society of New Zealand (ISOCNZ) was officially incorporated in November and began to take over the responsibilities of manage the dot.nz domain and the business surrounding overall responsibility from Waikato University for Internet development in New Zealand. There were approximately 2000 domain names in the .nz register.
The Pacrim West cable (Sydney—Guam ) came into service. Since acquiring spectrum in 1989, BellSouth had invested nearly half a billion dollars into building its nationwide cellular network and was pinning its hopes on a new digital mobile technology, known as Global System for Mobile communications, (GSM). It now had 95 percent coverage, the same as Telecom. Clear Communications had spent $8 million trying to resolve ongoing disputes over conditions and cost of interconnection before it reached an agreement on local service interconnection. Clear achieved an estimated market share of 23 percent during its four years of operation while Telecom had enjoyed seven consecutive quarters of revenue growth, and an earnings growth rate that ranked it with the top 15 percent of telcos worldwide.
In January Telecom was in discussion with Microsoft about a joint venture. Telecom announced plans to construct a hybrid fibre -co-axial cable TV and data network to about 300,000 homes. It begins trialling its First Media programming with more than 20 channels of TV to the Auckland suburbs of New Lynn and Pakuranga promising an extended range of new entertainment and interactive information services are ahead. In April Victoria University’s Internetworking Group changed its name to NetLink, offering leased-line, dialup and hosting services. By August it had taken over management of university Internet connections. The NZGate link at Waikato was upgraded to 1Mbit/sec. Wellington City Council’s Citynet stopped accepting new users.
After operating alongside Iconz during 1994 Nick Wood moves his business, the Internet Home users Group (Ihug), across town and is soon joined by his brother Tim. In November In November 1995, stiff new competition arrives in the form of Voyager with the full backing of Australia’s largest ISP, Ozemail. Wellington pioneer Richard Naylor is at it again, positioning a web camera on Mt Ruapehu after it began to rumble and let off a bit of steam. He wrote some software, borrowed Jim Higgins’ laptop, and a cellphone from Telecom, ‘acquired’ a Wellington City Council video camera and set it up so a PC server downloaded an image every 15 minutes. The site achieved three million hits in three months.
In May 1996 Actrix introduced a $5 monthly ‘community service’ which gave users free email through the non-profit PlaNet New Zealand network. ISP Cybernet launched as DoS (Denial of service) attack on Iprolink’s public demonstration of the Internet in Auckland. Cybernet’s upstream provider Auckland University responded by disconnecting them. Nick and Tim Wood and their father John form Internet service provider Ihug (Internet home users group) and are quickly pioneering flat rate ‘all you can eat’ dial up. Voyager launches, offering access for $10/hr, and 0800 access. There are an estimated 84,420 modems in use in New Zealand (IDC) with connection capabilities rapidly moving up from 9.6kbit/sec to 28.8kbit/sec. About 60 per cent of companies now have LANs or WANS. There are 500 domain names in New Zealand registered with the US-based administration body IANA. There are about 12,000 Internet users and 12 ISPs, the standard fare is $10 per megabyte for downloads. According to the Statistics Department the telecommunications market is worth around $3.6 billion.
It’s estimated 23 per cent of New Zealanders have PCs at home. The Ministry of Commerce estimates 60,000 to 100,000 New Zealanders are online. Network Wizards says 53,610 hosts and 9,472,000 worldwide.
1996: Clear, now 100 percent owned by British Telecom, launched its ISDN offering in May and an ISP Clear.net in November. It had 330,000 customers and 20 percent market share, and reluctantly signed a new interconnection agreement with Telecom for two cents a minute for traffic termination. Telstra entered the market focusing on the corporate customer and began building fibre rings in Auckland, Wellington and Christchurch. Kiwi Cable was investing $40 million in expanding its fibre network to pass 50,000 homes by the end of the year, working in closely with power companies to string up its cable. Telecom establishes an exchange in the US for international traffic.
Telecom owned Netway Communications, a joint venture between Telecom and Freightways, began providing bandwidth and Internet-related services to business. Waikato University’s NZGate stopped reselling international Internet bandwidth from Netway, opening up the wholesale bandwidth market to Clear and later Telstra. NZGate is scaled down and is replaced by the NZIX Internet exchange. Pronet, a cooperative between ISPs Actrix, Iprolink, and Plain Communications begins buying bulk backbone bandwidth from Telecom and Clear for network peering. ISPs are connected via frame relay. Citynet, Wellington’s pioneering experiment in community Internet access is decommissioned. NetLink moves into Christchurch and Dunedin. Telecom extends the rollout of its fibre-coax cable network in parts of Auckland and Wellington for delivery of its First Media pay television content services. Telecom claims 300,000 cellular customers and BellSouth around 40,000 - that’s about 11 percent penetration, compared with Australia which has 17 percent. According to Paul Budde Communications, the year ended with cellular market revenue growing 53 percent over 1995 with 380,000 subscribers, up 16 percent. Telecom’s ISDN service only has 500 customers growing to 1000 by the end of the year. There’s outrage that it’s charging too much ($500 installation and $120-$150 per month).
Competition among ISPs changed dramatically in May-1996 with the entrance of Telecom Online Services (TOLS) which soon changes its name to Xtra. New Zealand’s Internet uptake is among the highest in the world growing 15 percent per month. There are now about 30 ISPs and more than 160,000 users. The Internet Company of New Zealand (Iconz) is top dog with about 12,000 subscribers, Voyager has about 10,000, CompuServe 6000 and Actrix 3000. Xtra is immediately in a commanding position through its access to every town and city and its huge marketing ability. The arrival of Clear communication’s Clear.net six months after Xtra again puts the wind up the fledgling market. Voyager halves its hourly rate to $5 and in August Xtra follows suit dropping its hourly rate to $2.50. The price wars take a toll on smaller ISPs with rates down to $1.50 per megabyte and .50 cents for local traffic.
ISOCNZ in taking over the administrative role of ‘managing the Internet’ hadn’t entirely bargained on what that might entail. Most New Zealand domain names were still managed and moderated manually at Waikato University by Rex Croft who was considered New Zealand’s ‘father of DNS’. As the pressure came on Waikato began charging for its technical services and set a deadline to hand over the responsibilities. The commercialisation of the domain name space was done in a ‘big bang’ exercise on July 22, 1996. A fee of $96.75 including GST and administration costs stuck in the craw of Internet users who had been used to getting domain names free. In October 1996 ISOCNZ had, on legal advice, established a subsidiary company, The New Zealand Internet Registry Ltd (trading as Domainz) to run the domain name register. The Internet Service Providers Association (ISPANZ) is formed to represent the interests of ISPs and their customers, largely in response to Xtra’s price cuts. In June Xtra boss Chris Tyler said Xtra is three months away from delivering an Eft-Pos direct payment service. It never happens. A major security issue with Xtra forces Telecom to shut down its mail server in August after it was discovered hackers could easily get access. Customers were advised to change their passwords. Ihug merges with Efficient Software. On October 12 there was Web coverage of the 1996 General Election.
New Zealand has an estimated 241,000 pay TV subscribers and 5000 cable TV users and around 30,000 eftpos terminals. In March IT minister Maurice Williamson launches Impact 2001 – How IT will change New Zealand. Words like e-commerce, multimedia, convergence and smart cards are now in everyday use. The second annual IT industry survey shows a 61 percent increase in exports of communications hardware to $142 million. A survey of schools shows nearly all schools have fax machines. There is now one computer per 18 students in primary schools and one per 10 students in secondary schools. More than half the computers were older than three years. The percentage connected to a modem in primary schools had increased to 37% (14% in 1993) and secondary schools to 73 percent (44% in 1993) The main obstacles for greater penetration were seen as the high cost and lack of teacher training.
1997: To date 95.7 percent of all New Zealand households have a telephone, comparable to Australia and higher than the US. Clear Communications, which now has an 8 percent market share, begins withholding interconnection fees from Telecom in February, and in July sues the government for failing to act against Telecom’s alleged anticompetitive behaviour. By November Clear and Telecom agree on number portability and Clear begins providing local access service to Auckland, Wellington and Christchurch. Telecom launches its Internet access service IPNet in January as an 0800 gateway for commercial ISPs wanting national Internet access for local call prices. Concerns about the stability of the Internet in New Zealand were further fuelled in May when the main gateway at Waikato University became overloaded shutting down international access for eight hours. More secondary domain name servers (DNS) were added to the backbone. Clear pulled MCI circuits back to Auckland, to avoid tromboning international traffic to Waikato and back and Clear. Telecom, Telstra NZ began discussing peering in Auckland with a triangle of 2Mbit/sec circuits provisioned between the three telcos as an interim measure. Auckland’s iconic Sky Tower was the ideal location for an independent Auckland peering exchange (APE). Saturn Communications (Saturn) entered the residential phone market in Wellington after signing an interconnection agreement with Telecom. The industry complained Telecom was offering better prices for bandwidth to it’s wholly owned ISP Xtra (which now has 45,000 customers) than other ISPs. The Commerce Commission decides it is within its rights to do so.
New Zealand was assured it had all the international communications capacity it would ever need with PacRim East, PacRimWest and Tasman 2 fibre optic undersea cables linking us to the rest of the world. By mid-1997 the entire capacity was booked up largely due to the “remarkable growth of the Internet”. In July Telecom New Zealand, Optus and MFS Globenet (later acquired by WorldCom) agree to sponsor the Southern Cross cable. Telecom announces a 5-year $30 million contract with Newbridge-Siemens to futureproof its backbone network with ATM (asynchronous transfer mode) technology.
In August, British Telecom announces that it is increasing its stake in Clear to 50 percent taking over MCI’s 25 percent shareholding. BellSouth and Singapore Technologies Ventures announced the sale of BellSouth New Zealand to the Vodafone Group for NZ$750 million. In October Ihug is the first ISP to launch residential broadband using satellite bandwidth through an arrangement with PanAmSat to providing an additional path for inbound traffic. It serves Auckland customers via a microwave link from the Sky Tower at download speeds of between 256kbit/sec and 2Mbit/sec and expands to satellite coverage in 1998. After reaching about 30,000 Internet users in New Zealand Ihug ventures across the Tasman, offering bandwidth via satellite in Sydney and Melbourne.
Telecom pulls the plug on its HFC cable roll out and First Media content business after passing only 68,000 homes. It claims there are more appropriate technologies to carry fast data and video. It will continue to look at the relevance of fibre to the curb. Telecom and cable partner Ericsson are caught in a slew of law suits with contractors that goes on for another two years. In December Telecom launched a technology trial of DSL (digital subscriber line) technology from the Kandallah exchange in Wellington and hedged its bets upgraded another 11 exchanges for ISDN capability. A Ministry of Commerce report showed its tariffs were between 49-97% higher in many cases than similar markets so Telecom dropped ISDN prices twice, resulting in resulting in much increased uptake. It also reduces prices on the controversial 2Mbit/sec Megalink and metropolitan DDS and links at 64kbit/sec and above. In November 1997 Telecom announced a $700 million project to upgrade or replace 150 old NEC NEAC digital exchanges which it admitted were the bottleneck in its attempt to meet market demand. A decade later the NEACs in the system were still being blamed for bottlenecks.
Telecom withdraws its membership of the Telecommunications Users Association (TUANZ) because of a perceived bias. ISOCNZ established a subsidiary company The New Zealand Internet Registry Ltd (trading as Domainz) to run the domain name register. ISOCNZ registers 15,000 domain names. It’s estimated there are 393,000 Internet users across business, education, government and home, an increase of around 46 percent over the previous year. About 30 percent of New Zealanders now have PCs.
The Internal Affairs Department’s Government within Reach (GWR) project launched in 1995 took two years to come up with proposals for the way forward, even then most weren’t acted on because less than one third of government agencies showed any interest. In 1997 the government Internet presence was further reviewed with a mandate to help close the gap between “information haves and have nots” and ensure equal access to all public data. The assessment was made that by 2002 a maximum of 60 percent of the New Zealand population would have access to the Internet so there was an urgent need for action. The government however still considered it was still too early to commit to a public network to distribute its information. The first hint of digital television becoming a reality for New Zealand’s free-to-air broadcasters came late in 1997 as Broadcast Communications Limited (BCL), the State-owned infrastructure company began re-broadcasting TV2 in digital format for 10-days from a van moving around Auckland.
Over the past five years the New Zealand telecommunications market had stable growth of 8-11 percent per annum and has topped $4 billion for the first time including voice, data networking, mobile services, equipment, directories and related revenues. Mobile revenues overall were $368 million a 4 percent increase, representing a 36 percent growth in subscriber numbers to 520,000. In November the Ministry of Commerce proposed Telecom be required to produce separate financial statements for its local loop and other businesses and to undertake a full economic costing of the Kiwi Share Obligations.
A further buy-back of shares by the Telecom in late 1996, meant Ameritech and Bell Atlantic had recovered 85 percent of their original investment. The company was now worth about $7 billion and the investors had graded the bulk of the profit (around 70 percent a year). In November 1997 Bell Atlantic and Ameritech having begun investing in more recently deregulated markets announced they were off.
In the words of financial analyst Brian Gaynor: “Their combined 90 percent shareholding cost $3.8 billion yet they have received an estimated $5 billion from dividends, a capital repayment, share buyback and the sale of shares in the 1991 float and in 1992 and 1993…Thus the two American telecommunication giants will exit New’ Zealand with an estimated total realisation, including dividends, of $11.5 billion, compared with the original investment of just $3.8 billion.”
1998: In the past Internet traffic has had to travel to NZGate, sometimes via the US, before being distributed to users across town. Clear, Telecom and Telstra and Auckland and Waikato universities are working on ways to increase performance and improve routing. All traffic currently runs over a 512kbit/sec frame relay connection. Some ISPs have alternative access into the US to avoid network congestion. Telecom and Clear take over running NZGate, the main Internet gateway into New Zealand previously managed and maintained by Waikato University with plans to increase its speed and robustness. Telecom is also looking at upgrading its IPNet digital Internet distribution network to more efficiently distribute video and audio to Xtra subscribers.
The network operators NZNOG list is created in February and by June has 18 subscribers. There are now 26 companies providing various levels of competitive telecommunications services in New Zealand. In July the Internet Exchange (NZIX) is upgraded from a single Cisco CAT 5000 switch to two fully redundant Cisco WS-2926 switches. Netway Communications is pulled back into the Telecom fold in March to look after fully managed network services. Southern Cross Cables, half owned by Telecom, announces its plans to build a new fibre optic cable linking New Zealand with Australia and North America. Vodafone buys BellSouth which now has about 130,000 mobile customers compared to Telecom Mobile’s 500,000.
Telecom is involved in a number of legal proceedings including lawsuits mainly bought by Clear relating to Telecom’s right to provide pay TV, Internet, bundling practices and terms of interconnection. Clear threatens to withhold billing information from Telecom. It now costs 60 cents for a 3 minute off-peak toll call between Auckland and Wellington ($2.84 a decade ago) and $1.46 for a 3 minute off peak call to Australia ($4.20 a decade ago). There are only 200 party lines left (38,000 a decade ago). In April the annual NUS International survey found that while New Zealand business local calls were among the cheapest in the world, business line rentals and national toll calls are among the most expensive. ClearNet begins selling international bandwidth on MCI’s PacRim East cable to local ISPS. Voyager goes nationwide with its 56k service and has installed a satellite dish for better international links. Ihug now has two 34Mb satellite feeds into Napa Valley in San Francisco to earth stations in Auckland, Sydney, Melbourne, Wellington, Christchurch and Dunedin. It transmits 85 percent of its Internet traffic via satellite and adds Brisbane and Adelaide to its footprint.
Iconz buys three new Cisco boxes which each take 120 phone lines. They announce grand plans to become a pseudo-carrier. They already offer videoconferencing and streaming video and are talking about voice over the Internet. By September Ihug and Xtra unable to keep pace with the dialup revolution booked up all new ISDN lines out of Auckland’s Mayoral Drive Exchange for the next six months. Saturn Communications begins offering bundled voice, Internet and pay TV in Wellington passing 100,000 homes with 25 percent penetration. Capital Networks a joint venture with the Wellington City Council and 20 shareholders including Clear, Saturn and INL launches a new gigabit Ethernet network over fibre through the city centre. It eventually becomes CityLink which provides connectivity between customers and ISPs and begins organised peering services. The National Library begins peering over the Wellington Internet exchange (WIX) using a 386 notebook with two Ethernet cards running Linux, with Clear, Iconz, Netlink, Paradise, CityLink.
Telecom’s First Media content service closes and all services stop on July 31.Telecom’s commercial trial of DSL fast Internet to 200 customers in Wellington continues. There’s talk of a roll out to exchanges across the country starting in March and services including cheap high speed data and pay-TV. Sky TV introduces its digital satellite service with over 40 channels plus delivering free to air and is the only digital platform in New Zealand. The average PC costs $3400, about $500 more than buyers in the US are paying. Modem speeds are now 56k for dial up access although everyone’s waiting for digital subscriber line (DSL) to roll out. There are now about 60 ISPs and varying reports about the number of Internet users. IDC estimates ISP revenues — mainly from providing access services — will reach in excess of $116.7 million by the end of the year. This year IDC downplays Internet user numbers to 315,020, other reports claim 501,256 (an initial projection from IDC used later by Telecom), while AC Nielson says it’s more like 741,000 largely from what the ISPs claim about their own take-up. Major ISPs make their own claims: Xtra (150,000), Clearnet (70,000), Ihug (about 60,000) Voyager (28,000). Not far behind are Iconz, CompuServe and Iprolink trailed by dozens of smaller players. There are different methodologies in play but the real figure is likely to be around 400,000. Kawaihiko, the defacto science and research network, shuts down at the end of 1998 and former gateway manager John Houlker, having done himself out of a job, joins Telecom International Networks. His first project was to establish new landing points for its international circuits in Los Angeles and at the Palo Alto Internet exchange.
1999: In December 1998 IPNet had clocked up 87 million call minutes and been through a major upgrade now Telecom used its monopoly position as ‘owner’ of the local loop to force the entire Internet community to shift across to a new dial-up access network. Telecom claimed its public switched network was creaking under the strain of domestic Internet users hogging the lines and gave ISPs until 1 August 1999 to add an 0867 access number to IPNet or face a two cents per minute charge after an initial 10 hours on-line per month. ISPs were outraged, believing they were being blackmailed as part of a commercial tactic, when they were smack in the middle of a price war over flat rate accounts. The 0867 prefix also by-passed existing interconnection deals, depriving rival carriers of termination fees from Telecom. The deal was rejected by Clear. An inquiry was underway.
In March the idea of a neutral peering point in Auckland is discussed. A cabinet and switch are installed on level 48 of the Skytower and the peering point officially referred to as APE (Auckland Peering Exchange) is opened in June (although the first routes aren’t actually exchanged until August). Later in the year the APE switch is replaced with new hardware donated by Roger de Salis at Cisco. Telecom becomes an Australasian company by buying 78 per cent of AAPT Australia’s third largest telco. It also signs an outsourcing deal for all its IT systems with EDS worth $1.5 billion over the next 10 years and launches a new nationwide payphone network using smart card technology. In May Xtra, the country’s largest ISP announces flat-rate access to the Internet for $39.95 a month after Clear announced it intended to do the same. Ihug has been offering flat-rate access for several years. In June Vodafone announced it would spend $200 million over two years upgrading its cellphone network to cope with increased demand. In June 1999, Telecom had, undercover of the 0867 confusion, Telecom finally let its fast Internet service out of the bag but the pricing and performance proved disappointing to many business and domestic users. Jetstream used RADSL (Rate Adaptive Asymmetric Digital Subscriber Line) technology, to compensate for the bad condition of much of our copper cabling, allowing data to be sent down a normal telephone line without impacting normal telephone conversations; 69 exchanges were converted. No-one talking about pay-TV over DSL anymore – it was simply a data service. The cheapest Jetstream service allows 600Mb of data a month for $89 (including GST). Installation and modem costs are extra. Clear’s $5.5 million switch, went live in Christchurch as a main switching point for tolls, data and local traffic for its South Island customers, previously, handled in Wellington.
BT increases its shareholding in Clear Communications to 100 percent. Clear invests $14 million in fibre backbone technology with Nortel. Telstra buys ISP Netlink from Victoria University. TradeMe launches in March 1999 as a classified auction site like e-Bay, but initially specialising in computer parts and systems. In August Saturn launched its residential Internet access over its cable network through a cable-modem and an Ethernet card in the PC. Telecom plans to replace its mobile network with new cdmaOne digital technology optimised for high-speed mobile data transmission. It’s expected to be live by 2001. The $2 billion Southern Cross cable lands on Takapuna beach in Auckland and once its live will be the highest capacity route between Australia, New Zealand and North America. The Government is satisfied with Telecom’s initiative to force everyone onto its IPnet, as long as it doesn’t charge for the service and quality is maintained. From 1 November, Telecom required all ISPs and Internet customers to use its 0867 prefix and to introduce a 2c a minute dial- up charge for residential line customers after 10 hours use which caused an industry uproar. Telecom customers were not impacted.
The Government insisted Telecom must calculate and disclose the net economic cost of complying with Kiwi Share obligations and publish six monthly financial statements that split its operations into a local loop business and other services taking effect from 1 January 2000. It’s estimated there are now 862,000 Internet users depending on who you talk to. There are 1.25 million mobile users - 858,000 with Telecom and 397,000 with Vodafone. Overall investment in telecommunications in New Zealand had been below the OECD average for most of the decade - virtually stagnating in 1999 at one percent growth compared with the international average of 7-9 percent. Close to $5 billion had been invested in the telecommunications market since deregulation but little had been done to decentralise the benefits. Neither of the major carriers had plans to move beyond high-density domestic, commercial and industrial areas.
Meanwhile Telecom admitted its Internet gateway had reached capacity and added an extra satellite circuit to compensate. That move and plans by other major carriers came too late to prevent both official America’s Cup 2000 Regatta web sites being hosted off-shore and several entrepreneurial web sites relocating their content to the US. And the IPNet - 0867 debacle was far from over. The Commerce Commission complaint became the catalyst to help shift the Labour government from ‘hands-off’ mode to taking a serious look at the existing deregulation model. It promised a major review of telecommunications market and the Commerce Act which was supposed to cover competition issues. A cheeky claim from Clear Communications that Telecom should be forced to split up its local network for use by competitors, was to also prove strangely prophetic.
Enter the New Millennium: The Y2K panic is over nothing crashed, systems didn’t fall over. This in part may have been because so much was invested in upgrading and replacing old computers and software that kick started a new era of digital awareness and capability. The only overload that occurred was in Internet use. On 1 January around 12:05am the New Zealand Internet sends more outbound than inbound traffic for the first time ever, as the world wants to know if the first nation to experience the millennium survived Y2K. Worldwide Internet traffic is doubling every 100 days. An NUA Network Survey in May 2000 says 304.3 million people are surfing the net, about 70 million of them in Asia Pacific. Alongside Singapore, New Zealand has the highest user ratio in the Asia Pacific region. That uptake is spurred on by fierce competition from multiple players delivering free dial up access and the new flat rate offerings for higher end services. Locally the Internet infrastructure and the ability to manage all the traffic is pushed to its limits; new technology is put in place to cope and the pressure mounts for Telecom’s competitors to have equal access to the local loop. New Zealanders are no longer casual surfers, the know what they want online and how to get it but are frustrated at the slow surfing and are demanding more affordable broadband.
2000: Government departments were making arbitrary decisions about how to go online, what technology to use and how websites should look. Because the decentralised approach to central government its various departments refused to work together on standards or a common look and feel across their 52 main web sites. Cabinet had to intervene to achieve any cohesion. Accessibility had become a major issue. Although web guidelines were drafted some departments still felt their autonomy was being challenged and took a while to get with the bigger picture. In February Telstra and Saturn Communications merge creating TelstraSaturn. Major expansion of its cable network takes it to 25 per cent penetration in Wellington and with the promised major financial injection it claims it will reach 65 per cent of New Zealand homes and 80 per cent of businesses within five years. It never happens. The first step will be moving into Christchurch, Hamilton and Tauranga. About 650 jobs were lost in the merger. Vodafone has more than 500,000 mobile subscribers and has so far invested about $300 million. In March, Clear doubles the capacity of its North Island backbone using dense wavelength division multiplexing (DWDM) and announces plans for national LMDS (high speed wireless) rollout – it never happens. Clear instead forges a partnership with Vodafone for fixed wireless service. TelstraSaturn establishes a microwave service for Auckland CBD and begins re-selling Vodafone’s cellular services and acquires Wellington ISP Paradise for $18.7 million and disconnects from the NZIX.
Walker Wireless now offering fixed wireless connected at up to 25Mbit/sec. Superway invested $300 million on a North Shore co-axial cable network. Little is heard from them again. United Networks becomes the first electricity lines company to become a telco carrier with a $30 million scheme to run high capacity fibre through Auckland and Wellington CBDs. Sky TV now has 188,000 digital customers (up 63 per cent on 1999) and is looking for $80 million to invests in interactive services and expansion. TVNZ begins talks on piggybacking TV1 and TV2 on Sky’s digital network as its own plans for a digital network are scuttled. After a failed shareholder deal with Sky and another jilting with cinema and property giant Force Corp, satellite ISP Ihug purchases a controlling interest in Video Ezy chain, plans a nationwide on-line ordering and delivery service. This also eventually falls over. Telecom raises its AAPT shareholding to 100 percent
About 50 per cent of the traffic on the Telecom network is Internet use. Over 50 per cent of New Zealanders have access through home, work or education and since the April debacle over 0867 access around 200,000 had signed up with a new breed of ‘free’ Internet providers essentially leveraging the reciprocal interconnection fees for terminating on Telecom’s network to survive. In February Compass launches free dial-up service FreeNet, and in April Clear Communications establishes ZFree, a free dial-up ISP to take advantage of interconnect fees from Telecom customers. In April free ISP i4free does a deal with Clear. Telecom disconnects i4free but the High Court orders it to restore the connection. A government inquiry calls for an independent telecommunications regulator. Clear reaches interim 0867 deal with Telecom, Telecom reaches interconnection deal with TelstraSaturn in July and the Commerce Commission takes legal action against Telecom’s 0867 demands. In October on the eve of the final report from the Government Telecommunications Inquiry, Clear and Telecom finally reach an agreement with Clear paying a lump sum $35 million for all traffic types for the next year.
ISOCNZ begins to change the New Zealand Internet Registry into a Shared Registry System (SRS) to create more competition. Domainz moves to its new registration system (DRS). Between 1997 and mid-2000, Department of Internal Affairs inspectors had successfully prosecuted 49 cases involving the distribution and possession of objectionable material via the Internet. The unit was catching a New Zealand offender every three to five days. The Telecommunications Inquiry puts the squeeze on Telecom to share its once public assets, including wholesaling the local loop to competitors. It predicts increased competition will benefit the economy by $44 million annually and subscribers an additional $328 million. More than half of rural phone users, according to a recent MAF survey, experience Internet disconnection, noisy lines and exchange overloading. Telecom admits its network is not up to scratch.
Telecom forms esolutions, an alliance with EDS New Zealand and Microsoft to develop ecommerce products. Telecom restructures into six operating divisions and buys 5.7 percent of Independent Newspapers (INL) which is seen as a way to get involved in INL’s 49 percent shareholding in pay TV provider Sky TV. Cisco upgrades Telecom’s Auckland-Wellington fibre link with dense wave fibre increasing capacity to a potential 600Gbit/sec across 60 channels. Telecom invests about $200 million on CDMA mobile technology and $1 billion in the Southern Cross cable partnership. Xtra signs up its 300,000th customer, Telecom Mobile celebrates 1,000,000 customers connected to its network and the Southern Cross cable is finally switched on and the first commercial traffic began to flow in November. Telecom’s revenues total $546 million up 8.8 per cent with $432 million from data up 21 percent and $102 million through its IP network up 50 percent.
From August ISP prices were being forced down again from a $40 per month flat rate to an average $25 flat fee for dial up, precipitating the second major price war in just over a year. Many providers now had start-up accounts as low as $10 a month and 10s of thousands began to take up enticing offers from the newly arrived free providers. Xtra continued to dominate the market, having grown 49 percent in 2000 to over 320,000 subscribers. Xtra now accounted for about 42 percent of the market, well ahead of its closest rivals Clear.net and Ihug. The number of ISPs had dropped to around 60, around 20 or so had bitten the dust in the 18 months to the end of 2000 and others had merged or been acquired. Only those who were cash rich and technically geared for growth would survive the market pressures ahead.
2001: Telecom slashed monthly line charges in Wellington and Christchurch, the only places where it is facing serious competition from TelstraSaturn which was delivering bundled phone, Internet and cable TV services. Vodafone had 889,000 mobile customers, Telecom 1269,000. WorldXchange offered home to mobile calls for 16 cents a minute less than Telecom or Clear and its Kiwi managers purchased the local arm from its US parent for an undisclosed sum. The company accused Telecom of abusing its power after being forced to pay the telco $6 million a year in connection fees. WorldXchange moved to deal with Clear but Telecom refused to switch that traffic.
The Commerce Commission investigates Telecom claims that Kiwi Share requirements forcing it to provide free local calling are costing it $186 million. It rejects claims for compensation from other carriers, although with cause they remain jittery. Telecom begins bundling Sky TV with its voice and Internet services. It pulls plug on a $151 million plan to roll out a CDMA wireless network in Australia takes a 19.9 percent stake in Hutchison 3G Australia, a company set up to develop 3G services in there. And it switches on the CDMA wireless network, covering more than 98 percent of New Zealand’s populated areas. In the cellular market Vodafone has 889,000 mobile customers, Telecom has 1269,000. Telecom invests $38 million in a submarine cable between the North and South Islands. Its revenues are about $6.8 billion overall
By March 2001 Telecom had around 12,000 DSL customers with the service available at 82 exchanges and within the reach of 700,000 subscribers. Once it sorted out its billing problems it would be able to comply with Telecommunications Inquiry requirements that it offer wholesale DSL to other providers. Clear Communications was already piloting its DSL service using Telecom’s lines, with manual billing until Telecom got its automated billing system together. Telecom admitted to the inquiry that it had under-invested in its network, and agreed to achieve a minimum of 9.6 kbit/sec - 14.4 kbit/sec speeds for outlying and rural areas at a cost of at least $100 million. Most people are now connecting at 33kbit/sec. Telecom still wanted proof that its lines weren’t up to scratch and was moaning that conforming to the Kiwi Share agreement, was costing it around $186 million to December 2000 – $18.7 million more than for the previous year. It claimed an increasing number of residential customers were costing it money, largely fuelled by Internet use.
On July 28 the Tasman 1 and Southern Cross under sea cables were severed by a ship dragging its anchor during a storm off the coast of Sydney. That was the end of the line for Tasman 1, it was not thought cost effective to repair. In August the last router on NZIX was turned off. ISOCNZ, the Internet Society of New Zealand, re-brands itself as InternetNZ.
In 1993 about 38 percent of New Zealand domains were in the dot.co.nz (company) second level domain, by mid 1999 that had risen to 88 percent. Almost two thirds of domains were linked to a web site, with just under a third using them only for email. Domainz was registering about 1200 names a month, bringing the overall total to about 25,000 domain names, up from about 400 new registrations per month in July 1996. By October 2000 there were 75,500 dot.nz domain names and by May 2001 they had clicked past the 100,000 mark.
Internet pioneer Simon Riley along with the original Tuianet members who had brought the Internet to New Zealand, including John Houlker, John Hine and Neil James convened a meeting at the eVision centre in Wellington in May 2001 to raising awareness about the need for a gigabit backbone. They met with academic and industry luminaries as a ‘call to action’ for a national science and research network.
Telecom still dominated the fast market with its Jetstream service running at speeds of between 256kbit/sec and 6Mbit/sec with 400Mb and 600Mb data caps; users paid 20 cents per Mb for any excess data use. A flat rate Jetstart service with a speed limit of 128kbit/sec was also on offer. It had signed up around 22,000 DSL subscribers, 39 percent of them residential customers. DSL was now available at 110 exchanges and 30 ISPs were reselling Telecom’s service. Clear Communications was offering its own DSL service in some parts of the country but TelstraSaturn’s high speed cable offering had failed to reach beyond Wellington and Christchurch. The roll out which had begun in earnest in March was frozen and plans were announced in November to buy Clear Communications for $435 million. The cable contractor goes bust and sues Downer Engineering, which used to be ConnecTel which used to be part of Telecom. On December 15, from the merger of TelstraSaturn and Clear Communications comes TelstraClear.
On December 18 the Telecommunications Act, which establishes a Telecommunications Commissioner passes into law. A t the end of 2001 the statistics suggested around 60 percent of New Zealanders now have access to the Internet, and moving up to broadband was top of mind. However New Zealand rated only 16th among 30 OECD nations in the 2001 Development of Broadband Access report, largely due to lack of competition and the high cost.
The New Zealand telecommunications market was worth about $NZ 4.1 billion in the 2000-2001 year and expected to grow rapidly to $5 - $6 billion by 2005 according to Telstra International president Dick Simpson. Australian telecommunications researcher Paul Budde was even more bullish, predicting market growth to $15 billion within a decade. Investing in high-speed infrastructure to service the main centres, suburbs, towns and provinces was essential for New Zealand’s competitiveness, prosperity and wellbeing.
2002: A further comprehensive overhaul of the Government’s web presence and use of technology was planned with existing New Zealand Government On-line portal developments put on-hold and the promise of “NZGO on steroids” by June 2002. This was part of an overall plan to try and improve the way government departments communicated with each other and the public. New Telecommunications Commissioner Douglas Web begins work at the Commerce Commission, tasked with smoothing the way for more equitable competition. In his first determination he agrees the cost of providing free connections to all New Zealand homes must be shared by all carriers much to the delight of Telecom. However Telecom was ordered to more than halve the interconnection rate it been charging TelstraClear and other carriers for access to its network. In November Webb set the rate at 1.13c per minute, compared with the 2.6c Telecom had been charging, and ordered Telecom to pay TelstraClear $14 million to cover the difference between the two rates over the five months since TelstraClear first lodged its application for a determination.
Telecom still brings in some 75 per cent of the revenues from the overall retail telecommunications market. Telecom reports a net loss of NZ$188 million for the year ended 30 June 2002, after a partial write-down of its investment in AAPT following a review of asset carrying values. It claims 471,000 difficult to maintain residential customers are costing it $400 each a year. It also sheds its 10 per cent interest in EDS after dissolving the e-solutions partnership both has formed with Microsoft for ecommerce business. Telecom’s Xtra ISP increases its active user base by 34 percent to 335,000, having bought an undisclosed number of customers form the now defunct Voyager ISP. Telecoms CDMA wireless data network now has 110,000 customers. Its next generation CDMA1x network is launched in July capable of 153kbit/sec with coverage across 97 per cent of country. Telecom staff cuts continue hundreds of jobs go. Telecom now has 1.5 million mobile customers.
TelstraSaturn divests itself of 650 staff as restructuring continues after its $435 million merger. Sky TV takes over TelstraClear’s 26,000 pay TV subscribers making it the only pay TV provider of any significant size. Sky now has 476,000 subscribers to its digital and UHF services. Power company United Networks merges with Tangent and both are acquired by another power and gas company Vector. They begin talks on how to merge their underground fibre optic networks. CallPlus is now earning $30 million as a tolls provider but claims it could earn triple that if Telecom allowed it access to its network and is suing Telecom for anticompetitive behaviour dating back three years. Pukekohe power line company Counties Power purchase local loop frequencies in preparation for entering the telco market. Franklin district launches its Wired Country network in Auckland in October.
In August 2002, once the new shared registry system (SRS) had bedded in, the Office of Domain Name Commissioner (DNC) and.nz Registry Services (NZRS) were established. The office of the DNC bought in new policies and procedures, and in its first year the number of registrars jumped from 32 to 48. In September the .maori.nz domain is established and in December a proposal for the .geek.nz 2TLD (second level domain) was received.
Just 14 months after launching, Telecom has more than 200,000 customers on its 027 CDMA network. Alcatel signed a contract to become Telecom’s primary supplier for its next generation IP network on both sides of the Tasman which could be worth about a billion dollars over the next decade. In December the NASA-operated name server MX.NSI.NASA.GOV, after constant service since 1989, ceases to carry NZ zones, having been replaced by commercial DNS service UltraDNS.
Collaborating at Speed, Lawrence Zwimpfer’s report urgently recommending the Government get behind a gigabit speed nationwide national science and education network was published in October. He believing a business case could be ready by the end of 2002 and contracts let in May 2003 with the network operational four months later. All that came back from the political powers was the sound of bewilderment. Next Generation Internet New Zealand (NGN-NZ) was formed as a non-profit society, with Dr Neil James, assistant director of information services at the University of Otago, as chairman. He warned New Zealand’s information technology industry would suffer unless we forged links with Internet2, claiming the nation’s research community was already hindered by a lack of affordable high-speed bandwidth.
2003: The vision the government adopted in June 2003 was broad ranging including cliché ‘world leader’ aspirations. The three point mission was that by June 2004 the Internet would be the dominant means of enabling ready access to government; by June 2007 networks and Internet technologies would be integrated to deliver government information, services and processes, and by June 2010 government would be transformed through the use of Internet.
Telecom was now able to reach 83 per cent of the population with its JetStream fast Internet service but only 2 per cent of the population have taken it on board leading to claims it is holding back by artificially keeping prices high in the face of a lack of competition. Vodafone announces it has 1.3 million mobile customers edging out Telecom for the first time with a 51 per cent market share. Telecom announces a $709 million profit to the June year after last year’s massive write down and investing $600 million in capital expenditure. It signs a $120 million outsourcing deal with Alcatel for five years, a $200 million one with Lucent for its 027 cellular network.
In April 2003, Telecom set bold new targets claiming it would get broadband into 100,000 New Zealand households by the end of 2004. And it tells farmers it’ll solve their high speed network needs through a deal with BCL ( and its $28 million Extend wireless network ) and dairy giant Fonterra, pre-empting plans by the government led Project Probe to get high speed communications capabilities to 14 outlying regions. Partnerships of Woosh Wireless (formerly Walker Wireless) and Vodafone, Telecom and BCL, Pacific.net in Nelson, Counties Power in south Auckland and Waikato succeed in winning Project Probe contracts, which offer an estimated $30 million in subsidies to encourage broadband roll out. In the end Telecom gets most of the contracts either through stealth or partnerships.
New Zealand was 25th in the OECD for broadband uptake and even then Telecom was accused of overstating its Jetstream numbers and attempting to redefine ‘broadband’ to suit it purposes. There were reports only 13,000 residential customers had signed up for Jetstream since its launch in 1999 ,although Telecom insisted it was 44,000, but would not confirm how many of those were using the low end starter package which ran at 128kbit/sec and was not considered broadband.
Vodafone was trialling W-CDMA with Woosh Wireless and in Wellington independent network wholesaler Citylink continued to play in the high bandwidth game with its Ethernet over fibre network and enters the WiFi business with CafeNet. Cabinet finally reserved spectrum for digital TV but there was still “technical and commercial policy work” to be done to move things forward. Telecom signed a 5-year exclusive deal to bundle Sky TV’s existing content under a single billing arrangement for its customers with the ability to repackage the programming for its own DSL-based services, if it ever headed down that track. Sky remained king of digital, and the major content provider, hosting TV1, TV2, TV3, TV4 and Prime on its satellite-based digital service. The only competing offering was from TelstraClear which had 38,000 customers in 2004 and was in the midst of shifting its cable network in Wellington and Christchurch to digital in preparation for launching 25 new channels. It was also locked into an exclusive content agreement with Sky.
The long-delayed Electronic Transactions Bill passed was due to pass into law in October 2002, giving electronic transactions broadly the same status in law as transactions concluded on paper. However clarification was needed and after a discussion paper was released in April 2003 it finally became law on 21 November 2003. IT bodies such as ITANZ and InternetNZ insisted this and the Crimes Amendment No 6 Bill, which had passed into law after several years of debate on 4 July 2003, were important for the progress of e-business.
An International Telecommunications Union (ITU) study saw New Zealand drop from 12th to 21st among 178 economies in access to information and communications technology, was clear evidence existing strategies weren’t working. Then two days before Christmas 2003 the Commerce Commission did an about face. It rejected local loop unbundling (LLU) in favour of a dumbed down approach. Instead of opening up Telecom’s network for competitors to install their own equipment and establish independent network access, the Commission elected for a ‘wholesaling option’. It wasn’t satisfied the overall benefits of LLU justified its introduction and favoured Telecom wholesaling high speed data services to its competitors.
Telecom dabbled in content provision again in 2003 with a three month JetVideo trial to about 100 homes in Auckland, Wellington, Christchurch and Taranaki opffering movies and music videos provided by Intertainer Asia. The service, delivered to PCs over full speed Jetstream connections was “to gauge user reaction”. Telecom says it learned people don’t want to watch TV on a PC. InternetNZ estimated there were about 150 ISPs in New Zealand by the end of 2003, but the 50 or so medium to large players had about 70 percent of the customers, with Telecom making up just under 50 percent of the total business. The remaining 100 or so ISPs were mainly regional or served special interest groups. The OECD announced that New Zealand, Mexico and Turkey were the only member nation’s not to have unbundled the local loop. New Zealand was 21st of 30 OECD countries in terms of broadband uptake.
2004: The Government’s now ‘award winning’ portal was receiving over 22,000 visitors a week, a 26 percent increase over the same time in 2003.There had been a 36 percent increase in the number of domestic visitors - an average of 13,000 a week. A survey by Victoria University confirmed rural people were high users of government online, greatly appreciating the ability to contact governments at a time that suited them. The survey also found that more than 70 percent of the participants used government sites on the Internet.
Nielsen//NetRatings, described Trade Me as “phenomenal” in terms of the traffic it attracted and based on its poll of 3750 New Zealanders in the first quarter of 2004, said 7.9 percent of new Zealanders had shopped at local online sites and 5.9 percent at overseas online sites. While the numbers were modest, 22.6 percent used the Internet to research information online and 19 percent had purchased sometime online in the preceding 12 months. The most popular online purchases were travel, books and magazines, entertainment and movie tickets. Small numbers purchased computer software and music.
United Networks and Tangent complete the merging of their Wellington and Auckland underground fibre optic networks and begin working closer with parent company, power and gas firm Vector. Telecom raises line rentals by 55 cents a month blaming the increase on the growing cost of provider free local calling. Home customers were making more than double the number of calls they were in 1999. Telecom planned to invest $360 million in the local network this year.
Telecom withdraws route servers from WIX in May. TelstraClear announces it’ll de-peer from APE by November and wants to change peering policy. It’s still connected by February 2005. In November the Palmerston North peering exchange (PNIX) was launched. In October 2004, entrepreneurial independent bandwidth provider FX Networks, acquired the assets and customers of former DSIR arm IRL’s Network Operations Group. Telecom acquired Gen-i and Computerland and integrated them with Telecom Advanced Solutions to create a much larger Gen-i offering a range of ICT solutions. It also launches New Zealand’s first 3G mobile phone network (T3G), using EV-DO technology.
During the 2003 Knowledge Wave gathering, keynote speaker Rita Caldwell, director of the US National Science Foundation, challenged the government, asking how it expected to continue working with nations that had advanced networks, when it didn’t even have anything even on the drawing board. The government was shamed into action decided to dig into its coffers and borrow heavily from the idea that had been promoted by Internet pioneers for years. It put up $200,000 to establish a business case and co-operate with NGI-NZ which had already done most of the ground work, in the hope something might be ready by 2004. NGI-NZ was to manage an $8 million capability fund to train people, run demonstrations and set up temporary access grids. The government committee dragged everything out for another two years. NGI-NZ chief executive Tone Borren quit, accusing New Zealand of failing to take advantage of its existing fibre optic capacity.
Telecom had engaged with Alcatel and EDS to deliver a full next generation IP network (NGN) which relied on moving fibre closer to the curb. In July 2005 it announced further details of its 10-year, the details of its billion dollar investment plan for NGN to exponentially increase bandwidth to customers and pilot and deliver new services. It had already provided fibre to 1100 roadside cabinets (fibre to the curb) and would extend fibre to 1000 more cabinets over the next five years. It spoke about new services for business and residential customers, including video, very high speed Internet access. Fibre to the curb would be extended to fibre to the premises (FTTP) once demand for speed, capacity and new services developed in the residential market.
A $10 million pilot in the Flatbush residential subdivision and the Highbrook commercial development in Manukau City would show the way forward and $25 million a year over five years would increase the capacity of the core fibre network, and develop the next stage of its core multi-service network. A new Alcatel next generation exchange would be installed in Auckland to provide ISDN services in 2005, and detailed planning was underway to replace 600 exchanges and remote line concentrators with new IP technology over the next eight years. From late 2004 Telecom was experimenting with a range of technologies including Microsoft’s IPTV (Internet Protocol TV), designed to turn phone and Internet companies into distributors of content. It ran small trials to test video to the TV across its DSL and its fibre optic network. It suggested the first commercial customers of IPTV were likely to be in the new suburb of Homebush on the outskirts of Manukau City, where smart houses, wired with gigabit connections were being built.
No-one knew where to look on the one hand Telecom was preparing for a fibre optic future and the other resisting all efforts to unbundled its network or hold it to stringent goals for broadband penetration. Despite all the studies, reports and expectation of the market, the Commerce Commission decided against Local Loop unbundling (LLU), instead recommending Unbundled Bitstream Service (UBS) or wholesaling of ADSL.
Meanwhile the Government’s Digital Strategy, had delivered its own benchmark, specifying carriers should be able to deliver “pervasive high speed broadband to support voice over IP (VoIP) and video”. The goal was to have 85 percent of residential and SME customers in towns and provincial centres with Internet access speeds of up to 10Mbit/sec and beyond - possibly even 50/100Mbit/sec by 2010. We were told the industry “will need to replace all copper lines to exchanges and cabinets with fibre, and provide major users in cities with fibre connections on demand.”.
Then Telecom shifted the goalposts by revising its promise to achieve 100,000 broadband customers by the end of 2004, confirming a new target of 250,000 by the end of 2005. This time it conceded broadband was 256kbit/sec and above, not the lower speed services it had included in the in the past. Telecom had a million customers on dial up and 100,000 on broadband “of one sort or another”. Communications minister Paul Swain had promised in early 2002 that outlying communities they would have access to “the same kind of two way high speed Internet available to those in major cities” by the end of 2003. His predictions were revised to the end of 2004 and continued to slip away.
2005: By the end of 2005 it was estimated 84 percent of New Zealanders who regularly use the Internet were conducting on-line research ahead of making a purchase and at least 30 percent were purchasing on-line, according to Nielsen//NetRatings. Other market research used by Telecom suggested 309,000 people in New Zealand regularly shopped on-line. Local and international research looking at on-line buying habits confirmed books, music, videos and travel were the most frequently purchased items followed by flowers, gifts, food, drink, electric appliances, computers, toys and games, apparel and accessories. In February Ihug exited the satellite broadband business. On March 10 TelstraClear’s fibre-optic cable was knocked out by a fire in an underground rail tunnel in the Hamilton CBD. Concerns about the robustness of the Telecom network were bought sharply into focus in June when the “unthinkable” happened. An uninformed post hole digger working for a power company and a canny rat that chewed through a pipeline under a bridge in the Rimutaka Ranges took out Telecom’s main network and its back-up leaving 100,000 customers nationwide without a connection for most of the business day.
In July peering exchanges were announced in Dunedin (DPE) and Hutt area (3CIX). On October 12 Wired Country is sold to Compass Communications, some of the spectrum to be sold to Telecom. The Commerce Commission determination for TelstraClear announces Telecom has to truly wholesale ADSL at full line rate and $27 per customer (with no differential between residential and business customers). TelstraClear agree and withdraw a Commerce Commission complaint. Telecom alleges it has achieved its 250,000 goal for residential broadband customers.
Vodafone and Telecom were both pushing 3G mobile phone services which delivered higher speeds for data and even videoconferencing. While mobile was a major global trend the local cost was still outrageously high for Internet surfing. Wireless access however remained an attractive local loop alternative. In October 2005 South Auckland utility company Counties Power sold Wired Country, its wired and wireless provider, to Auckland ISP Compass Communications. Sky Network merged with Independent Newspapers becoming the country’s biggest media company. It had 619,000 subscribers as at April 2005 - about 87 percent of them on digital. Its My Sky PVR (personal video recorder) was launched in December enabling the recording of two channels at once, and through its buffering technology subscribers could pause and rewind ‘live TV’.
Unbundling was first raised as a serious option in late 2003, kicking Telecom’s lobbying machine into overdrive. The full details of Telecom’s political activism however had remained private until December 2005, when the Christchurch Press made an Official Information Act request, revealing the contents of a letter written by Telecom CEO Theresa Gattung to Minister of Communications Paul Swain in May 2004. She had warned him that 30 cents could be potentially wiped off Telecom’s share price if unbundling was required. She reminded Swain Telecom was the country’s biggest company and the Government superannuation fund was invested in it.
Gattung threatened that Telecom would not invest in “next generation” network upgrades for residential customers if TelstraClear got access to its network, urging Swain to accept the Telecommunication’s Commissioner’s watered-down proposal. The heavying worked – despite Swain and the Ministry of Economic Development supporting unbundling, this was overruled by Cabinet and the “market-led solution” adopted, essentially buying Telecom another year.
Cabinet finally agreed to support the proposed gigabit science and research network four years after it had been proposed, linking 127 sites throughout the country in partnership with MoRST. Crown-owned REANNZ (Research and Education Advanced Network of New Zealand) was formed as the operating company for what was to become the Kiwi Advanced Research and Education Network (KAREN). The network was officially commissioned on 15 December 2005.
2006: In January 2006, Telecom and TelstraClear agreed on interconnection rates for phone access to each other’s landline networks. Telecom would provide limited broadband services to TelstraClear and pay it a one-off $17.5 million to settle outstanding wholesale discounts and interconnection issues. Both agreed to drop multiple ongoing legal actions. The industry was incensed at this backroom deal which presented remaining ISPs with a take it or leave it offer on wholesale broadband rates. Ihug and Slingshot applied to the Commerce Commission for equal access to broadband at higher speeds.
Prime Minister, Helen Clark, warned in a February Parliamentary speech that New Zealand’s speed of uptake of broadband was unsatisfactory and improving the situation was now a top three priority. She promised urgent legislative initiatives. It was the government’s stated intention to get the country into the top quarter of the OECD Broadband Statistics listing; since 2003 it had languished at 22nd place out of 30 nations.
Telecom continued to play gamekeeper and poacher, all but ignoring ministerial threats to play fair or face legislative changes. Telecom CEO Theresa Gattung called communications minister David Cunliffe’s bluff telling business analysts in Sydney in March 2006, she thought the government was far too smart to “do anything dumb” like unbundling; suggesting the broadband issue was just a “manufactured grievance” created by competitors.
In a last ditch attempt to stave off regulation, she wrote to Cunliffe in April offering to accelerate the company’s investment in broadband infrastructure by spending “hundreds of millions of dollars” taking fibre-optic cable to almost all small towns by 2010. The offer was rejected and in a backlash Telecom said it would scale back its ambitions by extending its fibre network only in the five main centres of Wellington, Auckland, Christchurch, Hamilton and Dunedin.
A message delivered by rogue Parliamentary messenger Michael Ryan into the hands of a senior Telecom employee on 3 May 2006, proved the government was indeed serious. A budget announcement was planned to bring New Zealand in line with 26 other OECD nations by legislating for local loop unbundling (LLU) along with other proposed changes to telecommunications regulation. That news shaved at least a billion dollars off Telecom’s share index and while those shares quickly bounced back, Telecom was now forced to rethink what it meant to operate in the unconstrained market promised to the country for nearly 20-years.
Telecom’s chairman, Roderick Deane, nicknamed ‘Doctor Death’ for his ability to wield the knife when it came to restructuring and making the hard decisions, announced his resignation at the end of May. After 14-years on the board he got a golden handshake of $661,000. Weeks later, Telecom chief executive Theresa Gattung resigned, after seven years at the helm of the countries largest listed company. She admitted 2006 had been her worst year. The policies set out in the Telecommunications Stocktake Review, including unbundling the local loop, were introduced to Parliament. Communications minister Cunliffe warned further measures may be on the way, possibly even a forced split of Telecom into separate retail and lines companies. Telecom would have to allow its rivals to install equipment at its exchanges.
By May 2006 many Telecom Xtra customers had their accounts upgraded to 3.5Mbit/sec speeds. There were an estimated 300,000 broadband subscribers, around 8 percent of the population, including 100,000 customers outside of the Xtra network, many now operating at 2Mbit/sec with the hope of much greater things on the horizon. CallPlus and Ihug, motivated TelstraClear’s in-house deal, led the charge for unconstrained bitstream (UBS) access believing the Commerce Commission should now deliver on its original promise of 7.5Mbit/sec, opening the way for faster sub-$30 broadband accounts.
By June they had got their wish. They were granted wholesale access to the fastest broadband that Telecom could provide but at a price slightly higher than TelstraClear. The Commission also ruled Vodafone’s could interconnect with Telecom’s network to use a mobile as an option for a landline service, that neither party could charge each other to receive local calls.
The 2001 e-Government Strategy, together with the 2003 review, highlighted the ways government could use the Internet to increase the value of services internally and to all New Zealanders. The 2006 update took into account the launch of the Digital Strategy and Development Goals for the State Services in 2005, focusing on the inevitability of technological change and the need for government to recognise and meet the challenges.
By August 2006, 99 percent of government organisations had access to the Internet and 97 percent had broadband; 93 percent of government staff had Internet access compared to 43 percent of business staff according to a Statistics New Zealand report. It showed 77 percent of government organisations were planning to invest in new or upgraded software, desktop hardware or ICT in the year to August 2007. Obstacles to implementing new ICT solutions were competing priorities, budget constraints and a lack of qualified people. More than 60 percent of forms and documents needed for public dealings with government were available on the web and 26 percent of government organisations offered transactional services on their web sites compared with 34 percent of businesses.
The March 2006 numbers showed New Zealand had clawed back three places to attain 19th ranking in the OECD broadband top 30, still a long way from the top half we were now aimed at. The six monthly ISP survey released by Statistics NZ in March 2006 suggested there were 57 Internet service providers operating in New Zealand, eight less than the previous period. Dial up subscribers were in decline and broadband subscribers had jumped by a third over the previous six months. Internet subscribers totaled 1.3 million and just over a million were residential users with 70 percent still on dial up connections.
When the OECD Communications Outlook figures came out in July, the finger again pointed at New Zealand as having been greedy with profit and stingy on investment. According to the OECD, telecommunications revenue in New Zealand was 5.39 percent of GDP, the highest of any of the 30 OECD countries where the average was around 3 percent.
The Commerce Commission ruled on the introduction of number portability in August, removing one of the last barriers for customers to switch phone companies. From April 2007 consumers would be able to keep their fixed-line and mobile numbers when changing phone companies. The industry had spent about $100 million to prepare networks for the change. At stake were total fixed-line revenues worth $8 billion a year and cellphone revenues of $2 billion. FX Networks had made an initial investment of $14 million in its Auckland-Wellington backbone, and was offering high speed services through its own ISP, the former CRI-owned Comnet, which it had acquired in 2004. By September 2006 FX Networks had cobbled together its own gigabit speed nationwide network through investment and partnerships with carrier class operations. It owned 500km of the fibre in its backbone; a third of which was fibre leased from Ontrack, owner and manager of New Zealand’s railway infrastructure, and the balance from Kordia and Vector Communications and Wellington’s CityLink.
Telecom continued to ramp up its long awaited next generation network (NGN) with faster fibre roll out, and was shortening its copper loops and upgrading its copper capability to handle faster DSL2+ technology theoretically capable of up to 24Mbit/sec. In the meantime, the target speed seemed to have mysteriously dropped to 5Mbit/sec, something Telecom could claim it already did ‘where line conditions allowed’.
Even Communications Minister Cunliffe, was now stating “high-speed Internet access - 5Mb by 2010” in a June speech. The targets were part of the government’s long stated intention to get the country into the top half of the OECD Broadband Statistics by 2007 and top quarter by 2010. However officials were now talking getting into the top half of the OECD figures. There were howls of derision across the industry when researcher Bronwyn Howell sent a 167-page submission to the Select Committee considering amendments to telecommunications law, questioning the benefits of broadband uptake on the economy, and suggesting local loop unbundling wouldn’t increase broadband uptake much.
Wholesale broadband to ISPs other than Xtra had been choked back to 2Mbit/sec maximum speed, then edged out to 3.5Mbit/sec as legal and competitive pressure mounted after the TelstraClear determination. Then suddenly it was a free-for all, Telecom, as required by the Commerce Commission, announced that from October 2006 all ISPs would get unconstrained broadband. By the end of the month most ISPs had announced new plans for faster Internet access, starting as low as $20 – $30 a month, and at the higher end data caps and speed bumps almost disappeared. Telecom’s Xtra led the way giving its broadband subscribers to access to the maximum download speeds their copper telephone lines could cope with.
Those fortunate enough to live in a neighbourhood close to an exchange, with high grade copper lines and low broadband use, could potentially achieve speeds of up to 7.5Mbit/sec. In most areas however, it was more likely to average 2-3Mbit/sec. The open slather approach showed up the frailty of Telecom’s copper network with more than 10 percent of Internet users now getting slower speeds than previously.
CallPlus was sufficiently capitalised for the near future planning to invest up to $200 million over five years on building out its WiMax network. Ideally though, its roll out of nationwide phone and Internet services with IPTV as a likely third component, would involve a mix with DSL. Ihug left Australia to its new Perth-based owners iiNet, overhauled its product line, and as New Zealand’s largest wholesaler of DSL broadband, announced its intention to deploy its own network once access to Telecom’s exchanges was permitted. In fact the country’s third largest ISP, with around 120,000 customers, was ripe for the picking with iiNet having suffering some set backs in profitability. It was placed only behind top dogs Xtra with 500,000 customers and TelstraClear with around 200,000 customers. On 9 October 2006 Vodafone stepped up and offered its hand paying iiNet $NZ41 million for the ISP.
Meanwhile Orcon was also looking like an inviting partner for someone. In February 2006 it had taken on board latest high-end gear from Juniper and Siemens in a $30 million five year plan to go straight to high speed VDSL2 for IPTV and related services. Meanwhile Maxnet, Compass and Iconz and other second tier ISPs were also biting at the bit to show what could be done with better access to bandwidth. Each had their own specialty to differentiate from mere bandwidth resellers, whether it was e-commerce hosting, secure back-up, disaster recovery, software development, integration or other IT&C skills for the modern business. Alternative bandwidth wholesalers were also lifting their game to be ready for the new environment. Within days Auckland wireless voice and data provider Woosh made its move, acquiring Auckland ISP Quicksilver which claimed around 10,000 customers. Woosh, had been in the game since 2001 with a fixed wire replacement solution, and now had mobility options and was offering voice.
Submissions to the Telecommunications Bill were still being worked through in September when former Telecom chief technical officer Murray Milner, representing the Institute of Professional Engineers (IPENZ) stated Telecom’s copper cable was a major obstacle to the country moving into the top quarter of broadband OECD figures. In the submission on unbundling, Milner said $1.5 billion needed to be spent replacing copper cables with fibre optic to enable 90 percent of New Zealanders to access 5Mbit/sec speeds, the goal set by the Digital Strategy.
In September Telecom Xtra is hit with huge amounts of spam slowing down delivery of emails sometimes by several days. Telecom filtered a record 226 million items of spam in September, compared with 65 million for the same time in 2005. In November Telecom wholesale customers CallPlus and Ihug says they’ve spend millions of dollars trying to fix major problems on their network with thousands of customers loosing connection sometimes lasting for hours. ISPANZ puts the problems down to Telecom’s network not handling the increasing demand for broadband. Telecom blames the ISPs saying their systems are at fault.
Paul Reynolds, who had been running the wholesale division of British Telecom, arrived in the country in October to take up his role as Telecom’s new chief executive. CityLink, a world pioneer in establishing open fibre networks, and independent community participation in civic affairs, as well as setting the pace for peering was acquired by listed mobile radio company TeamTalk and a partnership of existing management acquired in November 2006 for $22.76 million. State-owned Kordia, the re-branded BCL and THL Group, was actively engaging in alliances that leveraged its nationwide wired and wireless backbone capacity and was planning much more than competitive backhaul and ‘inter-metro capacity’ for ISP’s and new market entrants. Telecom, Vodafone and TelstraClear were now not only its customers but its competitors.
The Broadband Challenge, where the Government contributed $24 million to urban fibre network projects, was launched in Lower Hutt on 27 November. It recognised the work done by the local authorities, independent carriers and fibre and wireless networks in delivering broadband access to city centres and communities, particularly where schools and public good services would be offered.
The Telecommunications Amendment Act (No 2) was passed into law on 18 December 2006 with urgency. The revised legislation upgraded the Telecommunications Act 2001. When the Bill went into select committee it proposed separate accounts for Telecom’s business arms, but after six months of consideration it came through with a much tougher regime. Telecom would be forced to undergo a three-way operational split, with retail, wholesale and network arms. Communications Minister David Cunliffe said operational separation should be completed by the middle of 2007.
In April 2006 TelstraClear and its subsidiary Sytec had won the $43 million government contract to build and operate the KAREN network for REANNZ and run it for four years. Research institutions and academia would match the contract figure for further development, and gain access to 10Gbit/sec on TelstraClear’s national fibre optic network, running on a separate wavelength to its commercial traffic. KAREN went live mid-December 2006.
2007: The sale of its domain name management company Domainz in 2003, had freed up InternetNZ to tackle the bigger issues, including spam. It consulted on a paper outlining a proposed Anti-spam bill which went to Cabinet in early November 2004 but soon slipped down the priorities list. The bill took an ‘opt in’ approach for commercial messages, similar to the Australian legislation. In other words there had to be some pre-existing relationship between the sender and receiver before commercial messages could be sent. In September 2006 Xtra claimed to have filtered a record 226 million spam items, compared with 65 million for the same time in 2005. The Unsolicited Electronic Messages Bill finally made it into law at the end of February 2007. The Act applied not just email but instant messaging and texting, and would come into force after a six month “amnesty”, to allow businesses adjust their mailing practices.
Statistics New Zealand reported 26.6 percent growth in broadband subscribers in its ISP survey to 30 September 2006, taking the number to 611,600. The survey for the following six months to 31 March, 2007 showed a further increase in broadband number, up 18.5 percent to 724,600. However uptake had generally slowed and was still way short of the 980,000 subscribers needed to get even close to the original 2007 mid-point goal, and a fat chance away from the two million needed to hit the Government’s 2010 broadband target. Dial-up still dominated at 739,700 subscribers, representing 50.5 percent of all Internet users, a slight fall of 4.1 percent.
The survey of New Zealand’s 57 Internet service providers showed there were 1.46 million Internet subscribers at 31 March 2007 - an overall increase of 5.9 percent. There appeared to be fractional overall growth, most of it new broadband business and a little churn from dial-up to fast Internet.
Another OECD report in March, using figures to June 2006, concluded we were among the most expensive countries to own a landline, and cellphone users were also paying prices well above average. A significant gap remained between prices in New Zealand and the top half of the 30 OECD countries. The second quarter 2007 OECD broadband numbers showed more of the same. It was ‘positive’, ‘heading in the right direction’ but oh so glacial. So how do you make a glacier sound like it’s careening ahead? New Zealand had doubled its broadband penetration rates from 8.07 connections per 100 people in the final quarter of 2005 to 16.5 percent penetration by the second quarter of 2007. Wow. To June 2007 New Zealand was back at 20th out of 30 OECD countries, with 683,500 broadband subscribers (16.5 percent).
According to ComScore in March 2007, 1.9 million New Zealanders aged 15 and over viewed 3.6 billion pages of Internet content, went online every other day and spent a total of 20.4 hours connected each month. The top three destinations were Microsoft sites (1.42 million), Google sites (1.39 million), and Yahoo! sites (1.1 million). New Zealand-based TradeMe and government sites rounded out the top five most visited locations garnering 977,000 and 621,000 visitors respectively.
The Freeview free-to-to-air consortium had reached an agreement and was in line for government funding to establish an independent digital TV presence. TVNZ would make its existing channels available plus two new digital only channels. TV3, TV4, Maori TV, and Radio NZ would also have a presence. What was described as “the most significant event in New Zealand broadcasting since the launch of colour television in 1974” hit the airwaves as Freeview went live on Wednesday 2 May 2007.
At the TUANZ Telecommunications Day on May 31, the new Telecommunications Commissioner Dr Ross Patterson was named and would take up his role from mid-July. He would play a pivotal role in implementing and monitoring the new telecommunications regime. The Government also made it clear that operational separation would be proceeding. In July 2007, State-owned Kordia, acquired entrepreneurial ISP Orcon in a $24.3 million deal.
Orcon was in the midst of a $30 million upgrade of its technology to provide QoS-based carrier class services including IPTV. Government-owned Transpower, which operates the national high-power electricity transmission grid, was in the midst of a major upgrade of its 500,000km fibre optic communications network. It was engaged in five year, 44 project strategy to bring its technology into the 21st century. It would soon be able to offer services ranging from 128kbit/sec to 155Mbit/sec with peak capacity greater than 2Gbit/sec.
In the second week of August 2007 the first tentative steps in the unbundling bonanza began. Telecom opened access to telephone exchanges in Ponsonby and Glenfield so competitors could plug in their own equipment. Orcon and Ihug were in like a rat up a proverbial drainpipe. Ihug’s Mark Rushworth said it reminded him of getting the keys to his dad’s Cortina when he was 16. However, he was concerned the commission was only requiring Telecom to unbundle 15 exchanges a quarter. Telecom continued to roll out higher speed DSL2+ broadband over copper to customers in the main cities, and move its cabinets closer to the streets to shorten the copper loop in the more fortunate suburbs.
Within three weeks of the first cabinets being opened up Telecom’s announced it would build an additional 2100 cabinets to shorten the copper loop and bring fibre closer to the customer by the end of 2009. CallPlus was taken by surprise, estimating around 50 percent of its customers would have to be serviced from those cabinets. While agreeing this was a step toward faster cheaper broadband, CEO Martin Wylie said the announcement made a “mockery” of the Commerce Commission’s LLU determination. “Why have we all wasted 18 months when we should have focused on different issues?”
Telecom stated clearly in its 2006 Annual Report that IPTV would be rolled out late in 2007 as a video on demand service over its NGN and it had formed a unit to oversee that. Then plans for IPTV were put on hold from July 2007 while it shifted focus to more pressing issues including regulatory demands of unbundling and requirements to separate out wholesale, network and retail divisions. The new deadline was late in 2009. Early in 2008 the unit was quietly dismantled, staff redeployed and only on asking the right people could you discover IPTV was no longer on the Telecom roadmap.
The demand on the Southern Cross undersea communications lifeline between New Zealand, Australia, Hawaii and the US became so serious an announcement was made in February that capacity would need to be doubled. Space as nearly sold out, so 50 percent owner Telecom contracted Alcatel to increase the capacity of each leg of the 28,900 km cable from 240Gbit/sec to 330Gbit/sec by April 2007. Another boost to 430Gbit/sec would occur by the end of 2008. A further boost to international capabilities was delivered by the Optus D2 satellite which was successfully launched in October, providing direct TV broadcast, Internet, telephone and data transmission services for Australia and New Zealand. In December winds reaching 130km an hour battered the Oregon and Washington coasts in the US damaged the Southern Cross cable network and reducing Telecom’s international capacity by 50 percent until the cable could be repaired.
In September 2007 the Domain Name Commissioner announced top level dot.nz domain names registered had reached 300,000 and there was no sign of slowing with around 7500 a month being registered. In the 2006-2007 year there were 50,000 new Internet domain names registered, in New Zealand taking the overall number to 272,752; the number of dot.nz registrars increased to 72. In its fifth year of operation, the Office of the Domain Name Commissioner received 84 complaints through its dispute resolution service, mainly relating to unfair domain name registrations; 54 were deemed to be valid, 21 were settled through informal mediation and 10 were followed through to an expert determination.
Intellectual property, competition and Internet law specialist Peter Dengate Thrush began taking an active role in the international governance of the Internet from the outset of his involvement with the Internet Society in New Zealand in 1995.He quickly gained the confidence of senior people within the wider Internet community. In December 1999 he stood for two terms as InternetNZ chairman, and he was chairman of the International Affairs Committee. On 3 November 2007 Dengate Thrush was unanimously elected as the successor to Vint Cerf ‘father of the Internet’, as chairman of Internet Corporation for Assigned Names and Numbers (ICANN) at its meeting in Los Angeles. He had been involved with ICANN since its inception in 1998.
Sky TV and Vodafone had launched their mobile platform at the end of January, with eight channels including cartoons, news, sport and MTV reality shows delivered to Vodafone’s 3G mobile customers. By February over 10,000 New Zealanders a day were logging on to their mobiles to watch up to 20,000 video streams. Customers could watch all eight channels for $2.50 a week. Then in September Vodafone added an adult TV channel; access to YouTube videos, a new music channel and full-length movies were also planned. Customers would pay 50 cents to view the X-rated channel with Vodafone claiming it would donate the income, less costs, to charity. Meanwhile State-owned Kordia was trialing a digital broadcasting technology called DVB-H which would enable mobile phones to act as fully functioning mini-TV sets to pick up free-to-air TV channels.
Kordia also borrowed an extra $38 million in late 2007 to help finance its bid to take on Telecom and Vodafone and become a major telecommunications provider. It had agreed to pump a “substantial” amount of fresh capital into Orcon, so that it could take advantage of local loop unbundling and install Internet access equipment in every Telecom exchange it could access. The September Connecting to Our Digital Future report, warned that broadband roll out needed to be accelerated otherwise New Zealand would increasingly struggle to trade in infrastructure-based markets. It said plans to make it to the top quarter of the OECD broadband numbers by the extended deadline of 2015 needed to be ramped up considerably.
NZCID, which commissioned the report, said international trends showed that within seven years, technology, research, film, medical, and financial services industries would require public data speeds of 100Mb/sec with gigabit speeds following closely behind. The second major report on the state of our IC&T infrastructure was delivered by the New Zealand Institute in its Defining a Broadband Aspirations which claimed economic benefits to the country through pervasive higher speed broadband could range between $2.7 billion to $4.4 billion a year. It said that by 2012 most homes would demand more downstream bandwidth than ADSL or ADSL2+ would be able to provide. Within a decade, it was likely speeds of 50-100Mbit/sec would be demanded in many parts of the market.
Originally Telecom claimed there was a billion dollar shortfall in what it planned to spend and what was needed to achieve the Government’s Digital Strategy goal of 5Mbit/sec speed to 90 percent of New Zealanders by 2010. Chief executive Paul Reynolds announced a ‘revised’ $1.4 billion plan to accelerate the next phase of the NGN footprint delivering speeds of “up to” 20Mbit/sec to all towns with 500 or more phone lines over the next four years. (The plan originally announced as early as 2004 and then again in July and in October 2007) now formed part of a legally binding commitment to the Government as part of the operational separation process. Telecom faced fines of tens of millions of dollars if it reneged on its commitment to deliver 10Mbit/sec speed to 80 percent of New Zealanders 20Mbit/sec to 50 percent of the population by 2010.
In Telecom’s own statement only 75 percent of customer lines were capable of speeds of more than 6Mbit/sec, and it was doubtful you could get more than 8Mbit/sec over 65 percent of them. While it claimed 93 percent of New Zealanders could get broadband, the average speed for the 38 percent who had taken up the service by September 2007 was 2Mbit/sec to 3Mbit/sec. Obviously the journey to 20Mbit/sec was going to be a long one and only complicated by the dire shortage of contract labour, already been cited as one of the reasons even existing broadband goals were unlikely to be met.
A living document to be updated at my leisure… Feedback welcomed (Keith Newman: email@example.com )
References Connecting the Clouds – Internet in New Zealand, Keith Newman (Activity Press, August 2008) Commissioned by InternetNZ. See also: (www.nethistory.co.nz ) NZNOG Internet history web page, research co-ordinated by Joe Abley (http://wlug.org.nz/NewZealandInternetHistory ). Telecommunications History web page by Keith Newman ( www.wordworx.co.nz since 1998) Telecom annual reports and web page TelstraClear Web page Wire and Wireless 1890-1987, A.C Wilson, Dunmore press, 1994, p162-163 Telecommunications – a decade of success (Telecom pamphlet 1998) Beardon 1985: Colin Beardon, Computer Culture: the information revolution in New Zealand (published by Reed Methuen, isbn 0 474 00047 8). Hine: John H. Research Networks in New Zealand,1987. Internet Society of New Zealand InternetNZ web page (http://www.internetnz.net.nz/ ) Unlimited magazine, Telecom’s Xtra Agony, Russell Brown, December, 1998 Network World, 125 Years of Telecommunications, Blanch Alan, August 1990, Pacific Way, Speaking your language feature on telecommunications, August 1991, Wired magazine, Godzone, Bob Johnstone, date? Telecommunications and Superhighways in New Zealand 1998, 2001, Paul Budde Communication. Gleanings from articles written and researched by Keith Newman over 20-years of writing about IT&T plus clippings from New Zealand Herald, PC Magazine Computerworld, Telecommunications Review, The Line, MIS, CIO and e.nz magazines.