The cost of the next generation of NZ broadband

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Living in NZ is always going to be a bit of a technological 'drag'. This is a small market, and one of the poorest OECD nations. For this reason, technology is always going to be a little slow getting here. The situation is even worse for basic infrastructure like: Roads, power lines, telco fibre lines, power stations, etc. The challenge is that:

1. There is little incentive for service providers to upgrade infrastructure if their competitors are not. A small market with just a few players gives little incentive for competitive pricing.

2. There is little incentive to adopt the latest technology if there is no growth in the market. National income in NZ is based on cyclical commodity prices, so with a static population, there is little incentive for increasing capital investment unless you have some important national resource like oil & gas or iron ore. NZ has......very little.

3. There is little incentive to be competitive without a regulatory regime to ensure that result. There is a propensity to use the 'weak regulatory framework' to extort highe revenues from customers.

Businesses however have to make money, or there will be even less spending or service. The question is whether the industry is functioning efficiently, and earnings are adequate.

This article outlines the cost and pricing for the next generation of the telco network. The actual cost is uncertain because it remains to be seen whether service providers offer unlimited capacity. I suspect they will want to offer unlimited capacity where they can otherwise they will lose customers, and there will also be excessive customer churn, i.e. Excessive reconnections.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Communications in NZ - a lack of competition

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One of the challenges of getting basic services in an uncompetitive, small market like NZ is that you have to contend with the proverbial 'carrot and stick' approach to market extortion. i.e. Market participants who put forward meaningless pricing plans with so many **** that you will probably pay double the stated rate. The implication is that you can spend your life investigating 'cheaper deals' which are nothing of the sought. In most countries such 'bait advertising' is disallowed, but because you have a ***, they get away with it, even though the price differentiation point is hardly an incidental pricing qualification, but rather a profoundly necessary cost you will have to bare. All the market players do it. The implication is that no pricing is real until you spend 1 hour investigating it.

In the telecommunications market, there are two dominant market players - Telecom and Vodafone. These two companies are famous for offering no real competition. i.e. They will offer you a 'special' of an extra 20Gb of broadband a month, as if that is of any value. After all, what are you going to do with that if your monthly need is just your contracted amount. They might offer you a teaser of a free wireless modem, even though wireless bandwidth is really expensive, and these little modems can be bought in China for $5. They sell them for $100 plus. 2 degrees is probably the cheapest, but try independent sellers.

You need internet in NZ, and because its rare to get free wifi in NZ, you really want a well-priced wireless solution if you are moving around. The problem is that you are stuck with these two majors. The only alternative is 2 degrees, which is confined to the 3 major cities and Queenstown. That is a very limited choice.

Outside the major cities you also need a landline telephone. You cannot just satisfy yourself with a ADSL connection. Vodafone offers such a plan but its very expensive. So you are stuck paying $110/month for a landline and ADSL for 20Gb, less in the cities because you don't need a telephone line rental.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Implications of the Christchurch Earthquake to NZD

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The cost of the earthquake is believed to be around $16 billion. The hit to the city is going to cause many people to leave. They can be expected to take their insurance payout and go to Australia. Expect about $3 billion of insurance funds plus another $1 billion in savings to go to Australia in the next 2 years. In fact some will stay here, maybe going to Auckland, if only because of the hit on the NZD will make Australian out-of-reach.

The bad news of course is that there is potentially more earthquakes to come. Escaping Christchurch might not be the solution either. The stresses being released along the Tasman Transform Fault might well shift to the North Island. Already there was a 4.5 magnitude earthquake in the Kapiti region. Of course escaping the plains and high-rise buildings offers some reprieve, so does avoiding brick (brittle) structures, or new earthquake-proof designs.

On a more positive note, Christchurch presents a fresh-faced investment to build a new city with a new image. That might take time, but it will also create new jobs, and imagine that a lot of businesses will be opening to replace those lost. Its a fresh canvas. The opportunity is also a huge risk if it lacks taste.

NZ Property Guide Philippine Real Estate Guide Japan Foreclosed Guide

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com