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Championing better broadband for New Zealand 2017 / ISSUE 4
Hardware makers and software developers
are pouring money into virtual reality.
What can you expect to see and when?
NETWORK FOR LEARNING BLAIR GALPIN DRIVERLESS CARS Brought to you by
Making school fibre The state of the The infrastructure needed
connections deliver results telecoms market to make them a reality
Contents 2017 / ISSUE 4
14
NETWORK FOR LEARNING
Education was one of the main
drivers behind the original UFB
plan. Now Network for Learning
is making sure schools get the
benefits of fibre broadband.
6
COVER STORY: IMMERSIVE EXPERIENCES
If hardware makers and software developers have their way, virtual
reality will soon be mainstream. The technology changes the way we 14
look at the world. Games and entertainment will be first, then business.
22
Driverless cars
A lot of infrastructure is needed for
10 12 the driverless car revolution.
24
VIRTUAL REALITY FOR A QUESTION OF VALUE Are today’s PCs gigabit ready?
THE MASSES Forsyth Barr analyst Blair
Fast internet and slow computers
Consumer VR is moving at a Galpin talks about the state of
are not a good mix.
cracking pace. The challenge the telecommunications sector.
lies in making the content.
26
Beginners’ guide to UFB2
More fibre to more places.
REGULARS VIEWPOINT
1 21
Editorial
Edge computing brings
data closer to the point it
Wi-Fi trumps cellular
… so look after those routers.
They have a lot of work to do.
30
THE
is consumed.
28
28 BENCHMARK
2 Fixed wireless challenges Read the latest
In brief Internet consultant Benoît data on how
Congestion-free copper rules, Felten says 4G didn’t replace New Zealand's
TCF industry report, Netflix fibre and there’s no reason to broadband network
passes one million. think 5G will. is developing.
thedownload.co.nz
The Download | Editorial 1
Back to the edge
Editor
Bill Bennett
Chorus Editorial Consultants
Ian Bonnar, Steve Pettigrew
Contributors In the opening years of this century an online bookseller
Nikki Mandow, Holly Cushen,
Scott Bartley, Rob O'Neill
realised it could make money selling its internally
Senior Account Director developed virtual server technology to others. Cloud
LauraGrace McFarland computing was certainly around before Amazon
Designers
Wade Wu, Julian Pettitt
Web Services, but it took off in earnest after the
Publisher arrival of Amazon’s Elastic Compute Cloud
Ben Fahy
Published by Tangible Media, Before long, established computer industry giants like expect to see a matching performance improvement
ICG Ltd. IBM, Oracle and Microsoft saw their world upended by from services like Netflix. They reward the companies
PO Box 77027, Mt Albert a rival no one saw coming. They all switched strategies who deliver this with loyalty and repeat business. They
Auckland 1350, New Zealand
and have since spent billions building their own clouds punish those who disappoint by looking elsewhere.
www.tangiblemedia.co.nz
to catch up with AWS. They have their work cut out. It turns out that the best way to deliver great online
AWS’s revenues are greater than the next four cloud experiences from streaming video or gaming services
suppliers put together. is to move the point of distribution as close to the
The key idea behind cloud computing is that it offers customer as possible — right to the edge of the network.
unprecedented economies of scale. Enter the next big thing: edge computing. In effect,
The Download is championed by Instead of building their own capital-intensive data this means the next season of your favourite television
Chorus centres, companies can use someone else’s and share show will be served from somewhere in your suburb
PO Box 632, Wellington 6140 the overheads. They can buy or nearby, not from a giant
www.chorus.co.nz
computing power, storage data centre housed on
and other digital services another continent. There are
The contents of The Download
are protected by copyright. Please in much the same way they You really don’t want already edge computing data
feel free to use the information
in this issue of The Download,
buy electricity or water. The your autonomous centres in some of Chorus’s
resources are there when you exchange buildings.
with attribution to The Download
turn on the tap. All you need car asking a server in Edge computing isn’t
by Chorus New Zealand Limited.
Opinions expressed in The is a credit card to pay the bill Stuttgart for permission just about streaming video,
each month. however. The technology is
Download are not necessarily
those of the publisher or the editor. Cloud computing is highly
to turn left or to apply essential for driverless cars.
Information contained in The
Download is correct at the time
centralised. Where there were the emergency brake. Latency is a vital issue with
of printing and while all due care once millions of small data these. You really don’t want
and diligence has been taken in the centres scattered all over the world, now these servers your autonomous car asking a server in Stuttgart for
preparation of this magazine, the and applications, which do all the hard work, are in a permission to turn left or to apply the emergency
publisher is not responsible for any
handful of massive sites close to cheap power and other brake. Likewise, edge computing will serve drones,
mistakes, omissions, typographical
errors or changes to product and essential resources. robots and all the billions of other Internet-of-Things
service descriptions over time. In technology, runaway success often sows the seeds devices being connected to global networks.
of its own destruction. No one is suggesting AWS is in The cloud will still play a role. Data collected
trouble, but it now looks as if there are limits to how far at the edge will continue to be sent to the centre
the cloud can go. for aggregation and further analysis. But digital
Streaming-video giant Netflix is one of AWS’s largest intelligence will be more dispersed.
customers. It uses the company’s central cloud to serve There has always been ebb and flow in the computer
up movies and television shows to around 100 million business. The first mainframes were giant central
subscribers. But Netflix, like other digital businesses, machines. Then came dispersed minicomputers,
Connect with us bumps up against a limitation of AWS. Often the big, followed by even more dispersed PCs, phones and
Facebook.com/ChorusNZ
efficient regional AWS servers are a long way from tablets. The advent of the cloud saw the centralisation
Twitter/ChorusNZ
Chorus NZ Limited on LinkedIn customers and that’s a problem. tide come in again, with edge computing it is now
Customers naturally want the best possible viewing heading back out.
experience. With the arrival of fast fibre networks, with
www.thedownload.co.nz speeds of up to a gigabit, New Zealand’s internet users Bill Bennett
2017 / Issue 4
2
In brief
Call for truth in
broadband advertising
James Young-Drew, a solicitor with Wigley and Company,
says broadband speed transparency is an important legal
90
PERCENT...
“In 2013, the Government set an objective that 90
percent of the population would have access to 4G
cellular mobile services by 2019. Thanks to the work of
Spark and Vodafone, we’ve reached our target well ahead
of schedule,” says the Minister.
Communications “As part of the Government’s 2013 objective, Vodafone
compliance issue.
Minister Simon Bridges and Spark were required to build new towers to provide
He says Australia’s regulator, the ACCC (Australian
says 90 percent of New new coverage each year for five years. They’re well
Competition and Consumer Commission) found 80
Zealanders now have on track to meet this deadline – creating even better
percent of consumers struggle to understand what they are
access to 4G mobile. coverage and capacity for rural communities.”
buying from broadband service providers. To help, it issued
guidelines for service providers selling broadband, to better
explain what customers can expect from the service.
Young-Drew says New Zealand’s consumer laws are
almost identical to Australia’s, which means the ACCC
guide is relevant here. He says is boils down to this:
“Broadband speeds should be marketed in a manner which
is accurate, easily comparable and descriptive of speeds
that consumers can actually expect to receive in a typical
busy period.”
In a PDF on his company’s website, Young-Drew writes
about the six steps New Zealand RSPs (Retail Service
Providers – Internet Service Providers in New Zealand) should
take to stay on the right side of the Fair Trading Act:
Commerce Commission rules on
1 Consumers should be provided with accurate information
congestion-free copper
about typical busy period speeds that the average New Commerce Commission rules UBA services are the main way
consumer on a broadband plan can expect to receive mean Chorus must keep its copper people not yet connected to fibre buy
network congestion-free as network broadband. For people outside UFB
2 Wholesale network speeds or theoretical speeds taken
traffic volumes grow. (Ultra-Fast Broadband) areas, it will
from technical specifications should not be advertised
The ruling says links between remain important for years to come.
without reference to typical busy period speeds
DSLAMs (Digital Subscriber Line Once the fibre network is complete
3 Information about the performance of promoted Access Multiplexers)and the first there is an option to deregulate the copper
applications should be accurate and sufficiently upstream data switch can’t exceed network where the two networks overlap.
prominent 95 percent of capacity for longer Telecommunications Commissioner
4 Factors known to affect service performance should be than five minutes. At the same time, Dr Stephen Gale says: “We are
disclosed to consumers Chorus must report when network confident that the new standard will
segments approach full capacity. not lead to inefficient investment, even
5 Performance information should be presented in a It must also tell ISPs about plans to if copper is deregulated in UFB areas.”
manner that is easily comparable by consumers, for improve capacity as lines approach 80 In the same ruling, the Commerce
example by adopting standard descriptive terms that percent capacity. Commission decided not to change the
can be readily understood and recognised These changes will give retail rules for VDSL (Very high bit-rate digital
6 RSPs should have systems in place to diagnose and ISPs more certainty when buying subscriber line) connections. It says this
resolve broadband speed issues Unbundled Bitstream Access (UBA). is already covered by existing rules.
Research company Gartner says spending on communications services will reach NZ$4.43
billion in 2018 up 1.8 percent or $79 million from the NZ$4.36 billion spent in 2016. It defines
communications services as including: consumer fixed services, consumer mobile services,
enterprise fixed services and enterprise mobile services (both voice and data).
thedownload.co.nz
The Download | In brief 3
FASTEST FIBRE UPTAKE IN THE WORLD
BUT RETURNS FLAG
Investment up, returns down. That was Comparative consumer costs
the message from the most recent Across the board in New Zealand, real costs of comparable utilities for consumers
Telecommunications Forum report, are increasing over time, while the cost of telecommunications services continues to
released at the end of March. decrease, even as consumer demand and the quality of services provided are increasing.
New Zealand is experiencing the fastest
fibre uptake in the world, and Kiwis are Local authority rate and payments Electricity Telecommunication services
early adopters of mobile services like
smartphone banking, the TCF’s 2017 2,000
industry report says.
But to cope with “extreme increases
in demand”, telcos have had to ramp up 1,800
network capabilities, meaning investment
reached an all-time high of $1.77 billion in 1,600
2015, the most recent figure available. This
makes New Zealand the second largest
Household spend per annum NZD$
1,400
telecommunications spender in the OECD,
in terms of investment by the sector, as
a percentage of the sector’s revenue, 1,200
the report says. Year-on-year investment
growth between 2014 and 2015 reached
1,000
almost five percent.
Getting a good return on that investment
is increasingly difficult, however, says the 800
TCF Forum’s CEO, Geoff Thorn.
“Revenues continue to fall, with
600
consumer spend on telecommunications
services declining each year, while
competition becomes increasingly fierce.” 400
Consumers are getting a great deal as the
speed and capacity of services improves 200
and prices fall, says Thorn. Electricity and
rates’ bills have risen in real terms since
2006, but consumers’ telco bills are lower 0
now, and this is squeezing the sector. 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
“The reality of declining industry Year Source: TCF
profitability and the potential consequential
impact on future investment is a concern
for the industry, when the focus should be Investment vs Return on total assets Surplus before tax ($m) Return on total assets
on encouraging New Zealanders to take
greater advantage of the digital economy,” 1,000 4%
says Thorn. 3.5%
Percentage Return on Total Assets
As a result, return on assets for telcos has 800 2.9% 3.2%
slumped from 3.5 percent in 2012 to 0.6
Total Return (million)
percent in 2015, the report shows. At the 600 2.1% 2.4%
same time, investment as a percentage of 1.8%
revenue has increased steadily since 2006. 400 1.6%
And in the future? The need for
telecommunications sector investment 0.7% 0.6% 0.8%
200
isn’t going away any time soon. The report
predicts New Zealand’s fixed internet traffic 0 0%
will more than double by 2019, and mobile -0.1%
data volumes will grow six-fold during the -200 -0.8%
same period. Meanwhile, 99 percent of Kiwis 2007 2008 2009 2010 2011 2012 2013 2014 2015
will enjoy peak speeds of 50Mbps by 2025. Year Source: TCF
2017 / Issue 4
4 The Download | In brief
Tasman Global Access cable
boosts NZ data security
Tasman Global Access (TGA) will boost international
bandwidth and capacity between New Zealand and the
rest of the world. It will also bring us closer to our fast-
growing Asian markets by connecting us with the five
international cable systems serving Australia.
Communications Minister Simon Bridges welcomed
the cable as a valuable alternative to the trans-Tasman
section of the Southern Cross cable, which presently
carries much of our internet traffic.
“Given New Zealand’s geographic isolation,
international connectivity is vital for growing our
economy and for helping us capitalise on opportunities.”
He praised the cable for helping ensure New Zealand
has affordable, robust connections with the rest of the
world – connections that will “set us up for the future”.
Greater cable capacity means fewer bottlenecks and a
faster internet. The TGA cable also means there is now
more competition in the cable market.
The $100 million TGA cable is 2,288km long, stretching
from Ngarunui Beach, in Raglan, to Sydney’s Narrabeen
Beach. It can carry 20 terabits of data per second.
Spark, Vodafone and Telstra cooperated to build the
cable, which took two years. Spark general manager
of wholesale Jilyut Wong says trans-Tasman traffic is
growing quickly and now constitutes 60 percent of their
international traffic – up from 10 percent in 2000. This is
expected to grow 11,000 percent in the next 10 years.
Taryn Hamilton
They described the cable as “extremely important in
Electricity and broadband
keeping New Zealand connected now and in the future”
as it will support consumer needs and New Zealand
now on one bill at Slingshot
business’s growth aspirations.
Alcatel-Lucent built the two-fibre pair cable, which
Slingshot customers can now add electricity features 20 repeaters along its length to amplify optical
signals. A third cable, the Hawaiki cable, should be
to their monthly broadband bill. completed next year, providing New Zealand with three
Taryn Hamilton, general manager Customers of other Vocus brands will cable systems.
consumer at Vocus Group New Zealand, be offered electricity later on, but for now
says the move is the fruit of his company’s Hamilton and his team are learning how
acquisition of power retailer Switch to make the strategy work.
Utilities late last year. Power and broadband have a history
The customer benefits are mainly of being close to each other. Some
economic. Hamilton says Switch’s power fibre companies are also electricity
prices are lower than those of the main lines companies. Electricity retailer
electricity retailers. He says that on top of Trustpower has been selling broadband
that Slingshot customers get 10 percent since 2006. It offers a simple bundle of
off their broadband bill and 10 percent off electricity and power on a single bill.
their electricity bill for prompt payment. Hamilton says the margins on power are
But that’s not the only reason people lower than on telecommunications. Most of
are signing up. Hamilton says for some the industry profit lies in power generation,
people the idea of having both services but there are benefits from running a
on a single bill is attractive. At the same combined billing and customer service.
time, he says, many users find they Beyond profit, the big gain for Vocus is that
prefer dealing with Slingshot’s customer there is less customer churn when people
Jilyut Wong
service team. buy a bigger bundle of services.
thedownload.co.nz
5
“So in the wireless space spectrum is very, very expensive everywhere, regulators
and governments are making money and they’re selling it off very piecemeal. And
unfortunately, because it’s piecemeal, you get little bits of spectrum everywhere; you’ve
got 20MHz here, 20MHz there or 16MHz here. And the more fragmented it gets, the less
you can do with it. A lot of the chipsets can work very efficiently if you have what’s called
contiguous spectrum, a continuous block – but unfortunately that’s not how it gets cut up.”
STEVE COLLINS, CTO Netcomm Wireless speaking at CommsDay Summit 2017
Spark Netflix passes million mark with Lightbox in hot pursuit
moves Data from Roy Morgan Research says Netflix had over customers buying the two services tripled over the same
Genesis’ a million New Zealand subscribers at the end of 2016.
That’s up 56 percent on the 684,000 users a year earlier.
period. A total of 1.4 million New Zealanders, roughly one-
third of the population, now have one or more streaming-
IT into the However, Spark’s Lightbox grew faster over the same video services. In March, Spark began offering discounted
cloud period, climbing from 285,000, at the end of 2015, to Netflix subscriptions to its broadband customers.
630,000 as it was offered free to subscribers. Numbers for
Genesis Energy shifted
its business into the
cloud. The country’s
Fibre connections use more data Netflix Lightbox Netflix and Lightbox
biggest electricity 1,200,000
and gas retailer has
migrated its whole
IT infrastructure to 1,000,000
Spark’s Revera Cloud
Number of New Zealanders aged 14+
as part of a five-year
deal that will see Spark
800,000
provide Genesis with
managed IT services,
business mobile and
600,000
cloud services. The
deal is a two-way street
with both companies
400,000
planning to offer
complementary value-
added services to their
respective customers. 200,000
Genesis has recently
focused on using
technology to make 0
the company more December 2015 March 2016 June 2016 September 2016 December 2016
efficient and to “deliver Discrete Quarters
the digital services and
tools our customers
400
need for energy will be spent on local procurement,
management – in university research and building cloud
their homes or their computing infrastructure.
businesses.” It sees the Last year, Huawei committed to
shift to Spark’s Revera becoming a leading supplier of cloud
Cloud as a logical part
of this move. Spark
MILLION infrastructure. It aims to repeat its
telecommunications success by
says it’s pleased to When Huawei founder and CEO selling the technologies that enable
help Genesis simplify Ren Zhengfei met Prime Minister Bill cloud computing. The company says
its operations, so it English, in March, he announced plans its focus is local for now but could
to invest $400 million in New Zealand extend later to offering services Huawei CEO and founder Ren Zhengfei
can focus more on
with Prime Minister Bill English
its customers. over the next five years. The money throughout the Asia-Pacific region.
2017 / Issue 4
6 Cover story | Virtual reality
Virtual reality is already offering a new form of entertainment and promises better
buildings and surgery. Touch, temperature and even smell could soon add to the 3D
experience. Bill Bennett reports on VR today and what’s coming in the near future
V
irtual reality promises a revolution Business applications are emerging, but, for Facebook’s Oculus Rift, Sony’s PlayStation
in entertainment, business and now, much of the nascent VR industry's focus is VR and HTC with its Vive range. These
communications. The point of VR is on gaming. Entertainment is a good way to get products require sophisticated headsets and
to build an immersive, computer-generated the first wave of any new technology out into the need 'game' consoles, or other powerful
experience. The best hardware blocks out the market. It works especially well for VR. computing devices, to feed users a steady flow
real world, replacing it with an entirely new, There is a clear consumer demand for VR of 360-degree visual data.
artificial reality. entertainment. A recent Telsyte study of This isn’t such a tall order given that around
VR’s eventual impact could be as profound Australian consumers found almost half of half of all New Zealand homes already own a
as the arrival of television or the internet. those planning to buy a VR headset expect suitably equipped games console. In theory,
VR already serves up all-embracing digital to use it for gaming, movies and other everyday PCs could handle the load, but many
experiences that include sound and vision. entertainment. Hardware-makers take one of PCs in circulation today aren’t powerful enough
Soon, developers plan to add touch, temperature two distinct approaches to VR gaming. At the to handle the graphics processing required. They
and perhaps even smell to the mix. high-end, there is specialised hardware from either need upgrading or replacing.
thedownload.co.nz
7
High-end VR equipment may need cardboard headset sells for around NZ$20. It making it easier for users to command the
substantial customer investment but prices are gives users a cheap entry point – most graduate software, rather than fiddling with controls on
in line with other digital consumer hardware. to more sophisticated hardware. the headset.
The HTC Vive headset sells in New Zealand for Both types of virtual reality products are IDC Research reports a total of 10 million VR
around $1500. That’s about the same price as a selling at a clip. At the recent launch of the devices sold worldwide in 2016. This figure does
premium mobile phone handset. Galaxy S8 phone, in Auckland, along with not include Google’s cardboard headset. The
There are cheaper options. You can buy less updated Samsung VR that works with the new search giant says that, along with its partners, it
expensive headsets from Google or Samsung, phone, Jennifer Millar, Samsung’s product has shipped 10 million cardboard headsets since
for example. These piggy back existing manager, said the $200 Gear VR headset is now they were first introduced in 2014. Google adds
technologies. For instance, Samsung’s Gear one of the company’s most popular products. that its VR app has been downloaded 160 million
Virtual Reality headset works with its high-end It is selling as fast as Samsung can supply the times. There are no New Zealand statistics yet,
mobile phones. And Google offers a cardboard hardware, she said. Samsung recently added a but across the ditch, Telsyte says Australians
VR headset for use with Android phones. The handheld VR-controller to its updated headset, bought 200,000 VR headsets in 2016.
2017 / Issue 4
8 Cover story | Virtual reality
The VR hardware business is still TOP INDUSTRY VR viewing can offer fresh
in its early days. It’s not mainstream, based on 2017 market share insights into solving problems.
but at the current rate of growth it Mining engineers can then go
soon will be. This year, a fresh wave on to construct virtual sites. The
of hardware manufacturers will join 5.7% 5% technology is also helping improve
the market with devices that work 7.4% worker safety and efficiency.
with Microsoft’s recently renamed In the construction industry, VR
Windows Mixed Reality Platform. hardware is being built into smart
Also in the pipeline are consumer 26.6% helmets, allowing engineers to view
products based on standalone VR 10.9% blueprints in three dimensions
reference designs from Intel and while on site. Architects say
Qualcomm. These will help push VR being able to view and explore
further into the market. designs this way, getting real
customer feedback, helps them
VR CONTENT – THE CHICKEN produce better buildings and forge
AND EGG PROBLEM closer relationships with their
While almost a dozen hardware customers, because of improved
brands showed VR products at understanding. Meanwhile, the
the 2016 Mobile World Congress healthcare sector has already
in Barcelona, many of them used embraced VR. Surgeons can now
the same demonstration software. 44.4% use headsets as a hands-free
This sent a clear message about the display during surgery and some
lack of suitable VR content. This is are even using VR as a sedative
Consumer Discrete Manufacturing Retail
becoming less of an issue, but good when drugs aren't available.
Personal and Consumer Services Process Manufacturing Other
VR content still remains thin on the
ground. The world has yet to enjoy Source: IDC Worldwide Semiannual Augmented and Virtual Reality Spending Guide, 2016H1 TAKE-OFF TIME
a single compelling VR experience IDC Research says the world
– one that’s good enough to In Europe, football clubs are already interested in VR. Intel is working will spend US$13.9 billion on
get millions to spend upwards with La Liga, the Spanish football league, to install VR hardware at three virtual reality and its close cousin
of a $1,000 on new hardware. grounds. And, in the publishing world, The Economist, New York Times and augmented reality in 2017. That’s
However, many people think this is others have experimented with VR content for its subscribers. up 130 percent on the $6.1 billion
only a matter of time. spent last year. By 2020, the
It’s a familiar case of the BUSINESS APPLICATION POTENTIAL market will be worth $143 billion, a
chicken and the egg. There needs Away from entertainment and publishing, VR has major potential in compound annual growth of rate of
to be a sizeable market before business. In many respects, it is a natural response to dealing with the nearly 200 percent.
media production companies explosion of data being gathered by companies in this era of digital Most of this spending will be
will confidently invest the vast transformation. Word-processor documents, spreadsheets and traditional on consumer products. However,
sums needed to create new VR presentation software are struggling to address the problem. People will IDC says industry spending is
experiences. Meanwhile, the big rush need new ways to absorb and analyse these vast quantities of data, so set to grow at an even faster
to VR hardware waits until there is moving to a virtual world looks like a potential answer. rate. Leading the charge will be
enough decent material to make VR’s supporters say it can give workers a more intuitive way of dealing the manufacturing and retail
consumer spending worthwhile. with and relating to these floods of data. For example, in the mining industries. By 2020, industrial
Games developers are furthest industry, a VR representation of an area’s geography and geology would spending on VR will eclipse
along the line. Valve, the company be easier to interpret than two-dimensional maps. Early results suggest consumer spending.
behind Half-Life and Portal says
it is working on three major VR
games. And there are now more
than 1,000 VR apps listed on Steam, Virtual reality and augmented reality –
the online gaming service, although the difference
they are not all complete games. VR
Virtual reality and augmented reality are closely It’s the technology that lets you see Pokémon
also dominated this year’s Games
related but quite distinct technologies. In virtual creatures in a familiar landscape. This means
Developer Conference, in San reality, the real world is blocked out. Instead, users you don’t need an all-encompassing headset,
Francisco, which now includes a get to see a virtual world that exists in a computer. the overlays can be seen on devices like mobile
parallel VR event. They use stereoscopic goggles and headphones that phones. Heads-up displays are a popular way of
Sport is also a potential market fool the brain into experiencing a continually updated using AR, so are projectors. Google Glass was an
opener. In the US, for example, three-dimensional landscape that feels real. early AR device that didn’t make the transition
one professional basketball game With augmented reality, the real world stays to the mainstream but is likely to be back in an
is broadcast in VR each week. in place but is overlaid with other information. improved form one day.
thedownload.co.nz9
Full VR experience needs high bandwidth
For virtual reality to take off, it needs to be While 1080p VR is good, it is still not VR users get motion sickness when
immersive – and to not make people sick. detailed enough to convince users they too many frames drop out or when
This means more detailed graphics and are in a real world. For that to happen, moving the head results in a jerky
smoother movement. A lot of bandwidth 4K resolution is needed. That is about image. Oculus Rift and HTC Vive avoid
is needed to deliver both of these. Let’s four times as many pixels as 1080p, this with a 90Hz refresh rate, which
look more closely at the numbers. which means eight times as much data means they project two new frames
Today’s VR systems use 1080p video, as a conventional HDTV display. In other roughly every 10 milliseconds. Future 4K
the same resolution as a high-definition words, 16 million pixels. Every pixel has resolution systems will need to match
television screen. The frames are 1920 by 32-bit colour resolution. It’s possible, that speed. Local caching and intelligent
1080 pixels, or about two million pixels even desirable, to go higher, but this compression algorithms can take some
in total. The displays are close to the eyes will do for now. However, people notice of the load. Even so, to get that kind of
and two of them are needed, one for each if colour resolution drops much lower throughput online requires at least a
eye, to get stereoscopic vision. than 32-bits. gigabit connection.
2017 / Issue 410
Virtual Reality
FOR EVERYONE
The long talked about technology could be on the horizon
if the stars align. They are nudging closer, writes Scott Bartley
VIRTUAL REALITY is one of those technologies If you haven’t tried it, it’s an amazing experience. Microsoft New Zealand’s Director of
that seems to have been just around the corner However, there is more to VR success than simply Developer Experience, Chris Auld, offers some
forever. Now, after years of unfulfilled promises, creating a headset that works. hope on the affordability front.
the VR stars may be finally aligning. For VR to succeed, a number of conditions “In the next six to 12 months, we’re going
The world’s largest tech companies certainly must exist. The devices must be affordable; to see a significant change in the price point
think so. Over the past few years, big players the content needs to be abundant and of at which VR solutions are available across
with bulging wallets such as Google, Facebook, high quality (both technically and narratively Windows Holographic and across gaming
Microsoft and Sony have piled into VR. speaking) and it needs enough bandwidth consoles,” says Auld.
Facebook famously spent US$2billion buying to deliver these immersive, highly detailed “Several OEM partners are working on VR
Oculus Rift two years ago and plans to spend environments on demand over the internet. headsets that will cost just a few hundred dollars.”
more again. Microsoft has a foot in two camps Above all, it needs buy-in from consumers.
with its augmented reality HoloLens device and CONTENT IS STILL KING
VR. Meanwhile, Sony has been one of the first to AFFORDABILITY Getting the price down means scaling up, and
bring a commercial headset to market, by way Buy-in covers many aspects of the VR world, good content is always the key to doing this.
of PlayStation VR. not least of which is the price of headsets. The problem is that, from a technical point of
Headset prices are dropping, but they’re still view, producing VR content is hard. Not only
VIRTUAL REALITY – A REFRESHER a significant purchase. For example, at over that, once the novelty of using a headset has
For the uninitiated, virtual reality requires a $1400 the HTC Vive can’t really be considered worn off, are the stories themselves any good?
user to don a headset and use some kind affordable. Sony’s PlayStation VR at $630 is Who is going to produce this content? And why
of control system. The headset could be a better, but add the cost of a PlayStation 4 (at would they bother?
dedicated device such as the HTC Vive or the least $449), ‘Move’ controllers ($60 a pop) and The games industry is an obvious fit for VR.
PlayStation VR, or it could be a folded cardboard the PlayStation Camera ($100) and it comes in These people have been building immersive
contraption with plastic lenses that literally at over the $1000 mark. 3D worlds for decades. PC-based digital game
came out of a cereal box. The Samsung Gear VR will only set you back and application platform, Steam, knows this
In either case, the headset will feature dual around $200. However, this headset requires and is pushing Vive and Rift-compatible VR
high-resolution displays (or a mobile phone a compatible (and expensive) Samsung Galaxy games heavily.
acting in its place for the cereal box version) that phone to use it. Google’s Daydream View Broadcasters in the UK and the US have
creates a 360 degree, 3D world. You look around headset takes an identical approach to Samsung begun experimenting with VR capturing of live
the VR world simply by turning your head. (it needs a mobile phone) and costs about $150. sports events.
And education, engineering, medicine all hold
promise as places where VR and AR (augmented
reality) can really come into their own.
For consumers, movies and TV are more
obvious targets.
Film-makers have already begun
experimenting with ways to turn their medium
into virtual reality. The biggest mind-shift for this
industry is in the way audiences can essentially
frame their own shots simply by turning their
heads. How will that work in terms of a story?
The answer isn’t yet clear, but they’re giving
it a shot.
Earlier this year, several short VR films were
Engineering screened at the Sundance Film Festival. They’ll
Virtual reality allows
be released later this year, when anyone with a
engineers to see how
blueprints will appear VR headset will be able to experience this new
in practice. take on film-making for themselves.
thedownload.co.nzBusiness | Consumer VR 11
photo-realistic VR content production platform
with the goal of significantly lowering the cost
of producing VR content.
The company specialises in capturing real-
world scenes in an ultra-realistic way using a
photographic technique called photogrammetry.
For us at the end of the chain, this means we can
explore an art gallery, a church, nature scenes,
even fly in the sky, and more, down to the
minutest detail, using a VR headset.
Simon Che de Boer is the creative director and
founder of Realityvirtual.co and firmly believes that
content, and simplifying the way that content is
produced, is the only way forward for VR.
“Our pipeline is all about quick, efficient capture
of an environment at a granular level. We’re
extrapolating details like roughness of materials
right down to individual fibres in a painting. You
look at these objects in a headset and you’ll go
cross-eyed before you see a single pixel.”
The technology the company has built
already has a few big name customers in the
works who want to use it to capture priceless
art works and artifacts, all with the end goal of
letting ordinary people enjoy them as if they
were actually there.
BUILDING A VR PIPELINE
Whatever the format, creating VR and AR
content is significantly more challenging than
traditional content and requires additional
support from the platform builders.
"We’re extrapolating details “One of the things we’ve done at Microsoft is
build an API (application programming interface)
like roughness of materials right into Windows through something called Windows
down to individual fibres in a painting. Holographic,” says Auld. “What we’re trying to do
with Windows Holographic is to lower the barriers
You look at these objects in a headset to entry, to allow people to more easily build
and you’ll go cross-eyed before content and have it work with a broad range of VR
and AR type devices that plug into a PC.”
you see a single pixel.”
FAST INTERNET IS ESSENTIAL
Simon Che de Boer The final part of the equation is the delivery
FOUNDER OF REALITYVIRTUAL.CO
mechanism for all this content – the internet.
Such extremely high resolution content is going
So far, the content we’ve looked at has clearly important. Given Facebook’s clout, it’s to need a lot of bandwidth. Auld says high
revolved around an evolution of traditional likely to influence the entire VR scene. speed, low latency fibre is critical to unlocking a
forms – games, movies and sport. However, Locally, Microsoft has partnered with ATEED truly collaborative experience within VR.
social networks could hold the key to true (Auckland Tourism, Events and Economic “Having to deliver content onto two
success for VR. Development), Datacom, HP and other quad-HD screens [these have four times the
organisations to develop the VR/AR Garage – definition of standard HD], streaming in real
THE FACEBOOK FACTOR an incubator for VR and AR development. time, with full freedom of movement – it’s not
Mark Zuckerberg has said publicly that he like downloading a movie where you know
plans to spend US$3billion on blending VR ENTHUSIASTIC DEVELOPERS exactly what you’re going to see. Two hours in
and social networking. Recently, the Facebook Microsoft’s Auld says this provides a way for an interactive VR environment would require
CEO showcased a demo of Oculus being used the company to work directly with enthusiastic significantly more data,” says Auld.
to take a group photo of him, his wife and his developers to help achieve that all-important With decreasing prices, better hardware,
dog – even though he was at work and she supply of VR and AR content. content pipelines being built and gigabit
was at home. This technology is some way off But it’s not just the big players making internet, the pieces are falling into place. So,
becoming mainstream – Zuckerberg mentioned headway, a New Zealand company, it looks like there is no escaping the VR-laden
a time-frame of five to 10 years. However, it’s Realityvirtual.co, has created and licensed a future. It is now on our doorstep.
2017 / Issue 412 Business | Investing in telco
The battle for
VALUE
Consumers are enjoying the best telco services ever for the
lowest prices. Rob O’Neill asks what this means for investors
WHEN THE MAINSTREAM media talks about At the core of the battle is the concept of value even a small proportion of that being recovered
business, the story is usually about winners and – and who gets it. For consumers, it comes in the in higher prices,” Galpin says.
losers – which companies are gaining revenue form of low prices, high speeds, large data caps “I think there has been an opportunity to charge
and market share, and which are not. and great services. For investors, it comes in the more for services and that hasn’t been taken.” The
Only rarely do they address the underlying form of dividends and share price improvements. biggest price drop, he says, was that in the price for
battle for value between consumers and investors. unlimited data caps three years ago.
By and large, the media takes the side of INCREASE MARGINS “I didn’t see the need to reduce the price on
its readers, the everyday consumer. In this Blair Galpin, senior equity analyst with that. My view was demand would have met that
scenario, companies that deliver great products investment adviser Forsyth Barr, says the single and consumers would have paid a higher price
and services for the lowest price are the heroes. biggest challenge in the telco industry is to for unlimited data. But once you’ve given it away
Investors, the people taking most of the risks increase overall margins, as opposed to moving it’s hard to claw it back.”
in the market, often fade from view. that margin share around between the different Last year’s telco industry report,
Over the last decade in New Zealand, players, and different parts of the industry. the Commerce Commission’s Annual
telecommunications consumers have “For that to happen, we have to see consumers Telecommunications Monitoring Report, said
been the winners, mainly because of willing to pay more for the services they get,” he there was not enough margin in the industry, but
regulatory interventions that have created says. “That’s the biggest challenge.” added that providers could be more aggressive
hyper-competitive markets. After years of Galpin has enjoyed a box-seat view of these on pricing. There’s an obvious disconnect here,
dysfunctional monopoly-owned networks, developments for over a decade. In senior Galpin notes.
consumers are, rightly, enjoying the value roles at Telecom, he witnessed the operational “As a telco provider, you don’t want to be
unleashed, in part, by regulatory change. and structural separation of the market. More lumbered as a ‘dumb pipe’. The challenge is that
Managers in telecommunications businesses, recently, at Forsyth Barr, he has analysed in extending beyond that dumb pipe you are
however, are faced with the challenge of both battles over the regulated price of network increasingly coming up against international
winning market share and maintaining or boosting services provided by Chorus and their impact competitors in other spaces.”
margins for their owners. It’s a tricky balancing act. on the industry. Those players include giants such as Apple,
Improved services also have to be paid for – It is, to some extent, a story of lost opportunities. Google, Facebook and Amazon.
especially in rapidly changing, capital-intensive “I believe the value the consumer gets from Efforts by local telco operators and banks to
businesses such as telecommunications, where telco services has increased dramatically over launch their own payment products is a good
expensive network upgrades are a constant. the last three or four years and we haven’t seen example. This came at a time when Apple and
thedownload.co.nz13
other handset providers had already taken a the Southern Cross trans-Pacific cable. As to unknown until we move to 4.5G and 5G
lead in this emerging market. reducing costs, the options are similarly limited. mobile,” he says.
The “value question”, though, is complicated. Broadband retailers have been shifted, through “If you look at the numbers, Spark is aiming to
“To increase your margins, you’ve got to sell regulation, from spending capex on infrastructure have about 10 percent of its broadband numbers
more or you need to get more for what you sell, to operational spending, through Chorus. on wireless broadband so it’s not a small number
or you’ve got to reduce your costs,” Galpin says. “The biggest cost to, say, Spark – excluding for a fairly new service.”
There is organic market growth as our employee costs – is going to be Chorus.” But, again, this is not an example of margin
population rises – by around two percent each year. Spark’s response has been to aggressively growth in the industry.
But, at the same time, traditional revenue pools push wireless broadband products in an effort “What you are talking about here is shifting
(calling revenues) and margins are shrinking. to reduce this operational spending and to profitability in the industry from one player to
Consumer demand is strongest around service customers through existing wireless another,” Galpin says.
mobile, but, at the same time, demand for high infrastructure. Galpin says that may well Despite regulatory uncertainty, created by
speeds and large data caps is also growing. produce short-term benefits to Spark – up to the interventions over the last couple of years, there
“So, you have this ongoing demand, whether point where it needs to invest more in its mobile is no shortage of investors.
from business or the consumer, for more and more network to deal with increased usage. However, the profile of these investors has
use of telco services,” Galpin says. “Separate to “What the long-term capex implications are changed. The type of conservative, dividend-
this is what people are willing to pay for it.” around aggressively pushing this are relatively oriented investors Chorus attracted when it first
Another way to improve your margin is listed are not coming back at the same level.
to bring it in from other related industries. “I don’t believe investors have completely
Spark has done this through the acquisition of gotten over the changes, but memories are
datacentre and IT service providers. starting to dim,” Galpin says.
There are still reasonable margins being "I believe the value “There’s still a lot of uncertainty around what
generated around the traditional PSTN (Public Chorus looks like. It’s attracted certain investors
Switched Telephone Service), Galpin says. There the consumer gets but maybe not quite the same mix that was there
is also quite a lot to be made on mobile calls. from telco services has when it was initially offered.
But there are also emerging risks to margins “But there’s always an investor at a certain
that are already smaller than they used to be.
increased dramatically price, just a different type of investor.”
“If you look out three to four years, the over the last three The good news is the major retail players all
question is does traditional mobile calling appear to have healthy balance sheets, with
become an app on your phone anyway?
or four years and we Spark even returning cash to investors, through
haven’t seen even a special dividends.
SQUEEZING SPARK
small proportion of International ownership in both Spark and
“The question then is: can you squeeze more out Chorus has also been creeping up, Galpin says.
of what you’ve got? What Spark has shown is that that being recovered The view generally is that there is not much
you can increase your revenues but that doesn’t in higher prices." regulatory risk around Spark.
necessarily increase your margins because you Around Chorus, there is still uncertainty
are replacing a high-margin revenue stream with Blair Galpin about future pricing through to 2020; how the
a lower margin revenue stream.” SENIOR EQUITY ANALYST, FORSYTH BARR pricing model is going to be set, and what the
That’s the real issue, Galpin says. Margins are price is going to look like.
shrinking and there is a risk of further shrinkage A potential danger is current telco behaviour
in older style products. and marketing, which could be helping to create
In this mix there is also a demand for capital a new generation of highly price-sensitive
investment and the risk of further regulatory consumers. New Zealanders are already famous
shocks. Regulatory risk has reduced but has bargain hunters, with some of the highest
not gone away. As long as there are three levels of buying “on sale” at supermarkets seen
competing mobile operators regulatory risk anywhere in the world.
remains focused on Chorus’s fixed-line and fibre Buying telco services is not like buying half a
business, Galpin says. kilo of butter – at least not yet. There is still some
Margins could be improved through reduced pain involved in switching providers and most
capital investment, but while capex could be customers don’t do it without good reason.
less “lumpy” in the future, it probably won’t Galpin says those aged over 35 tend to be stickier
reduce overall. customers and more loyal to existing suppliers.
“I don’t see a significant drop off in capital Younger consumers, who are targeted by
spend in the industry and, potentially, you might brands such as 2degrees and Skinny, are different,
need an increase in capital spend for a while,” however. They are increasingly being trained to
Galpin says. look for the best deal. If that behaviour persists,
Spark has recently talked about replacing its demographic changes could bring an unpleasant
aged PSTN network. It may also need to replace surprise for retailers and for their margins.
2017 / Issue 414 Government | Network for learning
‘What’s not
to like?’
Network for Learning, the free, uncapped, fast schools’ internet service, overdelivers.
Nikki Mandow writes that the UFB project has 96 percent take up, is running under budget
and kids are learning better – especially those who hate pencil-and-paper learning
D
orothy Burt is a teacher, an Auckland- was 88 days ahead of target, with 700 schools unlimited, and works when you switch it on?’
based digital learning expert and an connected. By mid-2015, N4L was 565 days being the main reaction.
Apple Distinguished Educator. In ahead of target in terms of connections, with 70 “N4L has revolutionised schools,” says Burt,
decades working in schools, she’s seen it all – percent of the country’s 2500 state and state- who heads up the Manaiakalani Education
from the Novopay debacle, through to delays in integrated schools hooked up. As of March this Programme, a group of a dozen, mostly low
school property projects. She knows ministry year, 2411 schools (just over 96 percent of the decile schools in east Auckland, plus another 40
timeframes aren’t always met and teachers are total) were using the network. further afield. She’s also on the N4L advisory
often resigned to project overruns. Perhaps more miraculous, the project is board. “It’s a miracle for schools to have free,
Which is why the success of Network for running under budget. Initially costed at $211 unlimited UFB.”
Learning (N4L), a free, uncapped, fast, reliable million, through to 2020/21, just over $80 million At Pt England, a decile 1 primary school with
internet connection for schools, run over New has been spent so far. And Treasury figures a mainly Maori and Pasifika roll, N4L’s managed
Zealand’s ultra-fast broadband infrastructure, is show a quite impressive $3 million smaller-than- network means every child has their own device
all the more astonishing. The concept was first expected spend in the 2015-16 year. and their own blog. This wouldn’t have been
mooted in late 2011, by then Education Minister Meanwhile, the schools that The Download possible without fast, uncapped internet, says
Anne Tolley, and N4L connected its first school got feedback from seemed happy. With principal Russell Burt. There simply wasn’t
in November 2013. Nine months later, the project ‘what’s not to like about a system that is free, enough bandwidth.
N4L’S TECHIE
TOP TEAM
What’s notable about the board
and senior management of CHAIR DEPUTY CHAIR BOARD MEMBER CEO COO ACTING CHIEF
HELEN MARK JACK JOHN HANNA WILL GRAHAM PRODUCT OFFICER
N4L is how many don’t come GREG
ROBINSON YEOMAN MATTHEWS
from the Ministry of Education. Former CEO Former national WOOLLEY
Former MD of Group CFO, Chairman, of Maxnet, CFO business
Instead, the team is heavy with Microsoft NZ; The Warehouse; MediaWorks; of Simpl, sales development Executive
former bosses from private APAC head former CFO of former CEO of manager IBM director of director of Certus
(VP) Pivotal Airways and NZ Fairfax Media Qrious; head Solutions; former
sector businesses – in particular, Corporation; Post; former CEO Metro Division project director,
of enterprise
tech companies. Here are a few MD of Markit of SamoaTel and Fairfax solutions, Eagle Technology;
Digital Vodafone; head weapons engineer,
of them – don’t miss the former Royal NZ Navy
of enterprise
weapons engineer. service, Geni-i
thedownload.co.nz15
N4L chief executive John Hanna
2017 / Issue 416 Government | Network for learning
N4L: WHAT IT WAS SET UP TO DO
In October 2011, the then connection. The budget was set of the total. The target was 70 N4L’s digital hub for teachers,
Education Minister Anne Tolley at $211 million, by 2020-2021. percent of schools connected by Pond, launched in March 2014, is so
announced Cabinet approval for One rationale behind N4L the end of 2016. far the main product that fits Anne
a business case for “a Network was to fill a gap the commercial Nearly 800,000 people use Tolley’s original objective of N4L
for Learning, a dedicated online sector would find challenging. The the network each day. The N4L providing “a range of online content”.
network for schools, which will Government argued commercial package also includes network By March this year, Pond had
run over the ultra-fast broadband providers would not be able to security, web filtering, proactive almost 15,000 educators using
infrastructure currently being offer a tailored platform and monitoring (using a Raspberry Pi the site and 522 organisations
rolled out across New Zealand. services to small or remote schools, device that automatically carries supplying education-related
The Network for Learning, or to more complex schools, at a out speed tests on a school’s content or services. There were
available progressively from price they could afford. network and reports back to N4L), more than half a million page
2013, will provide schools with support services and uncontended views in the year to June 2016
affordable, safe, ultra-fast internet HAS IT ACHIEVED ITS GOALS? connectivity (this ensures fast data and almost 170,000 searches.
access, as well as a range of N4L’s performance results and access at all times). Still, users and usage patterns
online content and centrally Treasury budget figures suggest The 2015-2016 budget for are lower than predicted (see
procured services,” she said. that unlike other educational N4L – $31.75 million – was main story) with some teachers
Over a five-year period, Anne IT projects (Novopay being the underspent by $3 million, saying they tend to use general
Tolley said, 97 percent of schools classic example) the N4L Managed according to Treasury figures. search engines such as Google.
would be UFB-connected, Network project has delivered Meanwhile, 98 percent of However, N4L is optimistic it may
enabling speeds of 100 Mbps ahead of time and below budget. connected schools can get be able to commercialise the
plus. The remaining three percent As of March 13, 2017, 2411 state speeds of 100Mbps or more. The platform underpinning Pond and
of schools, in the most remote and state-integrated schools are remaining two percent are rural is exploring the possibility with
locations, would receive a connected to the N4L Managed schools that use wireless services education officials in the Middle
high-speed wireless or satellite Network – just over 96 percent and get speeds of 10 to 20Mbps. East and elsewhere.
“Shifting from shared devices to your own Pt England school-children publish their work from 3.6 to 13.4 million. Interestingly, kids aren’t
device changes everything,” Russell Burt says, a directly to the web. Anyone can check out their just spending more time watching cat videos on
little impatient at the next question: Why? “Just blogs. Russell Burt says the rare privacy issues YouTube – total video streaming has gone up quite
think about your own job. Imagine if you had to that arise are more than offset by the enhanced modestly, from 550,000 minutes in June 2015 to
share your laptop or your smartphone.” learning outcomes when students share what 595,000 minutes in the same month in 2016.
There are so many ways in which learning they’ve been doing. Of course, it’s not perfect. Chris Hipkins
with digital technologies in a “one child, one Dorothy Burt says digital technology engages asked the Minister how many schools can’t
device, heaps of internet” setting is better than a whole group of children who were disengaged currently be connected to Network for Learning
the old system, Burt says. from learning using the pencil and paper method. because they don’t have the fibre infrastructure
For example, learning is rewindable – if “Recently I visited the maternity unit at in place to be connected.
students don’t get it first time, they can go Middlemore Hospital. Practically every mother This was the reply, from Associate Minister
back and do the lesson again. “On demand is had a baby in one hand and a smartphone in Nikki Kaye:
so important in our lives now. Think of digital the other. Our children live in a world where
learning as school-on-demand.” everyone is connected and digital. You can’t run Ten schools cannot be connected to the
a school without it.” managed network because they don’t have
SHARED LEARNING It’s not just Russell and Dorothy Burt who the fibre infrastructure in place. Two are
Another positive of this cloud-based learning is are N4L enthusiasts. Actually, it’s hard to find waiting for construction work to finish before
it makes it easy for whanau to get involved. someone who’s critical about the managed connecting to fibre. Another is moving to a
“Pretty much every child in the world network. Not journalists, not social media new site where there will be fibre. Three of the
answers ‘nothing’ when you ask: ‘What did commentators, not the Labour Party’s education schools are in the Chatham Islands, where
you do at school today?’” Burt says. “But if spokesperson, Chris Hipkins. Not even there is no fibre network. These are connected
everyone has a device and everything is online, competitive educational IT providers. Not one through the Remote Schools Broadband
a parent can say ‘Show me what you did at of the signed-up schools has unsigned. And the Initiative. The initiative connects schools via
school.’ And they’ll look at a blog entry or a amount of data students access via the network point-to-point wireless or satellite technology.
video, or a maths problem and they can put is increasing exponentially. N4L is working with the remaining four
their arm round their child and say ‘I’m proud Between June 2015 and June 2016, total schools to identify options for connecting
of you’. Now you’ve engaged in your child’s monthly traffic increased from 500 terabytes to them to fibre, so they can be connected to the
learning and encouraged them.” 1385TB. Web-page hits for the month were up managed network.
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