Orcon sold for millions. Now serial entrepreneur, Seeby Woodhouse, returns with Voyager

Page created by Darryl Lawrence
 
CONTINUE READING
Orcon sold for millions. Now serial entrepreneur, Seeby Woodhouse, returns with Voyager
Championing better broadband for New Zealand                                                    2018 / ISSUE 6

    Orcon sold for millions.
    Now serial entrepreneur,
    Seeby Woodhouse,
    returns with Voyager

                                                                                Brought to you by
       SMART CITIES                KATE MCKENZIE          FIBRE AND WIRELESS
How technology can transform       Chorus CEO on          Our future networks
   our population centres      challenge and innovation     work together
Orcon sold for millions. Now serial entrepreneur, Seeby Woodhouse, returns with Voyager
Contents                                                                                                                        2018 / ISSUE 6

                                                                                                            22
                                                                            10                              Closing Taranaki
                                                                                                            digital divide
                                                                                                            PrimoWireless is pushing
                                                                          SMART CITIES
                                                                                                            fibre deep into hard-to-reach
                                                                          Putting intelligence into our
                                                                                                            rural areas
                                                                          population centres needs more
                                                                          than just technology              27
                                                                                                            Networking in the cloud
                                                                          14
                                                                                                            Software Defined Networks
                                                                          Sensing Water
                                                                                                            promise much, but can they
                                                                          Tussock Innovation uses IoT to
                                                                                                            really deliver?
                                                                          keep water clean
                                                                                                            28
                                                                                                      16    Amazon threat
                                                                                                            inspires retailers
                                                                                                            Local stores respond to global
                                                                                                            online competition

                                                                                                             30
                                                                                                            THE BEST WAY TO
                                                                                                            NETWORK YOUR HOME
                                                                                                            Moving data around your house
                                                                                                            doesn't have to be hard
                                                                          16
                                                                          Kate McKenzie
                                                                          The Chorus CEO doesn't plan to
                                                                          run a boring utility
                                                                          19
                                                                          Broadband Compare

8
                                                                          Mining for ISP gold
             COVER STORY:                                                 20
             SEEBY WOODHOUSE                                              Where fibre meets wireless         VIEWPOINT
             The Voyager CEO says the move to                             Often seen as rivals, fibre and
             fibre is an opportunity he can't resist                      wireless work best together       33
                                                                                                            Why don't you have
 REGULARS                                                                                                   fibre yet?
                                                                                                            InternetNZ deputy CEO
1                     2                                                                                     Andrew Cushen thinks uptake
Editorial             In Brief                                                                              could be higher
Fibre and wireless    Falling broadband
                      prices, Stuff Pix,                                                                                                     33
                      school Wi-Fi trial

                                                24
 7                                             HOW STREAMING TV WORKS
                                               The key lies in red server boxes
Orcon sold for millions. Now serial entrepreneur, Seeby Woodhouse, returns with Voyager
The Download | Editorial                                                                               1

                                         Fibre and
Editor
Bill Bennett
Chorus Editorial Consultants
Ian Bonnar, Steve Pettigrew,

                                         wireless,
Holly Cushen
Contributors
Rob O’Neill, Scott Bartley,
Heather Wright, Hadyn Green,
Johanna Egar, Andrew Cushen

                                         not fibre or
Senior Account Director
LauraGrace McFarland
Senior Designer
Julian Pettitt

                                         wireless
Publisher
Ben Fahy
On the cover
Photography by Robin Hodgkinson,
art direction by LauraGrace McFarland,
design by Julian Pettitt

                                         Some telecommunications folk like to paint
                                         fibre and wireless as rivals. They tell us
Published by Tangible Media, ICG.
PO Box 77027, Mt Albert                  we have an either/or choice. In most cases
                                         they’ll then go on to say why one of the
Auckland 1350, New Zealand
www.tangiblemedia.co.nz

                                         two is preferable and that it is the future.

The Download is championed by            WHILE THERE ARE times when the two go head                      And yet Primo uses fibre to fuel its wireless connections.
Chorus                                   to head, that’s rare compared with the times when               Fibre means PrimoWireless can reach further and
PO Box 632, Wellington 6140              fibre and wireless go hand in hand. The two are                 deliver better performance to its rural customers.
www.chorus.co.nz                         complementary technologies, not opponents.                         It’s also worth remembering that when Telecom, now
The contents of The Download
                                            This is a theme that runs through many of the                Spark, first built the cellular network it now uses to deliver
are protected by copyright. Please       stories in this edition of The Download. We look at the         fixed-wireless broadband, the company’s marketeers
feel free to use the information         issue in some depth in Fibre and wireless, on page 20.          were at pains to point out that it performed better than
in this issue of The Download,           You rarely see fibre without                                                                  its rival because its towers
with attribution to The Download
                                         wireless. And wireless works                                                                  were “fibre-fed”. Fibre gave
by Chorus New Zealand Limited.
Opinions expressed in The                so much better when fibre is                                                                  the company a key advantage
Download are not necessarily             part of the picture. It almost        Because fibre will also                                 then. It still does.
those of the publisher or the editor.    always is too.                                                                                   By the time New Zealand’s
Information contained in The                When New Zealand’s
                                                                                 reach many of the                                     current wave of land-based
Download is correct at the time
of printing and while all due care
                                         UFB fibre network reaches           towers used for wireless                                  networks are complete,
                                         a neighbourhood, strands                                                                      fibre will extend to about 87
and diligence has been taken in the
preparation of this magazine, the        of glass carry data from the
                                                                             broadband technologies,                                   percent of homes. It will reach
publisher is not responsible for any     exchange to the cabinet              its benefits will stretch                                an even greater proportion
mistakes, omissions, typographical
                                         and from the cabinet to the            to almost everyone.                                    of businesses, schools and
errors or changes to product and
service descriptions over time.          buildings. Once the data is                                                                   medical centres. Because fibre
                                         inside the house or office,                                                                   will also reach many of the
                                         nine times out of 10 the job of moving it is then handed        towers used for wireless broadband technologies, its
                                         over to Wi-Fi.                                                  benefits will stretch to almost everyone.
                                            Scott Bartley covers this in The best ways to network your      Likewise, fibre will have an important role to play in
Connect with us                          home, on page 30. Even when homes and offices have              a year or so when the mobile companies start building
Facebook.com/ChorusNZ                    Ethernet connections to smart televisions or desktop            5G cellular networks. If 5G is to deliver on its promise,
Twitter/ChorusNZ
Chorus NZ Limited on LinkedIn
                                         PCs, Wi-Fi is used to connect tablets and phones.               fibre will be essential.
                                            At first sight, the name of Matthew Harrison’s                  The future is not fibre or wireless, it is fibre and wireless.
                                         Taranaki-based PrimoWireless — see page 22 — firmly
www.thedownload.co.nz                    nails the company’s colours to one technology mast.             Bill Bennett

                                                                         2018 / Issue 6
Orcon sold for millions. Now serial entrepreneur, Seeby Woodhouse, returns with Voyager
2

In brief
                                                              BY THE                                    Netflix surges
                                                             NUMBERS                                    Researcher Nielsen says 1.2 million New
                                                                                                        Zealanders now have Netflix access. The research
                                                                                                        company's Connected Consumer Report for 2018
                                                                                                        says around 434,000 households now subscribe

                                                               174GB
                                                                                                        to the video-on-demand service. On this
                                                                                                        showing, Netflix's New Zealand reach has almost
                                                                                                        doubled since December 2015, when researcher
                                                                 Average household
                                                                                                        Roy Morgan reported 684,000 New Zealanders
                                                                 data internet usage
                                                                                                        had the service.
                                                                                                           Netflix's biggest New Zealand competitor
                                                                                                        is Spark's Lightbox, which, according to its
                                                           AVERAGE BROADBAND SPEED IN NZ
                                                                                                        annual report, currently reaches 810,000 New

                                                              64Mbps                                    Zealanders, via 300,000 subscriptions. Spark
                                                                                                        says around 44 percent of the population now
                                                                                                        use streaming video. In comparison, Sky TV has
Broadband prices                                                                                        around 700,000 subscribers.

tumbled in 2017
                                                            Peak traffic on the network                    Netflix continues to grow fast internationally.
                                                               on 1 February 2018                       It added eight million new subscribers in the

                                                          1.45Tbps
                                                                                                        last three months of 2017. That's a record and
Research company IDC says the average price
                                                                                                        comes after a price increase. Netflix now has
of a residential 100/20 Mbps fibre plan with
                                                                                                        close to 120 million subscribers worldwide
uncapped data fell from $119.07 to $87.78 during
                                                                                                        – that's about the same number as the US
2017. That's a 26 percent drop. Prices across the
                                                                                                        television viewing audience.

                                                                20,000
telecommunications industry as a whole fell by
6.3 percent. This continues a long-term trend.
   Telecommunications Forum CEO Geoff
                                                              GIGABIT CONNECTIONS IN NZ
Thorn puts the drop in context, pointing out
that the cost of comparable utilities has been
increasing over time. “The latest figures
continue a trend seen across the board in                   Uptake of Chorus UFB fibre
New Zealand since 2006. The real cost of
telecommunications services is decreasing, even
as the quality and quantity of services provided
                                                                    42%
is increasing,” he says.

                                                              300,000
   Jason Attewell, Statistics New Zealand's
senior manager, Labour Market and Household
Statistics, says the price consumers pay for
                                                              CUSTOMERS WHO COULD BE
technology effectively falls over time. “In the                ON BETTER CONNECTIONS
Consumer Price Index, we adjust prices to
reflect improved products or services, even if the
sticker prices stay the same,” he says.

              "The New Zealand IoT Alliance's research says that IoT could bring
              NZ$2.2 billion of benefit to the economy over the next ten years."
                                  IDC New Zealand research manager for telecommunications Monica Collier after reporting
                                     the number of local organisations implementing IoT doubled between 2016 and 2017.

                                                                thedownload.co.nz
Orcon sold for millions. Now serial entrepreneur, Seeby Woodhouse, returns with Voyager
The Download | In brief                                                                    3

Communications services
flat as NZ spending on IT                                                              KORDIA REVAMPS WITH
rises to $12 billion                                                                   NEW TV BROADCAST-
Research company Gartner says it expects the New Zealand technology                    AS-A-SERVICE OFFERING
products and services sector to climb 2.2 percent in 2018. It will rise from           Kordia is making it easier for local content producers to
NZ$11.7 billion to a shade under $12 billion. This is close to the 2.5 percent         distribute their content with the aid of its Cloud for Digital
growth expected in Australia. Both countries are well behind Gartner's                 Playout service. A one-stop shop, it treats the transmission part
worldwide growth forecast of 4.5 percent                                               of broadcasting as a service that is paid for monthly.
  Spending on software is set to see the biggest increase during the year.                The company’s head of media, Dean Brain, says there is
Gartner says spending on communications services is likely to repeat the               already a lot of interest. Several shopping channels and ethnic
recent pattern and post a modest increase of around one percent. In 2017,              television companies – Chinese and Indian, but also some
the market was worth $4.37 billion, in 2018 this will rise to $4.41 billion.           smaller ethnic communities – are interested.
                                                                                          “To play their content, our TV customers have to first load
Gartner forecasts $4.42 billion in 2019.
                                                                                       it on to a server, then create a play list, then play it. Some of
  The research company includes consumer and enterprise, fixed and
                                                                                       them can’t afford the equipment needed, so we’ve developed
mobile, voice and data services in its communications services forecast.
                                                                                       a customer-agnostic service that distributes to web platforms
                                                                                       like YouTube or to their own branded platform, like Rhema TV’s;
 New Zealand                            2017         2018         2019
                                                                                       the Christian broadcaster.”
 Devices                                1,648        1,657        1,635                   Brain said the new service was aimed at New Zealand-
 Data Centre Systems                    364          353          345                  focused television content providers. The service is an
                                                                                       initiative of Kordia’s revamped media division. Brain is its newly
 Software                               1,487        1,630        1,788                appointed head.
 IT Services                            3,836        3,907        3,976

 Communications Services                4,378        4,413        4,425

 Total Sum of End-User Spending         11,703       11,959       12,169
Source: Gartner (January 2018)

                                                              Dr Stephen Gale

ComCom educates
broadband beginners
The Commerce Commission has released two more guides as part of
its consumer education project. All the consumer education guides are
aimed at beginners. The latest additions show users how to choose a
telecommunications service provider and how to monitor its performance.
   “When consumers experience problems, we want to help them
identify the potential causes, as well as giving them practical advice
about what they can do to try and improve their broadband before they
take it up with their internet service provider,” says Telecommunications
Commissioner Dr Stephen Gale.

                                                                          2018 / Issue 6
Orcon sold for millions. Now serial entrepreneur, Seeby Woodhouse, returns with Voyager
4                                                               The Download | In brief

                                                                                                  New Zealanders less
                                                                                                  likely to complain
                                                                                                  about telecoms
                                                                                                  The New Zealand Telecommunications Forum
                                                                                                  says the number of consumer complaints about
                                                                                                  the industry is lower than in other countries.
                                                                                                     According to the annual Telecommunications
                                                                                                  Dispute Resolution report, the number of
                                                                                                  complaints in the year to July 2017 was steady,
                                                                                                  following a rise in complaints the previous year.
                                                                                                     The TCF says the number is “substantially lower
                                                                                                  than the number of contacts [complaint enquires]
                                                                                                  received as a percentage of connections by dispute
                                                                                                  resolution bodies in other comparable sectors and
                                                                                                  telecommunications disputes services in other
                                                                                                  jurisdictions, such as Australia and the UK.”
                                                                                                     During the year, the dispute service received
                                                                                                  2,252 complaint enquiries from consumers. Only
                                                                                                  six percent became formal complaints. The TCF
                                                                                                  says that in most cases service providers were able
                                                                                                  to resolve the issues raised quickly.

Telco                                       LEVY ALLOCATION
                                                                                                                      2degrees offers
Development                                                                                                           Wi-Fi calling
                                                     QLP      Qualified revenue      % of      Amount of TDL to
                                                                      ($)          industry        pay ($)
                                                                                   qualified

Levy finalised                                                                     revenue                            to fill mobile
The Commerce Commission has
                                            Spark
                                            Vodafone
                                                                   1,502,143,973
                                                                   1,119,526,777
                                                                                       35.43
                                                                                       26.34
                                                                                                   17,668,014.48
                                                                                                    13,167,722.70
                                                                                                                      coverage gaps
released its final decision on the                                                                                    2degrees has introduced a service
                                            Chorus                 960,502,000         22.59        11,297,294.77
$50 million Telecommunications                                                                                        that allows customers in areas with
Development Levy for 2016/17.               2degrees                356,180,198         8.38        4,189,343.37      poor cellular coverage to make calls
The levy is, in effect, an extra tax on     Vocus                   134,057,695         3.15        1,576,768.50      or send texts using a Wi-Fi hotspot.
telecommunications companies.               Ultrafast Fibre          38,659,000         0.91          454,701.94        The Wi-Fi calling service only
In round numbers, it adds about                                                                                       works with some handsets. At the
                                            Teamtalk                 34,401,000         0.81          404,619.91
one percent to the end-user cost of                                                                                   moment that's just recent Samsung
telecommunications services.                Enable Networks          25,674,000         0.60          301,974.12
                                                                                                                      models. 2degrees says it will add
   The money raised is used to pay          Vector                   21,721,000         0.51          255,479.47      other phones to the service in the
for rural broadband, fixing mobile
                                            Kordia                   16,476,000         0.39          193,788.49      coming months. When in use Wi-Fi
blackspots, the 111 emergency
                                            Trustpower               13,901,000         0.33          163,501.68      calling appears like an ordinary
calling service and services to help
                                                                                                                      phone service.
deaf people use phones.                     REANNZ                    9,327,000         0.22          109,702.91
   As in previous years, New Zealand's                                                                                  Wi-Fi calling also works if
                                            Now                       5,659,908         0.13           66,571.07
largest telco, Spark, will pay the lion's                                                                             customers are overseas. It means
share of the levy for the year: almost      Northpower                5,443,000         0.13           64,019.83      people can receive incoming calls and
$18 million. The five biggest telco         Compass                   4,935,000         0.12           58,044.80      texts on their usual phone number.
companies, Spark, Vodafone, Chorus,         Transpower                2,419,000         0.06           28,451.95        2degrees' chief marketing officer
2degrees and Vocus, will pay around                                                                                   Roy Ong says: “If you’ve got Wi-Fi,
                                            Total Industry       4,251,026,551          100       50,000,000.00
$48 million of the $50 million total.                                                                                 you’ve got 2degrees cell coverage.”

                                                                   thedownload.co.nz
Orcon sold for millions. Now serial entrepreneur, Seeby Woodhouse, returns with Voyager
5

Stuff Fibre in                                   TESTING UNDERWAY FOR HAEATA
media play                                       COMMUNITY CAMPUS TRIAL
                                                 Network for Learning and                Andy Kai Fong, Principal of
Stuff Fibre now offers Stuff Pix, a movie-       Greater Christchurch Schools         Haeata Community Campus,
streaming service. The ISP says it has a         Network have been working            described the initiative as a
catalogue of movies that can be watched          with Chorus on a school Wi-          game-changer in that it allows
online for between $1 and $7 each.               Fi trial at Haeata Community         “seamless education between
   Paddy Buckley, previously head of             Campus in Christchurch. The          school and home.”
Quickflix in New Zealand, is Stuff Pix’s         project is now well underway.           “A good proportion of families
general manager.                                    The trial aims to extend the      here who make weekly decisions
   Stuff Fibre is a joint venture part-owned     school’s managed internet            about which bills they can afford
by Fairfax New Zealand that boasts a             service into the homes of            to pay; whether they pay rent,
sizeable number of media properties.             students in some of the most         food or power. When battling
With rival service providers also offering       deprived areas of the city.          this reality, the internet is a luxury
online media, the movie business gives              The free service offers           you don’t afford,” he says.
                                                 students the benefit of internet        “Yet, the notion of learning                            Andy Kai Fong
Stuff Fibre an opportunity to differentiate
                                                 access outside of normal             these days without the internet
itself from the pack.
                                                 school hours.                        is almost unthinkable.”                  telephone poles in the street,
   Stuff Pix is a relatively modest entry into
                                                    Chorus and Network for               Joseph Wong, Chorus’s                 and even trialling supplying
the streaming market, which is dominated
                                                 Learning have been working           network strategy and planning            power to the access points
by Netflix. The company offers a list of         on the pilot to help bridge this     manager, is positive about               over unused copper pairs.”
700 movies; they are not exclusive.              digital divide since November.       the programme’s progress.                   Once it goes live, the Haeata
   Buckley says the operation is a               A prototype extended Wi-Fi           “Considering what we are trying          Community Campus Wi-Fi
replacement for closed video stores and          network is now in place in two       to do is totally different and new,      network will let students log
is not a Netflix competitor. Stuff Pix           of the streets within the school’s   we’re tracking well,” he says.           in to their own account from
will be open to all internet users and its       catchment area and testing is           “We’re making use of our              home. They will have full access
main attraction will be price. There is no       underway in six homes.               existing copper, fibre and               to online educational resources.
subscription fee. Instead, customers pay a
one-off fee to view each movie.
   He says the prices will be the lowest
on the market. While it is technically
possible to buy movies for less by parallel
importing, customers need to set up a VPN
(virtual private network) to do this.
   New Zealand's two largest ISPs,
Vodafone and Spark, have their own media
offerings. Vodafone resells Sky TV content
through its Vodafone TV service, while
Spark has its Lightbox streaming service.

                                                 ON THE BALL
                                                 Kordia’s on the ball when it comes to                    in such remote locations is both a joy and a
                                                 broadcasting the popular Super Rugby games               challenge. “It’s like taking Meccano apart and
                                                 from the Pacific. It now delivers HD-quality             then putting it back together again.”
                                                 video of Fijian and Samoan games to fans                    However, Pacific rugby is getting global attention,
                                                 around the world.                                        and Kordia is earning an international reputation
                                                    Dean Brain, Kordia’s head of media, says              for its expertise in broadcasting the games to the
                               Paddy Buckley
                                                 flying in and setting up broadcasting equipment          world. HD’s reliability helps a lot, says Brain.

                                                                    2018 / Issue 6
Orcon sold for millions. Now serial entrepreneur, Seeby Woodhouse, returns with Voyager
6                                                              The Download | In brief

Chorus network                                          FCC ENDS US NET NEUTRALITY
hits 1.45 terabits                                      In December, the US Federal Communications
                                                        Commission voted to undo the net neutrality
                                                                                                            certain types of content often doesn't apply.
                                                                                                               The US net neutrality debate is often
per second                                              regulations established by the Obama                framed as a fight over free speech. It pits giant
                                                        administration.                                     telecommunications companies like AT&T
Chorus’ broadband network hit its 2017 peak at
9.25pm on December 10. At the time it’s network            This means US internet service providers are     and Verizon against wealthy internet giants
was delivering 1.328 Tbps per second. Less than         free to charge users more to access certain types   like Facebook, Google and Amazon.
four weeks later it hit a new high. On January          of content. The ISPs will be able to decide which      The internet companies fear the end of net
4, at the same hour, the network was spitting           content their customers can access.                 neutrality will give telcos too much power and
out 1.33 Tbps per second. Within a month that              They will also be able to slow the delivery of   an added ability to clip the ticket. At the time
record was passed. On February 1 1.449Tbps              certain types of content.                           of writing, they are working to reverse the
passed through the network. New Zealand’s                  In the US, many consumers have little or         December vote. A political backlash, especially
most voracious data consumers are in Porirua.           no choice of ISP. The competitive pressure          among younger voters, means Congress may
In December, the average Porirua household              that acts as a brake on discriminating against      revisit the issue later this year.
chewed through 202GB, that’s 34 percent
up on a year earlier. Nationwide average data
consumption on the Chorus network climbed
a similar amount. It is now 174GB a month.
That’s up from 123GB a year ago. Users with
fibre accounts use more data than those with a
copper connection. While the average monthly
data use across the entire Chorus network
is 174GB, customers with fibre use around
250GB. In September a Chorus forecast said
this will climb to an average of around 680GB
a month by 2020. In part the rise will come as
more accounts move from copper to fibre. The
growth is largely about television moving from
broadcast distribution to online, on-demand
delivery. Chorus network strategy manager Kurt
Rodgers says it is not just the big international
providers like Netflix driving this change. He says
TVNZ and Three launched live streaming in 2017
and that has helped online television become
mainstream. Rodgers says people are watching
on smart TVs, but they also watch on phones and
tablets connected to home Wi-Fi networks. He
says phone handsets are used more often with
Wi-Fi than cellular data.

                                                                                                    for up to 10 years. He sees digital radio coming to
                                        Kordia in tune with music                                   replace AM services because of the latter’s relatively
                                        lovers’ digital radio                                       poor sound quality. “DAB is a beautiful clean sound,
                                        Digital radio, beloved of music buffs and quality radio     just amazing,” says Brain.
                                        fans, could be coming to New Zealand with a little             The fact that many new cars now come equipped
                                        help from Kordia.                                           with DAB is music to his ears. These cars are now
                                           The broadcast-transmission provider turned               common in the UK and are becoming popular in
                                        telco has just revamped its media division and is           Australia, he says. They often now come equipped with
                                        getting behind Digital Audio Broadcasting (DAB).            a digital screen, so broadcasters can, for example, let
                                        Industry veteran and DAB enthusiast Dean Brain,             drivers know if there has been an accident. Brain sees
                                        the division’s new head of media, says Kordia is “in        such developments adding to the push for digital radio
                                        discussions with the new government”.                       to be allocated its own frequency. He has his sights on
                                           Brain is “positive” despite the fact DAB trials – with   the AM band as he believes digital radio will eventually
                          Dean Brain
                                        Radio New Zealand and others – have been running            replace AM because it sounds so much better.

                                                                 thedownload.co.nz
Orcon sold for millions. Now serial entrepreneur, Seeby Woodhouse, returns with Voyager
7

TGA CABLE AND
HAWAIKI ADD
RESILIENCE TO
INTERNATIONAL
LINKS
Last year scores of international flights were
cancelled when the fuel pipe supplying
Auckland airport with aviation gas was ruptured.
    In the same way, New Zealand’s international
telecommunications links were, until recently,
vulnerable to a shut-down should anything
happen to our sole submarine cable network:
the Southern Cross. It links us to Australia, Fiji,
Hawaii and the US mainland.
    That changed last February when the
Tasman Global Access cable went live. The
30Tbps cable, which runs between Auckland
and Sydney, provides us with greater capacity
and connectivity. It also gives us a back-up
cable. And the Spark, Vodafone and Telstra-
owned cable makes Kiwi creative hits like the
Thunderbirds series more possible too.
    Wellington’s Pukeko Pictures, an offshoot of
Weta Workshop, which created the movies, works
with production shops all over the globe. Vodafone
says better cable capacity means it can share big
files much more easily with its overseas partners.
    New Zealand will soon boast a third
submarine cable: the $500 million Hawaiki
Cable. This is set to go live mid-year and has
a total capacity of 42Tbps. It will link New
Zealand, Australia and the US. It is unusual
in being a split cable – one cable goes from
Northland’s Mangawhai Heads and another
from Sydney. They join up underwater to form a
single cable that lands in Oregon. There is also a
side link to American Samoa.
    A fourth cable, Southern Cross’ 60Tbps Next           40 percent from Australia, now its 75 percent
cable, is due to go live late next year. It will also     from Australia, 25 percent from the US. This
connect New Zealand, Australia and the US,                is mainly the result of Netflix, Amazon and
with branches to several Pacific islands.                 Google’s YouTube now running their content
    CEO Anthony Briscoe underscored the                   from Australian data centres.”
importance of submarine cable, saying people                 Entertainment is driving usage, which is
may think their Facebook and Snapchat content is          doubling every 18 months, he says. But the cable
delivered by satellite, but “most of it is delivered by   is good for business too, with Pukeko Pictures’
undersea cables no thicker than a garden hose.”           Thunderbirds series being a good example.
    “Submarine cable is among the most critical              Commenting on the four cables, Rieger says:
infrastructure projects on the planet.”                   “Submarine cable is a critical path. We need as
    Vodafone’s wholesale director Steve Rieger            much diversity as we can afford, and by having     ‘Thunderbirds Are Go’ – again. Better
has worked on the TGA cable project and                   Southern Cross, TGA and Hawaiki, and soon          submarine cable capacity with the advent of the
                                                                                                             TGA Cable makes it possible for New Zealand to
says cable traffic is changing fast. “60 percent          Next, we now have this critical infrastructure
                                                                                                             produce movie hits like Thunderbirds
of our traffic used to come from the US,                  much better protected.”

                                                                          2018 / Issue 6
Orcon sold for millions. Now serial entrepreneur, Seeby Woodhouse, returns with Voyager
8                                                                 Cover story | Voyager

SEEBY
WOODHOUSE
    AND THE ART OF THE ISP ROLL-UP
The CEO of Voyager is taking the company on a second journey as it
consolidates and takes advantage of industry changes. Rob O’Neill reports
on how Voyager is winning customers as they upgrade to fibre

THIS YEAR IS going to be a very big one for ISP           If the name Voyager rings a bell, then you’ve      most consumers in New Zealand will ever see,”
Voyager, says founder and CEO Seeby Woodhouse.         probably got grey hair and quite a good memory.       Woodhouse says. “But if you're having to pull
   Voyager, which has transformed from a               Woodhouse went to work for a company of the           out your modem and put in fibre then obviously
business-focused ISP into a much broader               same name in the early 1990s, to learn how an         you’ll look around.
company through a series of acquisitions, is           ISP worked and then launch one of his own.               “So, part of the reason I started Voyager was
poised to finally unite all its parts, first through      That early Voyager was bought first by             to try and get a percentage of the customers in
its billing systems and then through branding.         Australia’s OzEmail, then by US giant MCI             this final change-over from DSL to fibre.”
   Then Woodhouse and his team will focus on           WorldCom subsidiary UUNet. However, when                 He also set about building a hosting business,
growth. They aim to triple the size of the business    MCI found itself filing for bankruptcy, in 2002,      investing in virtual private server technology from
from just under $30 million in turnover now.           it closed the New Zealand business abruptly,          VMware, and in domain hosting and cloud services.
   It’s all about the roll-up, he says.                advising its customers to go to Xtra.                    “Voyager started as a business-focused
   Woodhouse made his first fortune from                  Woodhouse later bought the Voyager domain          hosting company and then expanded into
selling Orcon, the ISP he founded back in 1994,        and phone numbers, when their registration            access; business access and then, eventually,
to state-owned broadcasting communications             expired, and put them in storage, along with a        residential access,” he explains.
specialist Kordia. He sold it for $24.3 million, in    few hundred other domains he’d accumulated,              Two of the company’s most recent
2007. His share of the sale was 80 percent.            only bringing them out when his Orcon non-            acquisitions could be transformative. The
   That sale still seems to be on his mind though,     compete agreement ended and he was ready for          buy-out of New Zealand’s first ISP, Actrix, has
both as a benchmark and a regret.                      his next venture.                                     given Voyager scale – one percent residential
   “I think in some ways I sold Orcon too soon,”          Rolling up unprofitable ISPs works because         market share, in fact. While the acquisition of
he says. “I sold it once I got to $24 million          the customer base is all that’s needed – the costs,   cloud PBX developer Conversant has delivered
turnover and I was kind of disappointed because        mainly of premises and staff, can be cut away.        intellectual property.
it got to $150 million in the years afterwards.           “We don't need 10 CFOs and, you know, 10              “We don't have any licensing fees, unlike
   “I felt that I sort of missed out on a bit of a     different branch offices and 10 different billing     an Avaya phone system or something, so we
hockey stick. So, as a personal goal, I want to get    systems,” Woodhouse says.                             can actually provide a very nice, full-featured
to $100 million in sales. I'm just excited about          All of a sudden, a customer base that was          corporate phone system at a low cost and,
that journey.”                                         making little if any money, and was worth very        therefore, make enough money to provide a
   Orcon was the product of up to 40                   little, becomes valuable.                             good service at a good price.”
acquisitions of small, unprofitable dial-up ISPs.         Both Orcon and Voyager were launched                  That’s one major goal for the year: to
   “I grew the company over its last five years        to take advantage of major one-off industry           move into cloud PBX and telephony, and
from 3000 or 4000 connections to 60,000                changes. Orcon took advantage of the arrival of       help businesses migrate away from legacy
when I sold it,” he says. “With Voyager, I've          the internet as a consumer service; Voyager has       phone systems into applications such as next
done a similar thing, where I rolled up 10 or 15       taken advantage of the consumer shift to fibre        generation video-conferencing.
little companies, put them all together and have,      and the business shift to the cloud.                     Voyager also has a baked-in path to market
hopefully, created something that's a lot bigger          “The change from DSL [Digital Subscriber           for this and other services through its domain
than the sum of its parts.”                            Line] to fibre is the last technology change that     hosting brands, which already serve 30,000

                                                                   thedownload.co.nz
9

                                 – or one in five small and medium-sized New
                                 Zealand businesses, Woodhouse says.
                                    “We're actually a lot bigger in that space, and
                                 we're quite unusual in that we do everything
                                 from the domain name to email, to the website
                                 to content management, to broadband to phone
                                 services to the PBX. So, we've got a lot of products.”
                                    Retiring Voyager’s multiple legacy brands is
                                 another goal for 2018, but first the billing system
                                 needs to be sorted.
                                    “We’ve finally got a billing system that
                                 can handle everything we're doing and we're
                                 moving everyone on to it,” he says. “It's been a
                                 plan that's three or four years overdue and a lot
                                 harder than we thought, but there will be a lot of
                                 synergy once that's actually done.”

                                        "We don't have
                                      any licensing fees,
                                    unlike an Avaya phone
                                       system, so we can
                                    actually provide a very
                                      nice, full-featured
                                       corporate phone
                                     system at a low cost"
                                                Seeby Woodhouse
                                              VOYAGER FOUNDER AND CEO

                                   Once the integration is complete, Woodhouse
                                 thinks his team can raise the company’s profile
                                 dramatically and double the size of the business
                                 quickly. That’s not to say its growth has been
                                 tardy: over one two-year period Voyager
                                 grew from around half a million in billings to
                                 $14 million. Last year, Woodhouse says, the
                                 company grew by another 50 percent.
                                   Woodhouse’s personal approach to business
                                 has changed dramatically. He teleconferences and
                                 only comes into the office personally about once a
                                 month. From being a self-described workaholic,
                                 he now spends much of his time at his house in Los
                                 Angeles or travelling and taking photographs. He
                                 has visited 30 countries in the last two years.
PHOTOGRAPH BY ROBIN HODGKINSON

                                    “I think I have a fantastic team at Voyager
                                 [and] a really good general manager who is
                                 amazing,” he says. “I probably only did about 10
                                 or 20 days’ work all last year.”
                                    Meanwhile, the Orcon sale is still there in the
                                 back of his mind.
                                    “Voyager is now bigger than Orcon was
                                 when I sold it,” he says. “So that's a real
                                 milestone for me.”

                                                                                          2018 / Issue 6
Smart
evolution
     The smart city might be a hot idea but it’s a nebulous one.
 That’s because it’s still evolving, writes Bill Bennett. It’s also as
  much about citizen needs as technology and network smarts
Culture | Smart cities                                                                    11

                                  E
                                            very city has a nervous system of some       at bus stops and railway stations. Likewise,           Applications can be much more sophisticated
                                            description. In smart cities that nervous    billboard-sized road signs or phone apps can tell   than this, however. In Singapore, a phone app lets
                                            system is digital. It can be put to use      drivers which car parks still have free spaces.     citizens book seats on one of the city’s privately
                                  making services work better, managing key                 Smart city applications can be as simple as      run bus services. The buses serve remote parts of
                                  assets and making people safer, and improving          knowing when to turn street lights on. They can     the city not reached by public transport.
                                  their quality of life.                                 also alert engineering crews about trouble spots,      The software collects ride requests, then
                                     Building a smart city is not a single project, it   issue public health warnings, or re-route traffic   dispatches a bus to pick up the passengers and
                                  is developed over time through a series of small       flows. In some cases, they can predict what will    take them to their destinations. Software not
                                  or incremental changes. Some of the changes            happen in advance and act to lessen the blow        only automatically guides the bus around traffic
                                  are invisible to the public. Yet, they all add up      from a potential problem. So, when essential        choke points, but also determines the optimal
                                  quickly. The whole is greater than the sum of          city infrastructure equipment breaks down or,       route, depending on where passengers want
                                  its parts, especially as the components start to       say, a weather forecast suggests a road should      to go. Later, the stored data from these bus
                                  interact with each other.                              be closed, systems can automatically kick into      requests is analysed to predict demand patterns
                                     The key is data. In a smart city you are never      action without human intervention.                  and learn where new regular transport services
                                  more than a metre or so away from moving                                                                   may be needed.
                                  data. It travels at the speed of light through fibre                                                          In 2016, the US State of Ohio took a different
                                  networks under people’s feet, or over wireless                                                             smart city approach to transport by installing
                                  connections. Most of the time, it uses the same                                                            technology along a 35-mile (56kms) stretch of
                                  digital nervous system that powers industry,                                                               highway. The state worked with Honda to build
                                  enables telecommunications networks and                                                                    what it calls ‘The Smart Mobility Corridor’.
                                  delivers online entertainment.                                                                             The road is equipped with both fibre cable and
                                     Data generated by a smart city is at its most                                                           embedded wireless sensors. These feed back real-
                                  powerful when it can report immediately                                                                    time data so that road monitoring staff working
                                  on vital infrastructure, then be used to draw                                                              in a central office have frequent reports on traffic
                                  conclusions and feed back what it has learnt into                                                          conditions, weather updates, news of accidents
                                  control systems. This can all take place with or                                                           and information on the road’s surface conditions.
                                  without human intervention. Whether people                                                                    As well as making the road smart, the Ohio
                                  are in the loop or not, you still have the makings                                                         team fitted government vehicles with hardware,
                                  of a smart city.                                                                                           so they can send and receive data while on the
                                     Soon, smart city data will do even more.                "The smart city has                             move. The trial has proved successful and the
                                  The fibre networks will reach further and will             shifted from an off-                            US government is now planning to test similar
                                  be complemented by wireless technologies.                                                                  technology on an interstate highway linking
                                  Systems will become more intelligent and cities            the-shelf bundle of                             Chicago, Detroit and New York.
                                  will become smarter as a result. As you read           technological solutions                                Although the term smart city has been around
                                  this, administrators and private industry around                                                           for a decade or so, it’s precise meaning is not
                                  the world are investing in the information
                                                                                            to a more integrated                             always entirely clear. There are no completely
                                  and communications systems that control the             approach to governing                              smart cities, and these days only a few could be
                                  functioning of everything from a city’s water                                                              described as dumb.
                                  supply to traffic signals, to crowd control.
                                                                                          cities… however what                                  In part, the idea of a smart city means using
                                  Sensors can collect and transmit vast amounts          makes the city ‘smart’ is                           sensors and other digital technologies to collect
                                  of data on everything from pollution levels to                                                             data and make better decisions, but technological
                                  traffic flows at key choke points; or anything else
                                                                                         using these technologies                            descriptions only scratch the surface.
                                  that can be usefully measured and acted upon.            in a user-friendly and                               Huawei's chief technology officer of industry
                                     All this collected information fills vast                democratic way"                                solutions, enterprise business group, Joe So, is
                                  databases; these are often stored in the cloud. In                                                         the company’s smart cities’ champion. He says
                                  some cases, they are open databases, allowing                       Dr Jenny McArthur                      while there are a lot of smart city components,
                                  citizens to access or even contribute information                    RESEARCH ASSOCIATE,                   for now there is no single platform. He says
                                                                                                    UNIVERSITY COLLEGE LONDON
                                  about the state of their city. Citizens, non-                                                              this means the idea remains a concept or a goal
PHOTOGRAPHY BY ROBIN HODGKINSON

                                  council organisations and private enterprises can                                                          more than a clear-cut product.
                                  use open data for their own decision-making.              At the simple end of the scale, Palmerston          New Zealander Dr Jenny McArthur is a
                                  Software can then use the data to manage issues,       North Council ran a project using mobile apps       research associate at the Department of
                                  often in real time. This doesn’t all have to be run    and real-time data visualisation to track fly       Science, Technology, Engineering and Public
                                  by councils or government bodies.                      tippers. The technology allowed residents to        Policy, University College London. Her work
                                     Public transport phone apps and websites            report incidents, and work crews were then          focuses on urban policy and the governance of
                                  telling you when the next bus or train will arrive     dispatched to clear the rubbish. The council        infrastructure systems.
                                  are obvious familiar examples of how smart city        could draw maps to locate the hot spots, and, in       She says: “The smart city has shifted from an
                                  data can be used. The same information can be          a number of cases, collected the data needed to     off-the-shelf bundle of technological solutions
                                  relayed to people through electronic displays          prosecute fly-tippers.                              to a more integrated approach to governing

                                                                                                         2018 / Issue 6
12                                                      Culture | Smart cities

cities. Innovative technology is still central,                                         Ultrafast Broadband project gives Christchurch
however what makes the city ‘smart’ is using                                            and other cities here the underlying technology
these technologies in a user-friendly and                                               needed to make its cities smarter, says So.
democratic way.”                                                                           Huawei also announced its Safe City
   McArthur goes further, saying that a city                                            Integrated Communication Platform at the
doesn’t necessarily have to be high-tech to                                             conference, which, depending on your point of
be smart. “The smart city integrates a new                                              view, could be seen as a means to help police
approach to governance, using real-time data                                            crack down on crime. It could easily be used to
collection to learn and improve the way we                                              supress dissent too. And that’s the downside
manage urban systems,” she says.                                                        of smart cities: in the wrong hands, the idea
   This can and often does work in a democratic                                         can have a dystopian vibe. In places like New
way, giving citizens the means to communicate                                           Zealand this is less of an issue.
directly with decision-makers and participate in                                           McArthur says: “When we talk about a smart
debate over possible choices. However, democracy                                        city, it means that the infrastructure systems
is not a given. Many of the most visible and talked-                                    are information-rich and interconnected – using
about smart city projects are in countries where                                        new technologies to collect and interpret data, to
there isn’t a strong democratic tradition.                                              improve the management of infrastructures such
   At a 2016 Huawei conference on Smart Cities                    Joe So                as traffic systems and lighting. What’s smart about
                                                         HUAWEI CHIEF TECHNOLOGY
in Shanghai, So named Singapore, Nanjing and           OFFICER OF INDUSTRY SOLUTIONS,
                                                                                        this is not the technology, but the way it enables
Cameroon as three of its showcase smart cities.          ENTERPRISE BUSINESS GROUP      better, more responsive decision-making.”
The fourth was our own Christchurch, which                                                 Huawei’s So says that until recently the
committed to becoming a smart city when the                                             necessary connections to make a city smart
post-earthquake rebuild started. New Zealand’s                                          were not in place. This has changed in the

                                                         thedownload.co.nz
13

last three to four years. However, he says the       always have to be high-tech, the real innovation         We think of New Zealand as being rural,
smart city won’t happen overnight because            lies in matching technological solutions to           but around three quarters of our citizens live
there is still a lot of work to be done. Huawei is   people’s everyday needs.”                             in cities and large towns. By 2050, two thirds
involved in more than 100 smart city projects           The Internet-of-Things has an important            of the world’s population and an even higher
around the world, yet, he says, it will take time    role to play in building smart cities. These are      proportion of New Zealanders will be urban.
before any of them deliver on the promise of         systems that use simple computing devices and            There’s a danger city infrastructure will fall
being a truly smart city.                            sensors. The hardware can be connected directly       behind the pace of growth. You can already see
   “For a smart city to work you need an             to fibre networks but is just as likely to use one    this in Auckland with its housing shortage and
integrated, independent system. It has to be         of a number of overlapping, low-power, wireless       the massive investments in transport and water
an open IT infrastructure and there must be          networking technologies to communicate.               networks being made that are needed to cope
great connections — you can’t have a smart city         Today’s sensors and computers are cheap            with all its new residents.
without connections,” he says.                       enough to deploy in large numbers wherever               Technology doesn’t hold all the answers,
   But So says the underpinning connection           there is a need. They can be built in to other        but it can help to deal with problems like
infrastructure is now in place In New Zealand.       devices without adding more than a few                congestion, air pollution, noise and traffic
The Ultrafast Broadband network is an example        cents to the cost. They make it possible for          accidents. A slew of innovative ideas and
of the communications network needed to make         almost anything to relay back information on          developments together have the potential
smart city projects viable, he says.                 operational conditions in real time and to take       to help solve these problems; among them
   Yet, there’s more to a smart city than            action in response.                                   increases in computer processing power,
networks and sensors. McArthur says: “What              Cities are set to grow even more in                sensor technology, better batteries and
makes a city smart is not just the technologies,     importance as more and more people move               more. And we are already building the
but using them to collect and interpret data in      from small towns to larger centres. Today, more       communications networks that will form
real-time, enabling continuous improvement           than four billion people, that’s well over half the   the nervous system needed to bring these
of services and system operations. It doesn’t        world’s population, live in urban centres.            technologies together.

                                                                      2018 / Issue 6
14                                                     Internet of Things | Tussock Innovation

Sensing water
Tussock Innovation’s IoT technology promises to keep our water
clean and us dry. Heather Wright describes how Waterwatch
could mean the end of dirty storm water – and more

FLOOD AND SEWAGE contamination of our                  Waterwatch can do this by alerting council staff to
beaches has become common in recent months,            any changes in water levels, whether stormwater
but if Jesse Teat and the team at Tussock              or tidal, so the council gets an early warning
Innovation have their way this may become              about areas under pressure from rising water.
less common in future. Internet of Things (IoT)           “The Waterwatch sensors can be used as
technologies like Tussock’s Waterwatch should          an early warning system in waterways, storm
keep cities and citizens much safer – and drier.       water drains and sewerage systems, allowing
   Teat is chief executive of Dunedin-based            councils and their contractors to raise flags and
Tussock Innovation, an IoT technology                  so prevent damage to both public and private
development company and consultancy that has           property,” explains Teat.
developed Waterwatch, a sensor-based remote               However, Weatherwatch can do more than
water level monitoring system. Using sensors,          just prevent flooding.
it detects city storm water drain problems early          “What tends to happen a lot is that heavy
on, so helping councils prevent flooding during        rainfall events put pressure on the stormwater
heavy rainfall. It has the potential to be used on     systems and they often overflow into areas
farms as well, to monitor water tank levels and        like the sewerage systems,” he says. “That
effluent remotely.                                     puts real pressure on councils because they’re
   Tussock is also adapting its sensor-based           having to either put more sewage through their
technology for other uses, including a very            processing plant, or they’re having to dump raw
smart smoke detector that also monitors other          sewage into waterways.”
environmental conditions.                                 It’s a problem New Zealand has seen played
   Teat started Tussock five years ago with co-        out numerous times this year. Heavy rains in
founder Mark Butler. They imagined working             January and February resulted in closed beaches
as contract developers, designing software and         around the country.
hardware, and getting them to work together               Using a long-range, low-powered WAN (Wide
“really nicely”.                                       Area Network) connected to cellular grade
   “What we realised over time was that we’re          networks, Waterwatch’s sensors provide continuous
really good at providing connectivity to products      monitoring of water levels, with data being sent       Jesse Teat (left) and Mark Butler
– especially low-powered connectivity,” says Teat.     to the cloud; Amazon’s IoT cloud service.              of Tussock Innovation

   At the same time, IoT began to grow. For               The data is then analysed and provides
Tussock Innovation it was a natural progression.       threshold warnings, so action can be taken               Teat notes that most councils use their own
   “IoT is going to be a very, very big part of our    to resolve potential threats, or to evacuate          independent data warehouse, so Waterwatch
future – and by ‘our’ I mean everyone’s,” says Teat.   low-lying or flood prone areas. Data can be           forwards the data on for them to crunch and use
   “IoT technologies that are becoming available       presented spatially, or as a graph.                   in making any infrastructure change decisions.
now will really be the basis for knowledge.               “There’s a surprising amount of data you get          “But our system handles things like the early
They’re able to generate all the data points we        from these low-power sensors, so you do need          warning call-outs that alert the companies looking
need to make smart decisions for the future.”          to have a pretty fast broadband connection,”          after infrastructure for a council [regarding] the
   And underlying it all, is broadband.                says Teat.                                            state of the pumping stations, manholes or sumps
   “All of the towers around the country that             “The broadband really comes into its own in        they are monitoring,” says Teat.
are gathering information will be broadband-           the processing – and then in presenting that data        The Weatherwatch system is also being used
connected and they will end up being the heart         for the user at the end.                              to monitor groundwater in test bores.
of what provides the opportunity for people to            “Broadband is what provides all the links for         “This tells us more about what is happening
gather information,” says Teat.                        us. The towers that gather all of that information    with groundwater, and how sea levels are
   Waterwatch came out of Dunedin’s Gigatown           from your sensors – whether via cellular              affecting it,” says Teat.
win – public meetings highlighted solving              or Sigfox, or some other low-power WAN                   “With more data points collected, and a larger
flooding issues as a key desire of the community.      technology – are broadband-connected towers.          distribution of sensors, we are able to correlate

                                                                   thedownload.co.nz
15

how the water table reacts to weather events.                                                    Gigatown win, with Tussock Innovation joining the
Irrigation ponds and water tanks can also be                                                     ng Connect group. This is designed to bring com-
monitored for falling levels.                             "Even five years ago,                  panies together so they can collaborate on projects.
   “With Waterwatch, we’re in a space that will             you couldn’t have                       “Nokia put their hands up to work with us on
be very interesting for the next 20 or probably a                                                this project in particular, and they are helping us
hundred or more years. Resources are becoming           provided a council with                  look for tenders and market partners elsewhere
increasingly scarce and we’re providing people          devices you could install                in the world,” says Teat.
with the ability to study and learn more about                                                      The relationship has seen Nokia showcasing
the resources they’re consuming.”
                                                       in a sewerage system that                 Waterwatch globally, with demonstration products
   “If IoT wasn’t a thing, we wouldn’t be able to      can operate for more than                 currently in Sweden, Poland, Spain, Singapore,
do that. Even five years ago, you couldn’t have                                                  Thailand, the United States and Canada.
provided a council with devices you could install in
                                                        10 years on a battery for                   Tussock Innovation is also developing an
a sewerage system that can operate for more than         the price we can now"                   internet-connected, very low power, long-life
10 years on a battery for the price we can now.”                                                 smoke alarm that includes environmental
   Waterwatch has won the support of Nokia –                          Jesse Teat                 monitoring of humidity and air quality, and is
                                                         CHIEF EXECUTIVE OF TUSSOCK INNOVATION
another opportunity to come out of Dunedin’s                                                     designed for the rental market.

                                                                   2018 / Issue 6
16                                                 Interview | Kate McKenzie

      BEYOND
     THE UTILITY        Kate McKenzie
                    plans a modern Chorus
      When all the UFB fibre has been laid, Chorus’ CEO aims to use it to leverage
     Internet of Things apps and artificial intelligence, as well as run Netflix movies.
                  Chorus will not be a boring utility, she tells Bill Bennett

            CHORUS CHIEF EXECUTIVE Kate McKenzie                         It was, as she points out, a great grounding
            has customers in the front of her mind. She says          for a chief executive. She says: “During my time
            knowing what people value and understanding their         at Telstra I saw all the different aspects of the
            experience when they deal with the company is vital.      company. I was fortunate compared with my peers;
               This is not an unusual sentiment for someone           I worked on a wide variety of functions.”
            running a large New Zealand business. Yet, Chorus            As well as the regulatory role, McKenzie worked
            has few customers in the usually accepted sense of        in mergers and acquisitions, along with strategy,
            the word. By law, it can only sell wholesale services.    products and pricing. She ran the operations
               Chorus' customers are retail service providers or      environment and spent three years running
            RSPs. There are around 90 or so of these. They buy        Telstra's wholesale operation.
            wholesale broadband services from Chorus. RSPs               McKenzie says it’s helpful now she is a CEO to have
            then wrap these services into their own packages,         this hands-on knowledge of all aspects of a telco.
            sell them to consumers and provide the support.              When McKenzie first joined Telstra it was a
               As McKenzie points out, RSPs pay Chorus’ bills,        different organisation to the one you see today.
            which is something customers do. So, on one level,        The majority of Telstra's shares were still in public
            her customer focus is all about meeting RSP needs         ownership. Soon after she started with Telstra it
            and expectations.                                         switched from public to private ownership.
               But there's another level. McKenzie says the end-         This led to a cultural change. Overnight,
            customers, that is the home-owners and businesses         Telstra had to worry about winning and retaining
            who buy from RSPs, are also important to Chorus.          customers. This was something that had, in the
               She says: “End-customers get our product; we           past, been largely taken for granted.
            are the ones who handle its delivery. This means             She says: “At that time I went to Stanford and did
            we need an understanding of what’s important to           a strategic marketing course. There I got a bunch of     PHOTOGRAPH BY ROBIN HODGKINSON

            them. How we design systems, build processes and          new skills. I first learned how to segment customers,
            work with RSPs can make a big difference to an end-       and how to think about what customers value.”
            customer. You have to think of it as an entire customer      Like any privately owned business, Chorus
            ecosystem. In that sense, they are all our customers.”    lives or dies by serving customers. But it has to
               McKenzie says she learnt about meeting customer        cater to another constituency: the New Zealand
            needs early in her 12 years working at Telstra. Her       Government. The company de-merged from
            first job at Australia's largest telco was running the    Telecom NZ, now Spark, as part of a government-
            regulatory group. By the time she left Telstra she had    led industry restructure in preparation for the fibre
            managed almost every part of the company.                 roll-out. This means the Commerce Commission

                                                       thedownload.co.nz
18                                                              Interview | Kate McKenzie

regulates much of Chorus’ business. Among                  McKenzie jokes that the downside is that the      are as essential as water or electricity.” The
other things the regulations say it can only sell       structural model makes it easy for all the RSPs      company’s shareholder base reflects this.
wholesale broadband services.                           to gang up on Chorus. And the lack of vertical       “Compared with Spark, the former parent, we
   McKenzie says: “We have a contractual                integration brings challenges. “There is nowhere     have a different shareholder base. Most of our
relationship with the government. In effect, it has     for us to hide; we’re transparent,” she says.        shareholders are longer term infrastructure
given us some interest-free loans; they all have to        Yet, she looks to the positives: “On the plus     investors,” she says.
be repaid. Attached to these loans are obligations      side, they all get the same inputs. It means they       Utilities are often seen as slow-moving
about how the [UFB] build gets done and to what         have to think about what it takes to become          compared with other industrial sectors.
standard it gets done. At some point, we have           better retailers. They have to look for points of    Chorus doesn’t have that luxury. It plays in the
to start paying a dividend if we don’t repay the        differentiation to be able to compete with each      fast-moving telecommunications sector. The
loan. It's a good set-up. That’s why the regulatory     other. It’s a good model.”                           technology has already changed a lot since
environment is so important to us.”                        So far much of the competition has centred        the company de-merged from Telecom NZ in
   There’s a gulf between the New Zealand               on price. McKenzie says this is one of the           late 2011. Fibre and wireless networks are both
Government’s hands-off approach to the                  biggest challenges for the industry. “People         much faster.
fibre network build compared with what                  are consuming enormous amounts of what we               The key for Chorus once the UFB build is
happens in Australia. McKenzie says the fact            produce. Growth is very high. Eventually, price      complete is innovation. McKenzie uses this
that telecommunications has never become                competition is not sustainable because we are        word often. “We’re starting to turn our minds
a partisan political issue is a huge difference         spending a motza building these networks.            to what else people can do with the wonderful
between New Zealand and Australia. She also             There has to be some way of adding value that        fibre application that we’ve been creating. I’m
admires the NZ Inc approach to doing what’s             customers are willing to pay for that will stop      optimistic now that I can see more opportunity.”
best for the nation regardless of politics.             the whole thing from becoming a race to the             She says one aspect of technology is that it
   She says: “You have to congratulate                  bottom.” Hence the focus on differentiation.         changes customer behaviour, and business
governments here of both political flavours.               She says “differentiation can come from           models. Areas singled out for attention in the
They’ve made a decision and successive                  different places, that’s perfectly valid. In some    near term are how the fibre network works with
governments have followed it through. They              ways, the network is so good now that it’s hard to   the coming 5G mobile world, and how to use
haven’t changed their minds every two years             differentiate on network-related features.” She      fibre to get more from the Internet-of-Things.
or so about what they want built and what               points to moves by Spark and Vodafone to value-      McKenzie is also bullish about technologies like

                               “I spent 12 years in the telco industry explaining to
                               everybody why structural separation was a terrible
                                   idea and should never happen. I’ve definitely
                                            changed my view on that”
                                                                        Kate McKenzie
                                                                     CHORUS CHIEF EXECUTIVE

they don’t want. If you’re creating long-term           add with Lightbox and Vodafone TV as one kind        artificial intelligence. “Gaming, Netflix, artificial
infrastructure you can’t afford to have continual       of differentiation. Then there is Stuff Pix. Less    intelligence and so on all need networks to
change. This bi-partisan support has meant              obvious are the moves by brands in the Vocus         support them.”
Chorus could focus on what it was supposed to           Group to offer power alongside broadband. And           The network is a fantastic asset for Chorus, its
be doing: getting on and building the network.”         then there are the power retailers who now offer     shareholders and for the nation, she says. “It’s
   Coming to Chorus, a wholesaler, was                  broadband.                                           been very well done and will reach 87 percent
something of a leap for McKenzie, despite her              Meanwhile, she says Chorus’ main job is           of the country by 2022. It was, for the most part,
time running Telstra’s wholesale business. “I           to stay focused on getting the various stages        financed by private investors.”
spent 12 years in the telco industry explaining         of the UFB build completed on time and on               It’s easy to forget that seven years into the UFB
to everybody why structural separation was              budget. “We aim to make sure our processes           project the fibre companies, not only Chorus,
a terrible idea and should never happen. I’ve           and systems are fit for purpose, and that the        have exceeded the expectations set down before
definitely changed my view on that,” she says.          customer experience is good,” she says.              the start. Many more people have chosen to
   The New Zealand regulatory model makes                  The network build will be complete in about       connect than the planners anticipated. The build
a huge difference, she says. “We now have a             four years’ time. However, McKenzie has no           is ahead of schedule and the fibre footprint is
set-up where an organisation like ours is open          intention of sitting back then and managing a        about 20 percent bigger than was mapped.
access. It’s agnostic about how the retail service      steady-as-you-go network utility.                       McKenzie says: “Today, we have 61 percent
providers operate. This creates a completely               She acknowledges the U-word describes             of customers on the 100Mbps plan; it’s by far
different market dynamic.                               where the company is today. She says: “We’re         the most popular plan. Data consumption is
   “It gives us a real focus. It’s one that you don’t   the fourth utility. For where we are in history      going through the roof. Ten years ago, people
have in a vertically integrated organisation.”          that’s right. These days our broadband services      wondered if any of this would ever happen.”

                                                                    thedownload.co.nz
You can also read