Telecom New Zealand's recently launched 256kbit/s ADSL connection plans dubbed 'JetStream Home' (followed by their cap in megabytes) has cause quite an uproar with many of their more active users - and for good reason. The monthly download caps on these plans are 500MB, 1000MB (the good part of 1GB), and 2000MB for $49.95, $59.95 and $69.95/month respectively with an Xtra Internet Connection. The pressure put on the company by many industry commentators and competitors to lower prices resulted obviously took them by storm - after the initial announcements of their plans, they had to release a comment to IDG Computerworld stating that their initial proposals were 'not the final product'. Further pressure from user comments, the IT industry, and a burgeoning online petition I started two and a half weeks ago pressured Telecom into lowering the prices for their unfiltered (full-speed) JetStream Home plans by $10/month. This price drop, however, is not enough - and was also criticised, resulting in Telecom's latest gem: "We saw an opportunity to create a product at a lower price-point for the average user, which would meet the needs of what they actually do with their broadband connection".
I personally question Telecom's use of 'average user' above - in terms of internet connections around the country, Statistics NZ's 2001 Census shows that around 40% of New Zealander households have internet connections. Given New Zealand's population of around four million, my logic for the number of internet connections is as follows:
4,000,000 * 40% = 1,600,000
Giving 1.6 million people internet access in NZ at home. Using the 1996 Census information, that the average household has 2.7 members, we can work out the approximate number of internet connections in New Zealand:
1,600,000 / 2.7 = 592,592 (or 592,000 rounded)
This means approximately 592,000 internet connections are to be found in New Zealand households. Because we are going to be using broadband figures, we must compensate for the lack of broadband access in rural areas. Households in rural areas total approximately 192,000. Because rural households are LESS LIKELY to have internet access, I am going to use the figure of 30% for rural households with internet access:
192,000 * 30% = 57,600 (a VERY ironic number!)
With my calculation, approximately 57,600 rural households have a connection to the internet. Being very conservative again, I'll make a large assumption and say that NONE of these households are able to access broadband internet (this would probably be quite close to true), which leaves approximately 534,400 households able to be broadband connected. To make sure I'm not overestimating, I'll lower this figure to 500,000 households able to be broadband connected.
Telecom's residential broadband connections number around 47,000 and although I can't find any statistics on TelstraClear's connections, I'd think it be safe to say that they weigh in at around 10,000, and any competitors would add to 3,000 or so, giving 60,000 residential broadband connections in NZ. Taking this away from our initial figure:
500,000 - 60,000(approx) = 440,000
This leaves around 440,000 people stuck on dial-up connections - essentially these people being the target audience for the new product.
There we have it - '440,000' or so "average users" with dial-up who Telecom hopes to target with it's advertising scheme. Given their target of 100,000 residential broadband connections (that's another 53,000), that still leaves 390,000 'average users' - and in democratic society, majority rules - sorry Telecom, but the 390,000 people still living with dialup are your 'average users' - not people who want broadband.
I also question why telecom is looking at targeting these 'average users' (or so they call them), and what the main reasons are globally for adopting broadband. In my searching, the 5 most common reasons found for the up-take of broadband are as follows:
1. Does not tie up your phone line.
Fair enough - this is a perfectly valid reason. However, given the average number of people per household (2.7) and the services Telecom offer (such as SecondLine and Call-Minder), and on top of that the price for broadband equipment and connecton, this reason becomes insignificant unless combined with other reasons (and as you'll see below, it negates Telecom's view for broadband).
2. Experience the wider internet.
This is the main reason why most users look towards broadband as opposed to other services - to be able to access content that the MODERN internet delivers, and at an acceptable speed. As I'll explain later on in this article when I talk about another way to look at broadband caps, you'll see why Telecom's broadband plans are not suitable for these users.
3. The streaming video revolution.
Telecom are a smart bunch - with Xtra's new Broadband website, users are able to access streaming multimedia content including streaming video. Little do they know, that streaming video has very high bandwidth requirements - ones that will chew through their measly data caps in no time at all! Streaming video is widely considered to be most used by 'Power Users' (those who Telecom like to ignore), as opposed to 'mainstream users'.
4. Play Online Games.
Online games are one of the big pulls for broadband, simply because with broadband, multiplayer games are better. It's as simple as that - lower ping results in smoother gameplay, and for games which require the transmission of large amounts of data, the higher speeds of broadband allow ample communication speeds, smoothing out gameplay. Telecom seems to think they have online gaming covered with their JetStream Games service and in some ways they do - most games nowadays aren't very high bandwidth (almost all use under 5KB/s), so for most casual gamers (I'm not even going to bother going into gamers who actually play a large amount of games), a 1GB data cap is fine (in terms of connecting to game servers, the JetStream Games realm is surprisingly useless!). The real crunch in gaming comes with updates and patches - which for the latest games, can end up being over 300mb in size! Many of these patches are available at the JetStream Games website and FTP server, however not all of them are, which further eats into the small data caps. Combine this with normal web surfing and use (yes, gamers surf the web too), and most gamers will end up using quite a large amount of data.
5. Download at high speed.
One of the major advantages of broadband is the ability to download files at high speed - and finish downloading them while you wait, instead of after you've come back from work a week later.
Many websites (such as MP3.com) are now offering legal downloads of MP3 music files (which are usually around 4MB each song), and videos (which can be up to 100MB per clip). Free and shareware has been available for download for many years now, and it's been steadily increasing in size over the years - nowadays a simple program like MSN Messenger or ICQ can clock up 4-8MB, and many free program alternatives (such as Sun's StarOffice and the free browsing alternative, Mozilla) can clock up anything between 5 and 100MB apiece! Small data caps don't allow for much activity!
As you can see above, the 5 most common reasons for the adoption of broadband (all of them being pushed by Telecom's advertisements) are ALL indications of users who are more than 'average' - until dial-up is exclusively for rural customers, I'm afraid that 'mainstream' will not be a word that can be applied to broadband. Any user who (at this stage) moves from dial-up to broadband and uses it for more than checking e-mails quickly, and browsing websites quickly instantly becomes more than 'average' and as such, is piled into Telecom's 'ignore' bin.
An interesting thought of mine yesterday was to compare dial-up and broadband directly - e.g. in terms of SPEED, DATA CAP and HOURS, instead of simply using two of three to determine each. Dial-up plans are almost always 'flat-rate' or very high in hours, except for the few plans still remaining for light users. Broadband plans are almost exclusively labelled by data cap (except for JetStream Starter - a.k.a JetStart, which for most users is simply a matter of 'fast internet that I'll never reach the monthly limits of'). I thought I'd start by listing the technology speeds, and calculating the maximum theoretical amount downloaded in a 28-day period (many ISP's use a 28-day billing period as opposed to monthly).
Plain Old Dial-up:
Speed: 56.6kbit/s maximum
NOTE: Many users do not understand that the quoted speed is in BITS per second, not BYTES. Each bit is a simple "yes" or "no" - and each roman character sent is composed of eight "yes" or "no" parts which form a combination to determine which character it is. Downloads are measured in BYTES per second (or kilobytes per second), so divide any quoted speed by 8, and you'll get the speed at which your connection will download.
56k dial-up connections are theoretically able to handle around 7KB/s downloads, but they are half-duplex (meaning that 7KB/s is shared between both upstream traffic and downstream traffic), and are plagued by line noise and other sorts of problems which bring the average download speed right down to 4.3KB/s.
In a 28-day period, there are: 28*24*60*60 seconds (that's 2,419,200 seconds).
Dial-up downloads at 4.3KB/s, so:
2,419,200 seconds * 4.3KB/s = 10,402,560 Kilobytes (KB)
One Megabyte (MB) is equivalent to 1024 KB (because of binary - the nearest power of 2 to 1000 is 1024), meaning there are 10,402,560 / 1024 Megabytes downloaded per month maximum, on an unlimited flat-rate dialup plan.
In gigabytes, that's: (10,402,560/1024/1024)
or in other words, the good part of 10GB - 5x Telecom's highest data cap for the new 256kbit/s plans, and the average data cap of Telecom's JetStream Starter service. The funny thing is, with dial-up and an unlimited flat-rate connection, ISP's will let you download this amount!
With hour-limited plans, such as Paradise.net's 250 hour plan (which is cheaper than a lot of other flat-rate plans at $20/month as opposed to $25/month), you can download at 4.3KB/s for (250*60*60) = 900,000 seconds, which each month gives you a maximum of:
3.69 gigabytes - around 1.7x the maximum data cap of Telecom's new 256kbit/s service.
JetStream Starter (JetStart)
Speed: 128kbit/s maximum
ADSL in New Zealand is full-duplex, meaning your download and upload bandwidth pool is separate (i.e. your connection can be shifting 256kbit/s - half up, half down, at any one time), and ADSL lines have to be of high quality - so it's much easier to come close to the theoretical max, which is 16KB/s.
Downloading at 16KB/s for 2,419,200 seconds gives you a grand total of: 38,707,200 KB, or:
Yes, I'm aware that this service is short-burstable up to full ADSL speeds, but for consistent downloads it sticks to a max of 16KB/s - usually between 14.9 and 16KB/s.
JetStream Home 256 / Paradise Cable 256
Speed: 256kbit/s maximum
Once again, these services are full-duplex (even though Paradise Cable's upload speed is limited), meaning around 32KB/s max speed is attainable.
32KB/s for 2,419,200 seconds allows for a grand total of:
That's a tremendous amount of data - in fact, it's more data than can be stored on the average hard drive.
JetStream Home Full Speed / Paradise Cable 2Mbit
Speed: 2Mbit/s guaranteed (2048kbit/s)
I had to include these services to show you just how long it takes to chew through your data cap - Paradise Cable is 2mbit limited, although JetStream can speed right up to 6Mbit/s, and on the majority of user's lines it averages around 3Mbit/s - however because Telecom guarantees 2mbit, I'll use that figure.
2048kbit/s is equivalent to 256Kbytes/s (8x the speed of JetStream Home 256), thus:
256KB/s * 2,419,200 gives a very amazing..
Yeah, be amazed - it's an amazing figure. Also known as approximately half a TERABYTE, and more than the largest consumer hard drive available to man.
So now you know how much you can download if you leave your computer downloading for all 28 days. Now, lets take a look at the data caps vs. the maximum:
Dialup:
NO CAP -> 9.9GB
JetStream Starter:
10GB CAP -> 36.9GB
Paradise Cable 256:
10GB CAP -> 73.8GB
JetStream 256:
500, 1000, 2000MB CAPS -> 73.8GB
JetStream Full Speed:
500, 1000MB CAPS -> 590.6GB
And now for those concerned, we convert these into hourly figures (i.e. how long you can use your connection for using average net applications) per 28 days, to line them up with dial-up (this is essentially working backwards from the calculations above). For Broadband plans, we must realise that data is not always being constantly accessed at full speed while connected, and only connected for around half the day (6hours) at most, so any hourly figure will be multiplied by 6 to compensate for sleep and daily access.
Formula for calculations:
( data cap in kilobytes / speed in kilobytes per second ) / 360
Dialup:
Unlimited (no data cap)
At $20 for 250hours per month: $0.08/hour
JetStream Starter:
182 hours continuous (1092 - effectively more hours than in 28days - 672)
At $60/month, that's: $0.08/hour
Paradise Cable 256:
91 hours continuous (546 effectively)
At $77/month, that's: $0.14/hour
JetStream Home 256:
500MB: 4.44 hours continuous (effectively 26.6 hours)
At $50/month, that's: $2.25/hour
1000MB: 8.88 hours continuous (effectively 53.3 hours)
At $60/month, that's: $1.13/hour
2000MB: 17.8 hours continuous (effectively 106.8 hours)
At $70/month, that's: $0.65/hour
JetStream Home Full Speed:
500MB: 0.55 hours continuous (effectively 3.3 hours)
At $60/month, that's: $18.18/hour
1000MB: 1.1 hours continuous (effectively 6.7 hours)
At $80/month, that's: $11.94/hour
There we have it - for the "Broadband" purposes Telecom intends, this is how much in terms of hourly rates you're connection will cost you. Seems alright for Dial-Up and JetStream Starter - but even the best JetStream Home 256k plan is 8x more expensive per hour than JetStream Starter, and when compared to Paradise Cable at 256kbit/s, the latter is FOUR times better value! What's even more sickening (if you will) is the post-cap costs, equating to 20cents/mb. In the equations above, we've used a gain of 6x from hours to effective hours. That's based on ½ of the time is sleeping, leaving usage at 1/3rd speed, meaning that on 256kbps, you use about 115MB/hour at full speed, or 38MB at 1/3rd speed. That 38MB will cost you a whopping $7.60 - that's almost as bad as Full Speed JetStream!
Although broadband gets you the content faster than dialup (6x in some places), the data caps on JetStream plans of 500-2000MB make the connection impractical for common internet use, giving you with modern broadband content only a small amount of effective usable hours. I admit these figures are based on heavy usage - someone who would clock up around 200 hours on dialup, but even if you DOUBLE the effective hours (equating to a medium-light user of around 100hours/month), JetStream Home 256 plans still clock up as DOUBLE the effective price (and usability) of Paradise Cable at the same speed.
Telecom's advertising is skewed - Telecom's new JetStream Home 256k data caps mean that Xtra's new Broadband website is good for at most 30 hours of constant full-speed use (that's paying a premium for the top end plan too, I might add). By calculating the effective number of hours used, we can calculate the value of each plan - and it is clear that Paradise Cable (which does have a fairly high premium, but gets reduced by $25/month when combined with TelstraClear phone services keeping in mind) is twice the value, and Telecom's own JetStream Starter service is almost four times better value. We're talking about the LOW end of the bandwidth spectrum here - despite 256kbit/s being double the speed of the Starter service, it's at the very bottom end of broadband speeds - surely we can have better value for money in this low-end range. Users who use under 500mb/month are unlikely to abuse the service as it is, why not be competitive - how about add a plan with a 5gb cap, and lower the price if you're a Telecom phone user?
TelstraClear understands the value of customers, and by offering cheaper deals when combined with another service, keeps the customer happy. Telecom New Zealand does not appear to value their (would-be) loyal customers. Something must be done about this, Broadband is beneficial for New Zealand as a country, and we will not move forward in this digital age without it.