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Fixed wireless speed drops as broadband use surges

Three big talking points emerged from the Commerce Commission’s latest Annual Telecommunications Monitoring report.

First, in general, New Zealand’s telecommunications networks were more than up to the job of coping with massively increased demand during Covid pandemic lockdowns.

Second, average download speeds for fixed wireless networks were down 25 percent.

Third, there’s a clear problem with retail telecommunications revenue. This has implications for investment in new networks and technology upgrades.

We’ll look more closely at all three points later. Before that, here are a few highlights from the report.

Fixed lines connections by technology - New Zelaand -
March 2021

More data, faster data


Broadband use jumped ahead in the year to June 2020. The monitoring report notes the average New Zealand broadband user chewed through 284GB every month. That’s up 37 percent from the 207GB used monthly a year earlier.

That should surprise no-one. This time last year New Zealanders were sent home to work or study. When the lockdown finished, many continued to work from home either part-time or full-time.

During the lockdown we saw a huge rise in the number of people using video conferencing. And an even bigger rise in the number of video conferencing meetings between users.

Wireless disappoints


Fixed line broadband technologies held up during what were potentially difficult times.

You can’t say the same for fixed wireless broadband. The Commerce Commission noted a significant performance decrease for fixed wireless broadband users.

The average fixed wireless speed dropped 25 percent during the year.

Fixed wireless carriers managed to convince plenty of new customers to move to the technology. The number of customers on fixed wireless broadband networks was up 16 percent during the year.

Fibre sales raced ahead during the year. The number of fibre broadband users went from a little over 800,000 to more than a million. That’s a 25 percent increase.

By the time the report period closed around two-thirds of those who could connect to fibre had chosen the technology.

Traditional landline numbers dropped 12 percent during the year.

Industry revenue falls


Retail telecommunications revenue dropped four percent during the year. Mobile revenue was down three percent. An important and lucrative part of the revenue; mobile roaming, evaporated.

Revenues fell despite the growth in use and the importance of telecommunications at a time workers and students were sent home and asked to connect remotely.

Mobile data consumption continued to grow. It was up 20 percent during the year. The report notes the increased popularity of unlimited or ‘endless’ mobile data plans. These now account for 14 percent of on-account plans.

Fast, not fastest


The Commerce Commission says New Zealand ranks number 12 in the OECD for average broadband download speed. It is well ahead of the OECD average and more than twice that of Australia, which is a laggard by international standards.

There was movement in fixed broadband market share during the year. The largest telcos continued to see a fall in their share while the smaller retailers grew. The ‘others’, that’s service providers outside the top five, increased their share of the total from 11 to 13 percent.

Spark’s market share was down a fraction falling from 41 to 40 percent. Vodafone dropped more, from 24 to 21 percent. Third place Vocus stayed steady with a 13 percent market share while 2degrees nudged ahead of Trustpower to take fourth place.

Fixed wireless’ weaknesses exposed


On average, fixed wireless broadband download speeds dropped 25 percent.

During the lockdown I heard from a number of readers who experienced worse performance drops. Others saw no fall off.

That anecdote shows one of the main downsides of fixed wireless broadband: it’s a lottery.

You might get a good connection, you may not. Your local connection might be congested at Netflix o’clock, or it could be fine. There’s no sure way of knowing what you’ll get until you commit.

Compare this with fibre where customers get a consistent experience no matter where they live, no matter the time.

Your own personal internet on-ramp


If you buy a fibre broadband connection, you, in effect, get your own internet pathway from your house to the local cabinet. No matter what other fibre users down your street do, you can expect to always see roughly the same data download speed.

With fixed wireless broadband, you share the airwaves, or the available bandwidth, with other customers. If everyone connects at once then the airwaves and towers can get congested. When that happens the speed will drop.

One way the companies selling fixed wireless broadband can maintain network performance is by limiting the number of connections in any given area. They know that, in normal times, not everyone connects at once. This allows them to estimate how many connections can be supported in normal times before the performance drops.

The problem is that last year was not normal times.

Fixed wireless broadband performance should improve when carriers switch to 5G. The raw speed will be higher. Latency - that’s the time it takes for a signal to get from here to there - will reduce. There’s a beam forming technology which, without getting technical, should reduce congestion.

It will take a long time for 5G to roll out nationwide. At the moment it is mainly in central city areas. It covers only a fraction of homes. In the meantime, carriers will work to upgrade fixed wireless technology. Despite this, it will remain something of a lottery.

Fixed wireless broadband is ideal for certain groups of users. For some, it is the only option. Or will be until the new generation satellite networks open for business.

Otherwise, you should only choose it if you don’t care about performance or reliability. The Commerce Commission report underlines this.

Falling industry revenues


On the surface falling industry revenues might not concern telecommunications users. Money is tight and spending less on broadband and phones feels like a welcome break from rising prices.

In the short term it’s not a huge problem. In the long term it is. And the problem here is weak revenue and profit margins has been going on for years and there’s no sign of it ending.

The good side of this is that one reason telecommunications companies don’t make huge profits is because there is intense competition. That benefits users.

On the negative side, the industry needs to keep investing at a high level to build new networks, new products and services. Lower profits mean less to invest. This hasn’t happened yet, but the problem looms like a rain cloud on the horizon.

Fixed wireless speed drops as broadband use surges was first posted at billbennett.co.nz.

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