Looking forward to the type of uncapped data plans broadband users in Asia, the US and Europe enjoy? Think again.

Prospects for such flat-rate pricing for broadband took a giant leap backwards this week with Telecom’s decision to can its $69.95 per month Big Time plan.

I just received this email from Telecom spokeslady Emma Kate Greer:

As you have may have read this morning Telecom’s Big Time broadband plan has been removed from our broadband line-up. I remember you were a Go Large customer – did you also give Big Time a go?

As you know Telecom has been the only ISP in NZ to provide a broadband plan that has no set monthly data allowance – we have made successive attempts to give customers this innovation, but unfortunately it is simply proving unviable.

We are conscious we have a range of customers who enjoy using this plan, but managing the traffic of an extreme minority has made the plan increasingly hard to manage and keep in market. We are seeing some customers using astounding amounts of internet data – in the terabytes each month which is equivalent to downloading more than 1000 movies.

We try to manage certain types of activity on the plan to ensure availability of bandwidth, but over the past few months we have seen an increasing use of technology that is specifically designed to circumvent traffic management.

We have been making updates to our technology to keep up with these software programmes, but the resource and work needed to continually do that has also become untenable.

We recognise it was relatively brave to launch this plan and certainly we’ve been the only ISP to try a plan with no monthly data cap. We wanted to give our customers this option. It is not possible to achieve innovation without trying new things and sometimes those things won’t come off.

Customers using the Big Time plan will be communicated with in the coming months and given advanced notice before we need to move them to another option. We will look at their average data usage and recommend the best option for them.

Naturally we will also make sure customers are completely free to move to other ISPs if they chose to.

Those with high data use may suit the Pro plan. We are adjusting the price of overage on our Pro plan (monthly plan price of $79.95) which has the largest monthly data allowance (40GB) – previously it was $20 per Gigabyte (GB) and now it is $2 per GB (or part thereof).

We appreciate that there will be a small number of extreme users who will not be happy with this outcome (and of course neither are we) but we hope that one of our other broadband plans may suit them.

Bandwidth vampires to blame?

I was a Go Large customer but I ditched that plan due to the unsatisfactory speeds I was getting. I moved to an Orcon naked DSL plan (broadband only, no phone) and have been very impressed with the transfer speeds and reliability of service.

As Chris Keall points out, the irony here is that Telecom’s Australian arm AAPT has bene making inroads in the broadband market (finally) with an uncapped data plan.

Telecom set itself up as a target for heavy broadband users with the launch of frist Go Large, then Big Time so it really should have foreseen this and had a plan to cope with the traffic management issues. Ultimately, the plan has failed because it is too expensive from a bandwidth point of view and too complicated to manage individual users without having a major impact on performance for a large number of customers. But if we had cheaper international connectivity, more bandwidth would be available at a lower price and such traffic management techniques wouldn’t be as necessary.

Here’s hoping the Pacific Fibre backers are getting some interest in their plan for a second trans-Pacific fibre cable… whether we get unlimited broadband plans in future may hinge on whether they succeed or not…

I was in Wellington bar Matterhorn this time when the XT network failed. The first I knew of it was a text message from my boss asking if my phone was able to make calls, as she had been unsuccessful in calling me from her XT handset. Sure enough, a few attempts to make calls failed and while I was able to send text messages, the outage stretched on into the evening for around three hours.

Since then I’ve spoken to several senior business people who have quite genuinely told me they are heading for the exits where Telecom’s XT network is concerned – and that will either mean a move back to the CDMA network or a move to Vodafone. The blood on the floor at Telecom and Alcatel Lucent may go some way to placate corporate customers furious at the numerous outages that have occurred, but money talks and only serious compensation will keep those wavering onboard.

So how do you decide how much is fair compensation for a network outage? Well, there’s actually a scientific equation for calculating such things that has been proposed by researchers. The paper Game Theoretic Outage Compensation in Next Generation Mobile Networks was published in May last year in the journal IEEE Transactions on Wireless Communications proposes a game theory-based compensation algorithm.

Here’s the paper’s abstract:

Changes in network dynamics (e.g., link failure, congestion, buffer overflow and so on) may render ubiquitous service access untenable in the Next Generation Mobile Network (NGMN). Since the commercial viability of a network in a competitive market depends on the perceived user satisfaction, to atone for the loss of the guaranteed service access, it is desirable to compensate the users either with future quality-of-service (QoS) enhancements and/or price reductions.

Focusing on the price reduction aspect, this paper proposes a non-cooperative game theory based compensation algorithm that derives the best outage compensation (i.e., price reduction for the outage period t) over different service types. Taking into account all-IP based applications in the future, the service types are categorized into different classes such as flat rate based (i.e., cents for the entire session(s)), time based (i.e., cents per minute), volume based (i.e., cents per MB), etc., whereupon the compensation algorithm is translated into an n-player game, based on the current subscription profiles. With step sized cost reductions, the selection of the outage compensation is governed by the Nash equilibrium points and fairly allocates cost reduction among the ongoing service types.

Telecom offered up $5 million in compensation to customers following its second major XT outage. Whether that was a mathematical calculation based on any compensation model hasn’t been revealed, but it is likely that any further compensation will be over the odds on anything an algorithm can come up with…

The Herald on Sunday produces more evidence today of the perils of using your phone for email and surfing the internet while abroad.

While making calls and sending text messages while abroad has become much more affordable for consumers and the charging schedules easier to understand, the same cannot be said for using mobile data services.

I’ve heard numerous stories of people returning to shocking bills after using their phone to keep in touch via email while abroad.

Ernie Newman, ever-present advocate for consumers as head of the Telecommunications Users’ Association (TUANZ) told the HoS:

“People go overseas without any concept of how quickly these costs can mount up. It’s what’s known in the trade as bill shock and unfortunately it’s a recurring story.”

Here in New Zealand on a Vodafone plan, 100MB of mobile data will cost you $10. When you roam overseas as a Vodafone customer, 10MB will cost you $100 – yes, one hundred dollars.

As the table below shows, people using data services overseas typically pay 10c per 10kb of data. Now, 10kb is enough to get one or two plain text emails via a device like the Blackberry or a Windows Mobile phone. If you are just clearing a few email it isn’t too expensive, but heaven forbid you download, say a 300kb PDF file ($3), or a 2MB Powerpoint presentation ($20).

What’s even worse is that as a Vodafone customer, if you do not roam on a Vodafone network in the country you are travelling in, you’ll pay 30c per 10k. So that 300kb PDF file is suddenly costing you $9, the 2MB Powerpoint file a whopping $60.

The minimum charge in plenty of countries you are likely to be travelling in – Canada, Denmark, Fiji, Kong Kong, South Korea, is 30c per 10kb. And some providers, such as the US arm of T-Mobile, charge minimum connection fees, in its case – the minimum charge for a data session is $3.

Telecom quotes data charging, probably more realistically by the megabyte. One megabyte in Australia will cost $8, in the UK, $10, in Fiji and China, $25.

To their credit, the two mobile players Vodafone and Telecom have got a lot better about warning customers about using mobile data overseas. This from Telecom’s website:

“…if your laptop automatically downloaded a security update of 30mb it could cost you up to $900 depending on where you are, and you may not even be aware it happened until you received your bill back in New Zealand.”

Avoiding mobile data roaming bill shock

1. If you are picking up email on your phone, make sure you are receiving them in text only form and with the option to open attachments if you choose. Avoid at all costs opening attachments on your phone while overseas.

2. Be very careful about using GPS mapping applications to find your way around foreign cities – these can rack up significant data transfer which at 10 – 30c per 10kb could cost a small fortune.

3. Want to access a restaurant review or tourst guide on your phone? Avoid doing so – websites, especially those that aren’t optimised for mobile web browsers, can take several hundred kilobytes to load. Even optimised, virtually text only pages, will take 10k – 30k per page to load. That’s potentially 10c – 90c per page to load.

4. If you are using a mobile data card or USB dongle to get your computer online overseas, BEWARE. Data charges will escalate quickly. Make sure you turn off Windows updates, antivirus software updates, peer to peer file sharing applications. Don’t use Skype, don’t even have it running. I’d very very wary about using my computer with a data roaming service. At least with a mobile phone, you are likely to be assured to only have one application running at the one time. Your computer is a potential gateway to sucking large amounts of data as the various useful bits of software you have installed query servers on the internet for updates.

5. Always stay on partner networks, when roaming. You can, for instance set Vodafone as your default network so that Vodafone will be the first network you connect to as soon as you walk off the plane in a country where Vodafone operates (or has an affiliate). The same goes for Telecom’s XT network.

A cross-section of roaming destinations and Vodafone charges

I had a sense of deja vu today as I walked down Lambton Quay repeatedly attempting to dial a number on my Blackberry.

XT Network: crashes more often than Richard Hammond

Instead of a ringing tone, dead air was all that could be heard in my phone’s earpiece. The words “call failed” kept flashing up on the screen. A few things go through your mind on such occasions: have I paid my phone bill? Is there a massive amount of concrete nearby blocking the mobile signal? Is my Blackberry knackered? Since last month there’s another item to add to that list – has the XT network fallen over again?

Telecom’s massive outage on its XT mobile network today came barely six weeks after the last one similarly knocked out service from Taupo south, severely inconveniencing me and thousands of other customers for over half a day. If the first big outage shook faith in the reliability of Telecom’s new mobile network, the second so soon after with undoubtedly leave many customers considering a move to Vodafone, or at the very least a retreat to Telecom’s more stable CDMA network.

Early in the millennium, I reported on how Telecom got itself in trouble with an advertising campaign that suggested customers could enjoy “five nines” reliability on its fixed line service. The adverts promised:

“Should our network get damaged it will usually heal itself. Should it get severely damaged it will automatically divert to a backup cable. Should that fail, technicians will divert traffic to other backup cables.”

The ads proved a headache for Telecom when angry customers who had their phone and internet service cut off rang the Telecom helpdesk asking why their connection wasn’t working 99.999 per cent of the time. Telecom tried to weasel out of that one by explaining that the reliability promise, which was a trendy thing to advertise in the telecoms and IT industries at the time, related only to Telecom’s “core” network. The myriad collection of cabinets and copper wires between its core infrastructure and you weren’t covered in the reliability promise. Problem is, its somewhere in that bundle of kit that the problems with fixed-line services often happen.

Telecom soon abandoned that ad campaign and since then has never pushed reliability as a selling point. Both XT outages involved systemic failures in Telecom’s core network, the latest one Telecom executives putting down to:

…issues with our Christchurch XT Mobile RNC switch which has resulted in the degradation of the XT Mobile Network from Taupo south between approximately 10.30am and 12pm.

The RNC is a radio network controller which is responsible for routing calls across the mobile network of cell sites.Last month, the problem was again with RNC switching, according to the National Business Review. Telecom’s mobile network architecture is flawed to the extent that if one of its two RNC switches for the country fails, the other one cannot take over for the whole country.

The XT network was meant to breathe new life into Telecom. Instead, it has come to symbolise what is wrong with the company. While I blogged a couple of weeks ago about Telecom’s impressive mobile data service on the XT network, innovative mobile services are otherwise hard to find. Telecom’s pricing for XT was also uninspiring on launch and despite the slick advertising campaign featuring Top Gear host Richard Hammond, the range of handsets offered by Telecom has been rather lacklustre so far.

Elsewhere there are signs of a company struggling to innovate:

- It was incredibly late to market with an IPTV offering, partnering with TIVO well after Sky had claimed the personal video recorder market with its successful MySky device. Word is that TIVO sales are well behind targets. While TIVO is a fantastic device (I reviewed it here), the idea that people would go to a Telecom store to purchase it is flawed. A technical glitch related to TIVO that saw Telecom broadband customers overcharged earlier this month suggests the unmetered data access associated with TIVO has been causing Telecom’s software engineers grief as well.

- Telecom completely dropped the ball in its dealings with Sky TV, shifting from having a useful bundled deal with the pay TV operator and owning a stake in the company, to having virtually nothing to do with it. Vodafone was quick to exploit the fractured relationship, offering its customers the MySky recorder at preferential pricing.

- Telecom’s play at offering a suite of services to the small business sector has hardly set the world alight, despite costly sponsorship of dotcoms like Start-up.co.nz and Madefromnewzealand.com which are focused on small, innovative New Zealand businesses.

- Consumer VoIP services are missing in action despite claims back from executives back when I was reporting on Telecom for the Herald that they were on the verge of being released.

- Telecom has missed the boat with retail product bundles so many times, its not even funny. Best example – not going head to head with Vodafone’s Best Mate deal until that product had been in the market for years. Telecom has an alternative available now, but sadly the customers have long departed for Vodafone.

The list goes on and on. Telecom seems so drained from years of fighting regulators, manipulating customers with advertising that breaches the Fair Trading Act and cleaning up after fiascos like Xtra Bubble, that it is too timid to come out with innovative products and too unsure of itself to deliver them effectively. All the while, Telecom has lost market share on all fronts – mobile, broadband, phone packages and tolls. The only bright spot has been its IT services division Gen-i, but the shine has even come off that. All up, Telecom’s strategy and vision when it comes to innovation seems to make about as much sense as the sloppily drawn asterisk that serves as its new logo.

It’s only hope to develop an edge that will stop its business and consumer customer bases from eroding completely is to get involved in a meaningful way with the Government’s national broadband plan. That will probably force Telecom to break itself up, so-called structural separation, which the Government would require of it. Telecom has resisted doing that so far – but it doesn’t really have much of a choice any more with numerous competitors angling in on the fibre roll-out.

Telecom boss Paul Reynolds is reportedly “angry” about the latest XT outage and has commissioned an independent review. Good job. But he’s likely to be increasingly disillusioned with aspects of Telecom and the legacy he was left by his predecessor Theresa Gattung, who promises to soon release a “no holds barred” memoir of her time at the top of the country’s largest listed company. If it lives up to the promise, it could well serve as a textbook case in how bad technical decision making and lack of innovation and vision can topple a behemoth.

Thousands of Telecom customers are without mobile service today due to a major outage on the new XT network affecting service from Taupo south.

UPDATE: Chris Keall at the NBR has an update and some interesting info on cause of the outage, which has now stretched in length to over six hours.

My Blackberry, strangely enough, is still receiving emails, but there’s a “SOS” message where the coverage bars should be and there’s no XT cellsite available when I try to manually connect. Emergency calls are apparently still going through okay.

There’s plenty of discussion on the subject in the Geekzone forums.

As outages go, this is a major – we are now five or six hours without service, which is the longest mobile outage I can remember.

It is disappointing, but the first problem I’ve had with the XT network – which in general delivers fast mobile broadband and good quality calling for me. Telecom will need to get back online soon or it will be facing legitimate claims of lost income from small businesses who rely on mobile services to do business…

In a 3-part series I’ll be reviewing the TIVO digital recorder and video on demand service launched last week by TVNZ and Telecom.

This post deals with the TIVO installation and set-up.

DVR war declared (finally)

So finally, a decade after time-shifting TV, ad-skipping and digital storage of TV programmes came to American homes via the TIVO box, New Zealanders can get their hands on the same service.

While the TIVO brand is new to New Zealand, the concept of the digital video recorder is not – Sky’s successful MySky recorder was the first official box to employ an electronic programming guide, digital recording and intelligent services like series link, which allows you to set up recording of an ongoing TV show with one press of a button.

Other players such as Panasonic, Philips and Sony have released stand-alone DVRs that allow easy recording of programmes but without the integrated programming guide. DVRs designed to work with the Freeview service are also on offer for around $800.

Given that, is there room in the market for TIVO? Sky has certainly scooped up the early adopters of the technology with its impressive MySky box, but the desire of a sizeable section of the market to avoid lining Rupert Murdoch’s pockets further and stick to free-to-air TV and the clever on-demand and networking features of the TIVO service make it a compelling offer – if the $920 price tag had about $300 shaved off it.

Setting up TIVO

There were a number of elements to my particular TIVO installation, so I was surprised at how quick the set-up process was. To take full advantage of TIVO’s video on demand functions, I had to not only have to plug the box into my existing home theatre set-up, but attach it to an internal UHF aerial and connect the box wirelessly to my home broadband network.

Something could have gone wrong at any step in the process, but amazingly, nothing did. It helps that TIVO supplies a big, simple diagram you can spread out on your living room floor to walk you through the process.

Out of the box

The TIVO device is fairly simple in design, black with a silver trim. There’s no digital display on the box, just a series of coloured lights to indicate power, whether TIVO is recording and when a download is ready to view. It’s a fair bit larger than MySky and nowhere near as sleek or stylish. But it has an understated simple profile and blends in well with home theatre components.

The TIVO remote control is easy to get the hang of and better designed than the chunky MySky remote.

Terrestrial HD

TIVO relies on the Freeview broadcast service launched a couple of years back to support the broadcast of free-to-air channels in high-definition format. As such you will need a UHF aerial capable of picking up the service – check coverage in your area here. For best results, you’ll need a roof-top aerial, however I’ve been using an internal UHF aerial I bought from Dick Smith for around $80. It works very well, though occasionally there is some screen distortion as several tall buildings sit between my apartment in Wellington’s CBD and Mt Kaukau, where the Freeview transmitter is.Note that you cannot connect TIVO to the Freeview satellite service that is also used to deliver free-to-air TV digitally.

Wired for video

TIVO offers good options to connect to your TV – composite video, component and HDMI among them – you will want to connect via one of the last two options to receive the 720p high-definition picture the broadcast service supports.

Bundled with the TIVO package is a wireless networking adapter which plugs via USB into the back of the TIVO box and talks to a wireless router to shift information to your computer and to utilise your broadband router for movie downloads. The adapter is fully plug and play – set-up was a breeze.

With everything connected, it was time to turn on the TIVO box and scan for the digital free-to-air channels. TIVO took a couple of minutes to programme in the channels after which I was able to view them all by clicking on the “live TV” button on the TIVO remote.

But first, setting up TIVO involves you going online to register the box with the TIVO network. This was a straightforward process, within minutes I had a TIVO account set-up and had registered for the CASPA movie-on-demand service, which takes about a day to activate. I was then taken to a menu to set up the wireless adapter, which involves entering your wireless network security code via the TIVO handset.

With a connection established with your wireless router you are then set up for unmetered downloading of TV shows and movies over a Telecom broadband connection.

Short learning curve

TIVO's suggestions feature

Learning the ins and outs of TIVO’s menu system, features and remote control took less time than learning the ropes with MySky did. Everything is designed for easy navigation. Helpful videos are pre-loaded to walk you through the process. The Now Playing screen will become central to organising your TIVO viewing – it displays all the recorded programmes and downloads you have gathered on the 320GB hard drive. Other options on the menu take you instantly to CASPA, the on-demand download screen which displays the premium and free content available to download.

Another menu option will become important to your ongoing viewing – a “TIVO suggestions” screen where TIVO suggests programmes you may want to watch based on your recording habits. TIVO learns from what you watch and record, so one afternoon into the TIVO experience, the box won’t have much to base its suggestions on. But it is surprisingly astute. Assembled programmes choices are served up which you can reject with the touch of the green “thumbs up” button or reject by pressing the red “thumbs down” buttom. More about the suggestions features in part 2.

With TIVO receiving the broadcasts and accessing the wireless gateway I was fully installed in less than 45 minutes, impressive given the complexity of the technology involved.

In part 2: Getting to grips with TIVO suggestions, remote recording, downloading movies and shifting content to a computer.

UPDATE: A more in-depth Herald piece looking at the implications of Telecom’s shift in mobile strategy and my cHerald comment piece here. The Sunday Star Times business editor Tim Hunter explains the mobile roaming revenue Telecom can expect to tap into when it has a foot in the GSM/UMTS camp.

Juha’s scoop gives some interesting details of Telecom’s decision to spend $300 – $400 million on a GSM/UMTS network, confirming rumours that Telecom has been looking to extricate itself from CDMA.

I blogged about it in detail my Herald blog early this morning. So far, no official confirmation of the leak from Telecom and its shares are not on a trading halt, which is unusual given a development that is so material to Telecom’s business has been revealed. There’ll be lots of angles to this story. For instance:
- What will it mean for the newly flush New Zealand Communications which is set to build a GSM network itself? Maybe it’s a good thing as it will open up GSM roaming options.
- What about TelstrsClear? Will it exit the 029 arrangement with Vodafone in favour of some wholesale deal with Telecom?
- What about the hybrid network model Juha talks of, where CDMA is kept for high-speed data. How will this work for customers? Will they need dual-mode handsets to talk and use data? Will
EV-DO be restructed to PC data cards?
- What will Telecom do with its Hutchison 3G partnership? How will it leverage H3G services over here?

A few comments via the Herald:

From Keith:
Interesting comments about Telecom going GSM. I have been a Telecom mobile customer since 1989. I take a bit of an exception to your comment about CDMA being a bad choice. I have found call clarity and connections generally to be better with 025/027. In the early days 025/027 was far superior. Admittedly that may have changed in more recent times. Equally, my reading of the mobile data situation was that the Telecom products have offered better speed. Perhaps the only bad part of the decision is that the rest of the world went with a different standard. Had they gone CDMA then Telecom’s choice would have looked inspired!

As for a better selection of handsets. So what! It may be important for geeks and fashionistas but the rest of us get by with the Telecom selection (currently I have a Treo 600). I also have a work 021, a very nice and expensive Nokia, which I like. As for the Motorola RAZR phones, my previous experience with Motorola phones and modems including cable modems is that they are hopelessly unreliable. This was confirmed very recently when the boss “upgraded” to a Motorola RAZR which managed to die just prior to his overseas trip. I wouldn’t touch Motorola gear, no matter how nice it looks. I’ve also managed to persuade my kids to avoid it as well.

Telecom didn’t really have much choice by the looks of it, but for most of us it comes down to price and service, not technology.

Of course, with number portability maybe none of it matters. Not that the networks are saying much about that. Where is it at?

From Mark:
Interesting story on Telecom NZ move to GSM. I left NZ in April 1996 and went to work in Vietnam, where GSM mobile phone connections outnumber landlines by a considerable amount. I quickly realised (as you do when you work outside NZ) that a good proportion of the rest of the world also used it, and on my first trip back six weeks later gave my 027 phone to my wife and have been a Vodafone customer ever since. Interestingly, at the same time a good friend of mine owned (and still does) a Telecom franchise in New Plymouth and had no qualms telling me that CDMA would take over the world and texting would never take off. I could never convince him at the time that I thought Telecoms was a poor choice and that the rest of the world was moving in a different direction. I now own a triband Smartphone and use it in the US, Europe, the Middle East and SE Asia, roaming all of the time on Vodafone. It even worked in Brazil!

From Olga:
Your article is interesting but to share another aspect with you, as it happens Vodafone are erecting a tower & base outside my house today. This is despite my cries to Auckland City and Vodafone to move over it over the road where there are no houses.

So possibly this explains their hard stance with me.
There are bigger more powerful reasons, e.g. Telecom using the same facilities? Who cares about the safety (traffic concerns as base box obscures road & frequencies of units etc) of people when theres more profit to be made. Maybe the next time we read the glowing reports in the business section of the papers, you can highlight that the real price is being paid by a handful of affected people sacrificed for the sake of profit. What do you think??