"Can you send the lightnings, that they may go and say to
you, here we are?"
- Job 38:35
By Keith Newman
We’ve come a long way from flag
waving semaphore and the dot-dash-dot of Samuel Morse’s electronic
forerunner of the digital age, and our first glimpse of the device that
would cause its users to respond more rapidly to its shrill beckoning
than to a knock at the door.
In the 21st century we can't get enough of the telephone and
the technologies it has spawned, from the dinky pocket cellular phone
that doubles as an MP3 player, electronic diary, data repository and
camera, to that most influential of all offspring, the Internet. The
modern miracle of the Internet; a network of millions of intersecting
networks, a ‘spider’s web’ of connections meshing the globe, crosses all
time zones and political, social and geographical borders wherever there
is a telecommunications infrastructure.
Because of the
Internet we have email, newsgroups, peer-to-peer computing, on-demand
music and movie clips, electronic banking, e-government, community
networks, online shopping and information at our fingertips. Social
networking and blog sites enable people to share their thoughts, their
hobbies and photos, showcase home movies, recommend music, films, books
and ideas that can stimulate mass market shifts in perception. This
transformational technology, which bridges the ‘six degrees of
separation’, is instrumental in creating hit records, or turning flops
into box office successes virtually overnight because people are talking
to each other, not just relying on the hype from the producers of their
entertainment. The Internet has come of age and its influence has hardly
begun to be understood.
Only 128 years ago New Zealand's rural pioneering community was getting
its first glimpse of a device which would cause its users to respond
more rapidly to its shrill beckoning than to a knock at the door.
Mrs Sheehy of Roxburgh started our love affair in 1877, as the first
kiwi to have a conversation on a private line using the new-fangled
talking telegraph. No-one thought to keep a record of what she said. A
century later we still can't get enough of the telephone and the
technologies it has spawned, from the dinky pocket cellular phone and
pager to that most influential offspring, the internet.
The promise of what the future might hold has us totally sucked in to an
endless upgrade path, drawn by a compelling vision of a world where
bandwidth is free and we're in touch with anyone, anywhere, anytime. In
its wake this revolution has left many markers to remind us how quietly
it began and how rowdy things have got lately.
New Zealand's first phone office opened in Port Chalmers in 1879. The
first exchange in Christchurch in 1881 had 30 subscribers. Auckland
followed suit with 10 subscribers. The New Zealand Post and Telegraph
Department was formed to oversee the roll out of telephone lines across
the country and to train telephone operators. It quickly became a state
monopoly on the advice of a government official, in order to prevent the
Electric Telegraph Company of Chicago, a direct antecedent of Ameritech
and Bell Atlantic, opening an exchange here.
Within a decade the first private automatic branch exchanges (PABX)
appeared. In 1930 all the main centres had been connected and callers
could pay a toll to call between cities and towns. It was official the
telephone was here to stay. People were talking, not just across the
back fence, but to friends, relatives and businesses across towns and
cities. The news of the world was more readily available. Gossip
travelled at light speed.
Talking to the world On November 25th
1930 the minister of Native Affairs Sir Apirana Ngata had a chat with
Australia's acting prime minister Mr Fenton, marking our first
international toll call. A year later we connected to Britain - a call
cost six pounds 15 shillings and there were only 312 calls in the first
year. By 1939 the rates had reduced and 3,457 calls were recorded to the
old country. In 1930 The NZ Post Office had 125,000 customers that had
nearly tripled by 1950. By 1960 subscribers rocketed to 686,021.
The user was given increasing autonomy with the shift from the old party
line, operator-based system, to subscriber toll dialing (STD.
Technology kept improving and by 1970 the NZPO was transmitting computer
data across its network using its Datel service.
With the nation criss-crossed with wire the innovators began to look
skyward to satellites which were being used to link continents. The
first satellite station at Warkworth opened in 1971, the year telephone
users passed the million mark. New Zealand had truly entered the
The New Zealand Broadcasting Service bought us one channel of TV in the
early 1960s - by 1975 there were two, and with the arrival of TV3 in
1989 we finally broke away from state dominance of what we viewed. For a
while there it looked like we'd get some serious pay TV competition with
the arrival of Sky TV then Kiwi Cable which became Saturn and began
rolling out cable and services in Wellington and Christchurch, telecom
launched its own FirstMedia service and several smaller cable players
joined the fray. But after Telecom pulled out and Telstra purchased
Saturn and then Clear its cable subscribers were sold off to Sky and
TVNZ did a deal to go digital in conjunction with Sky, Sky - now a
monopoly player - became the limit.
Selling the family jewels
The New Zealand Post Office (NZPO) state monopoly was restructured and polished up ready for sale
in 1987 and given a new lease of life as the re-branded Telecom. Our
telecommunications market was the first in the world to totally
deregulate in 1988.
The first item on the on the agenda was to sell off Telecom to Ameritech
and Bell Atlantic in 1990 for $4.25 billion. Competition wasn't too far
away with the arrival of the Alternative Telephone Company which quickly
became Clear Communications. It set out to establish its own
infrastructure and compete in the international and national tolls
market and data services.
The next major competitor to appear was mobile network provider
BellSouth with its GSM digital service. BellSouth was taken over by
Vodafone in November 1998. Clear then became 100 per cent owned by British
Then Saturn Communication, owned by Australian company Austar made its
entrance into the local market by acquiring the former Kiwi Cable
company (formed in 1994) which operated on the Kapiti Coast and was
making forays into the Wellington and Christchurch areas with cable TV
and phone and internet services. Then at the end of 1999 Australia's
dominant carrier Telstra shocked the market by entering into a
partnership with Saturn, promising a $1.2 billion spend up on a
nationwide broadband network covering 65 per cent of homes and 80 per
cent of businesses.
The renamed TelstraSaturn promised to lay fibre loops in the main business centres, wireless links
to outlying regions and leverage independent local and international undersea
cable with 120Gbit/sec capacity. At last it looked as though there was a
formidable opponent to Telecom and that true competition would at last
arrive in New Zealand.
Cabling New Zealand’s most densely populated regions for data and
pay TV was not a new notion. Telecom tried to lay its own hybrid-fibre
coaxial cable between 1995-97 and blew close to $200 million before
aborting its FirstMedia project. Termination had more to do with making the books
look good before corporate raiders Ameritech and Bell Atlantic took the
money and ran than claims it had found a cheaper alternative in digital
subscriber line (DSL) technology.
Within months DSL was relegated to fast internet, an interim
solution limited by the quality of copper phone lines, distance
from the exchange and electrical interference. Jetstream offers a
minimum download speed of 2Mbit/sec and costs an estimated $60 a month,
plus internet service provider costs.
Telstra, a sleeping giant with deep
pockets, however was waiting to make and even grander move as it sought
to hit back at Telecom which had moved across the Tasman and acquired
AAPT. In November 2001 Telstra moved to acquire Clear Communications
from British Telecom creating the merger giant now known as TelstraClear.
However it soon became evident the the two year long integration process
of bring the company structures and the network together would not ramp
up levels of competition as much as many had hoped. Hundreds of staff
lost their jobs and by de facto the new entity now had a nationwide
network and its previous promises of massive infrastructure roll out
were significantly scaled back.
There are currently about 30 competitors to Telecom in the local and
international tolls market but it's a tough field with reducing margins
on voice, and the internet provider market which once exceeded 100
players was also rife with acquisitions and failures. Most of the activity
remained around scraping out niches in the data sector, an area Telecom
has virtually corralled through its dominance over the last mile into home
and business. Most competitors
still had to deal with Telecom to get to the majority of their
Internet goes mainstream
In April 1989, a full 18 months after an agreement had been reached to
connect New Zealand directly into the NASA gateway at Hawaii, the
the ‘full wire 9.6kbit/sec analogue
modem’ and router connection across the undersea link to Waikato went
live. Part of the deal with NASA was that Waikato, and John Houlker in
particular, would be required to be the troubleshooter if things went
wrong at the NSF operations in Christchurch,
which they often did.
Effectively New Zealand became the first nation in Asia- Pacific to take a
full link into the US internet backbone through the country's
universities. Previously all links were dial-up and based on different
protocols. Within five years everyone was talking about standardising on
the internet protocol (IP), not only to access the burgeoning on-line
world but for their own internal business communications. IP became the
glue to bring together the networks of the world and to open the door
for another powerful economic force with the same acronym, intellectual
The internet is where all the action is and everyone wants a slice of it
including the bulletin board services who gradually morph into Internet
service providers first at Victoria University and then in other parts
of the country. There's
a feeding frenzy as key players buy-up or partner with smaller service
provision and web development firms and acquire payment system
technology ready to get serious with e-commerce. Telecom and
TelstraClear still having the strongest presence, alongside other
first tier players including satellite operator Ihug and another
pioneering firm Iconz, both of which undergo restructuring and changes
of ownership ownership over several
and Clear initially don't want anything to do with the Internet but once
they realise that where the future is being built they can't get in
quick enough. Telecom in particular jumps in boots and all with grand
schemes discounting its way into the front before it realises it needs
to upgrade its entire infrastructure to cope with all the traffic. it
them blames everyone else for putting pressure on its network. Significant upgrades tare
made to Clear and Telecom's fibre optic networks
across both islands with rings around the central business districts.
The overlay for both is now capable of gigabit per second throughput.
However providing high speed data services into residential
communities is an idea who's time has not yet come. Telecom launched
ISDN (integrated services digital network) in 1992 to speed up data over
the phones lines but it remained expensive. Saturn got it right in Wellington
bringing real competition to local subscribers across the range of
services. It planned to keep rolling into Christchurch and Auckland but
the acquisition by Telstra and then Telstra's acquisition of Clear
Communications resulted in serious curbing of that plan.
When Telecom pulled the plug on its First Media hybrid fibre coaxial
project it claimed it had found a
less expensive technology in ADSL (asymmetrical digital subscriber
line) technology which would use the copper cable to send not only data
but movies. It soon became evident that the copper infrastructure
was far from suitable for the pay TV service Telecom had planned so .
The newly branded Jetstream service would instead be for fast
internet only. Another rival for fast internet was the Starnet
service from Ihug which leases satellite space and splits it up to sell
to its local internet customers and 100 internet providers in Australia.
The family firm was first to offer flat rate internet. The rest of the
market caught up in 1999 resulting in a price war before
Telecom stepped in and forced them all to shift to a new prefix for fear
its own network couldn't cope with the growing demand.
Telecom invested in the PacRim and the Tasman 2 undersea
fibre optic cables circling the Pacific. The light speed cables went live
progressively between 1992-94 but within three years they were booked up.
We were told the latest local multi-point distribution services (LMDS)
wireless technology using the 26-28GHz range could provide relief for
high speed data, television and voice communications needs. Millions
of dollars were invested but it was soon relegated to back and short
haul backbone technology for TelstraClear.
The $2.5 billion plus Southern Cross undersea cable went live in 2000.
The initiative 50 percent owned by Telecom,
provided 120 gigabits capacity cable linking Sydney to Muriwai and
Takapuna on to Hawaii. within a year more capacity had to be opened up
and that too was booked up. The trend continued with further upgrades
necessary in succeeding years to cope with the international data
New Zealand's demand for faster access to
the Internet and all the applications and services
continues to remain unrequited. Roadworks on all attempts to improve our on-ramp to
the mythical information superhighway remain at a critical stage. Now
the talk is that we all need to be connected by between 10-20Mbit/sec
speeds by 2010 - a tall task when you consider most of us are lucky to
get 2-3Mbit/sec and half of us are still on dial up. Nevertheless the
futurists and industry researchers are saying that 100Mbit/sec over
fibre into our homes is the next big step if New Zealand is to gain any
traction in the OECD top 30 and not slip further back into the compost
heap where we've been heading for the past decade. The race is on for
our economic survival and advancement as a literate and technically
In expectation that the bottlenecks will be unplugged, creative kiwis
ought to polish up their marketing skills, finish beta testing the new
software, spruce up the web site and jump on the e-commerce train. With
over 100-years of innovation behind us it's now up to a visionary government,
in partnership with knowledge economy businesses, to ensure 'New Zealand
on the edge' and 'first to the future' become more than empty tourist
To learn more click through to the
New Zealand telecommunications timeline
Step back in time 1840 to the 1990s From 2000 - 2006
2007 - 2008
or read the
technology news section for
the ever unfolding history of telecommunications in New Zealand.