NZ Telecommunications - Convergence

Digital convergence is the merger of many technologies, including Broadband fast Internet, digital audio and video. Using a set-top box [STB], your TV or home entertainment system expands its entertainment capabilities to on demand TV, movies on demand, pause pause live TV or even record several TV channels at once.

For New Zealand to join the rest of the world on the verge of a technology revolution, we must improve our broadband access to be able to transfer large amounts of data.

Video-on-demand services [JetVideo] have been trialed in in Auckland, Wellington, Christchurch and Taranaki. Films and music videos were provided by Intertainer Asia, an on-demand content provider in the Asia Pacific region.

However, convergence is not just about entertainment. ICT [Information, Communications, Technology] is driving economic transformation worldwide, and is therefore extremely important to New Zealand’s digital future. The government has a strong agenda and primary interest to developing the telecommunications sector. At present, NZ is not able to take advantage of overeseas trends and is rapidly falling behind in business capability. Even the iPhone is not capable of operating in NZ.

Other new interoperable digital devices, providing a single point of access to a multiplicity of services and audio-visual content, such as mobileTV continue to be constrained due to the lack of New Zealands network capability.

In typical downstream impact, content development is now also lagging. Control over the medium and over media services and content is shifting from the provider to the user.

Market Development

The international audio-visual content market, once restricted to TV and radio is now enjoying broadband and mobile AV media distribution platforms.

The TV network in New Zealand has upgraded to a digital transmission platform, providing a good basis for more complex and diverse online delivery - ‘vodcasting’, ‘podcasting’, peer-to-peer platforms and streaming services. These new broadband-based models, providing access to ‘broadcasting-like’ content, have blurred the boundaries between broadcasting and telecommunications. See more on Broadcasting in NZ

The merging of the broadcasting and telecommunications markets will drive new market models and require a complete revision of broadcasting standards to extend them to include these new media channels.

International trends, whilst not directly applicable to the NZ market, do provide a good basis for developing transition models for both the ICT market and policy. In addition, media has become a global network - IP content crossing geographic borders without restriction.

NZ pro-competitive policy introduced through the Telecommunications Stocktake is driving most of New Zealand’s convergence. Stocktake includes:

• Broadband - the need for faster, cheaper broadband
• Local loop unbundling - LLU will drive market competition
• Separation of Telecom NZ Ltd
• Rural telecommunications services

Spectrum

One key initiative by the NZ over the past few years is the release of a significant amount of broadband spectrum to support ICT. This will include

• Spectrum in the 2.3 and 2.5 GHz bands - configured for WiMax and IMT advanced applications, and applications
• Spectrum in the 3.5 GHz band - for regional services

These licences are aimed at facilitating the roll-out of more high-speed internet services to New Zealanders, in particular to rural and provincial areas.

Stocktake's goal is to drive New Zealands ability to keep up with technology. And convergence is resulting in new methods of delivering traditional media.

Convergence Services

Triple-play Services

• TV-telephone-Internet

New Media

• User generated content or UGC – YouTube, MySpace, blogs
• Môbisodes (mobile episodes) – short video clips for cellular mobile streaming

New Consumer Behaviour

• Use of personal video recorders
• Video on demand
• Downloading archives and back catalogues
• Blogging, chat rooms
• Internet shopping

These innovative technologies are taking over the communications market, with broadband now available on a range of platforms, enabling content to be created, distributed and consumed in multiple ways. For example mobile TV, IPTV, social networking, blogging, user generated content and virtual worlds.

Triple Play Models

There are currently only very limited triple play activities in New Zealand where voice video and data are delivered over the same network.

TelstraClear offers triple play services over cable networks primarily in the central business districts of Wellington and Christchurch.

The rollout of ADSL2+ high-speed broadband by Telecom, largely driven by the NZ Government's decision in 2006 to unbundle the local loop will eventually provide the foundation for the development in triple play services.

Services delivered over Telecom's NGN will include:

• VoIP
• Video calling
• Converged fixed/mobile offerings
• Interactive television
• Video-on-Demand (VoD)

Urban and rural fibre network rollouts in New Zealand will also support high-speed networks capable of triple play service delivery.

Economic Impact of Convergence

As markets multiply, audiences are becoming increasingly fragmented, threatening the incomes of traditional pay and free-to-air networks.

Consumer demand driven trends have significant implications for broadcasting, telecommunications and other content providers.

With networks already facing major challenges to maintain their revenue streams from subscriptions, pay-per-view and advertising, the wide choices now available to media audiences likely to choose those presenting the minimum of advertising at the lowest cost, the revenue models in telecommuncations, broadcasting and media are all facing restructure.

Business Models

Predictions of the impact on current business models varies:

Some believe that free-to-air and subscription TV will continue to receive support as consumers seeks to gain full return on the investment of their expensive STB TV receivers.

The market model is changing from a push model [consumers receive the media broadcasters push] to a pull model [consumers receive only that media they choose]. And the channel upon which they receive it is also in the hands of the consumer - TV, PC or handheld.

With the lag in high speed ADSL, convergence is more likely to be enabled by cable and wireless. This will cause a shift in the providers’ traditional income streams to the pay-per-view end of the spectrum, with possible metered use. Free-to-air delivery is only likely to survive if supported by sponsorship, product placement and embedded advertising.

Content

Content is a vital component of the Digital Strategy. National heritage content is being digitised, making it more accessible to all. This is generating complicated issues around creative ownership, residual rights, and copyright.

Resolving these issues requires involvement at all levels of our communities and business, with the support of government.

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