Starlink’s predatory pricing challenges rural fixed wireless

If you googled ‘New Zealand Fixed Wireless broadband’ in the past week, chances are you saw a Starlink advertisement.

Elon Musk’s low earth orbit satellite broadband service is not hiding its ambition to replace Spark, One NZ and 2degrees in rural New Zealand.

If that wasn’t already clear, Starlink’s recently introduced ‘deprioritised plan’ makes it obvious.

Faster, cheaper, more data

Starlink’s deprioritised plan costs $80 a month for an uncapped service that runs at 50 to 100 Mbps for most of the time. Deprioritised means the speed may drop during demand peaks.

While there are rural fixed wireless customers who get a similar performance. Many do not.

Starlink’s promise compares with Spark’s current Rural Wireless Basic plan which offers 60 GB of data at an average speed of 36 Mbps for $96 a month.

The satellite option is faster, cheaper and comes with more data.

Deprioritised

Before we get too carried away with this line of reasoning, let’s look closer at what ‘deprioritized’ might mean in practice.

All wireless communications use shared bandwidth. This can get congested if everyone tries to use the service at the same time. Satellite is no different.

Fixed wireless operators manage performance by restricting the number of customers signed up to any given tower. Satellite operators do something similar. There are places in the world where Starlink is full and is not taking on more customers.

Unused capacity

That’s not the case in parts of New Zealand. Starlink has unused capacity.

Deprioritised is how Starlink manages demand. If all customers in an area are online at once, deprioritised customers get pushed to the back of the queue.

This means speeds can slow during peaks. The big, as yet untested question, is whether this peak hour slow down is significant enough to mean that streaming television no longer works. And if streaming does drop out, how often does it drop out and for how long does it stop?

This could all be immaterial. For many New Zealand rural users, even a jittery, unreliable TV picture at peak times will be an improvement.

There are workarounds for getting decent TV pictures from deprioritised Starlink. Users can pre-download shows. That won’t work for live sport, but it is fine for movies.

I plan to revisit this story in future newsletters, if you have any thoughts, or direct experience of Starlink’s deprioritised service please either comment below or get in touch.

Quin moves to public sector role at One NZ

One New Zealand has hired Wellington-based Nick Quin as head of public sector. Quin comes from SAP where he spent seven years managing that company’s public sector business. Previously he worked in sales for technology companies.

Local PC market down more than 10 per cent in 2023

A weak economy dragged down New Zealand PC sales in 2023. Figures from IDC says shipments dropped 10.7 per cent to 669,000 units.

Consumer PCs did better than business computers with sales down 8.1 per cent compared with a 12.5 per cent drop for hardware destined for the corporate sector. The SMB segment did worst of all.

That hoary old cliche adverse macroeconomic conditions got the blame. IDC says “Companies decreased their spending given the uncertain conditions. Refresh cycles were pushed out, causing shipments to be reduced further”.

Election year slow down

IDC didn’t mention the election, which must also have been a factor. Technology sales typically fall away in the run up to an election and immediately after if there are protracted negotiations. By the time that was all over, New Zealand was into the summer holiday period.

As usual, IDC expressed an optimistic picture of the near future. The research company says it expects sales to increase 2.4 percent in 2024, but it has had a poor record forecasting sales in recent years.

HP has strengthened its position as market leader with its share growing from 29 per cent in 2022 to 33 per cent last year. Lenovo remains in second place with a 20 per cent share. Apple moved up to third place despite shipping fewer units than the prior year.

See: New Zealand PC Market Declined by 10.7% YoY in 2023, According to IDC.

2023 was a slow year for broadband equipment sales

Dell’Oro Group says worldwide revenue for the broadband access equipment market dropped 9 per cent last year to US$16.5 billion. Passive optical network equipment spending fell 7 per cent while fixed wireless customer premise equipment was up 7 per cent

Few details as Spark cuts jobs again

At the NZ Herald Chris Keall writes Job cuts at Spark, with AI in the frame. He says staff were called into restructuring meetings on Thursday morning and told a recent rise in labour costs is “not sustainable”.

Spark tight-lipped over job cuts after restructure meeting at RNZ’s website doesn’t have a byline. The story quotes an unnamed spokesperson:

In a statement, a spokesperson said the organisation did not have an overall number to share, and areas would change depending on if it wanted to invest in growth or look to see how it could be more efficient.

"We are not confirming details on specific role changes within individual teams or the details of consultations we are having with our people. Changes to our operating model will look different in different parts of the business."

Samsung debuts security focused midrange Galaxy A phones

Samsung has improved the security of its midrange Galaxy A models. At the same time it has moved from plastic to metal cases.

The $800 Galaxy A55 5G and $650 Galaxy A35 5G bring Samsung’s Knox Vault to the company’s less expensive models for the first time.

Knox Vault aims to protect sensitive data like lock screen credentials and encryption keys from software and hardware attacks. It does this by physically isolating them from the phones’ main processors and memory.

In other news...

Juba Saarinen at interest.co.nz says Singtel denies Optus is about to be sold to Brookfield Asset Management, the Canadian investment firm which until last year was half owner of One New Zealand.

Thursday’s CommsDay led with much the same story, in effect dismissing the reports of a deal published earlier in the Australian Financial Review. Optus has been a mess in recent years with a major data breach in 2022 and massive network failure last year, it is currently without a CEO.

More solid reporting from Newsroom to puncture Amazon Web Service’s New Zealand expensively manicured reputation in Amazon cloud pays barely $1m tax on $391m revenues. Jonathan Milne says AWS is charging government agencies and NZ businesses hundreds of millions for ‘local’ storage it hasn’t yet built.