Smaller ISPs dispute 'investment challenge' claim

Small and midsized internet service providers strongly disagree with the suggestion they can’t keep up with the level of investment coming from the big five.

In December, internet service measurement company Epitiro and analyst firm IDC reported that the quality of broadband services provided by smaller ISPs in New Zealand was flat or in decline, while the performance of the major providers had improved as a result of network investment.

“A challenge for smaller ISPs is the inability to match the scale of investment, caching or international capacity provisioning undertaken by the top five carriers,” the report, prepared for the Commerce Commission, stated.

“Wellington ISP Actrix installed its own equipment in a phone exchange in Central Wellington in September, and has plans to extend beyond this. However, it has not yet begun connecting customers.”

However, smaller ISPs Computerworld spoke with dispute that suggestion.

Compass Communications’ group CEO, Karim Hussona, says Compass has no plans, and no need, to invest in unbundling as it is buying wholesale services from other providers. He says Orcon and Vodafone are now delivering wholesale services and Telecom is responding with similar services, and it makes sense for Compass to use these rather than build its own network.

Hussona says its network investment is going into wireless by extending its Wired Country service, which the company bought from Counties Power in 2005. He says that service has now been extended to 12 other areas including Whangarei, greater Auckland, Hamilton, Tauranga, Rotorua, Nelson and Christchurch. It is also being migrated to WiMax.

“It’s a lucrative business, very much a niche product,” he says.

Epitiro’s Michael Cranna, however, says that while ISPs buying wholesale services will benefit from the investments made by their providers, there are still investments they can make in their own domain to improve performance.

Brett Herkt, managing director of Maxnet, is also dubious about Epitiro’s conclusion and says the company never called him to discuss it.

“I wonder whether the big guys have caught up a bit,” he says, suggesting they might be improving faster “because they’re so bad”.

Herkt says Maxnet has no problems investing and he doesn’t think other small ISPs have either.

On caching, he says ISPs have two options: buying more bandwidth, or investing in caching. All ISPs keep a margin over their normal bandwidth needs, he says. Some may have 5% and some 10%. Running out may cause temporary and relatively imperceptible slowdowns.

However, he says, some ISPs that have invested in caching are unsure of its benefits.

Herkt says smaller organisations tend to have more diversified business models. Epitiro measures residential services, he says, which make up a small part of Maxnet’s business. Maxnet also provides datacentre and hosting, as well as other services.

Cranna says the data demonstrates improved performance from the big players, up to the point and even ahead of where some of the smaller leaders, such as Snap and Inspire, were four to five months before. However, he says, the small ISPs tracked are aggregated into a “other” category, as some are only measured from one or two Epitiro sites.

Cranna says this data will be fleshed out in future with data from its desktop agents and software installed on users’ PCs, which it began distributing last year.