Data Privacy, Biometric Regulations and Telco Competition

Paul Spain:
Greetings and welcome along to the New Zealand Tech Podcast. I’m your host, Paul Spain and it’s a pleasure to have Bill Bennett back in the podcast. New Zealand Studios. How are you, Bill?

Bill Bennett:
I’m in good shape, Paul.

Paul Spain:
Great to see you. Always nice to have a catch up and of course to hear your thoughts and opinions on the New Zealand Tech Podcast. So curious what insights you’re gonna have for us today. Now, just as a reminder for listeners or any that don’t know you, where do you fit into this big world of tech and journalism?

Bill Bennett:
I’m a journalist, I’ve been writing about technology since the 80s. Write about business, mainly business technology, not so much the consumer and gaming side, but I can do that if need be.

Paul Spain:
Well, yeah, lots to chat through today. Before we jump in. Of course, a big thank you to our show partners for their support. One NZ, 2degrees Spark, HP, Workday and Gorilla Technology really appreciate what they do in terms of looking after and supporting the tech and innovation ecosystems in New Zealand. Now first up, first cab off the rink, if you want to call it that. It’s been getting a bit of attention out there is this move to charge road user charges to every vehicle that gets used on the road going forwards and be replacing the tax that we pay on our fuel, on our petrol today. Now, you know, in the past obviously diesel was sort of covered with that approach where it was all about the road user charges, our electric vehicles, road user charges. And you know, to make that work, you had to keep a track on your mileage or kilometerage.

Paul Spain:
What’s the correct term, Bill?

Bill Bennett:
Our mileage works, but we have kilometres. When you talk about mileage. Yeah.

Paul Spain:
So anyway, the new change, from my reading of it, and curious to hear your thoughts, is for newer vehicles, the vehicle itself does track its GPS location and those things get stored. So. So the case of the Tesla, at the modern end of vehicles, the information that the Tesla collects, you can already Today install a third party app that will tap into Tesla’s APIs and keep track of where you go and give you varying intelligence around how much electricity you’re using, where you’ve gone, your history, if you need a logbook for, you know, business purposes and so on, all of that, that can be done. You can also go in and turn off, you know, some of these types of capabilities as well at a vehicle level. So you get to kind of, you know, choose to a degree. But there’s an element with more modern vehicles that, yeah, there’s certain data that they’re not going to work very well without, and especially because you have integrated navigation systems and so on as well. So this is one approach that the government will be able to draw from that data that’s collected in the vehicle. For older vehicles, they’re talking about partnerships which will allow, which will involve you having a gadget that gets put in your vehicle and will collect that same sort of data and then we’ll feed it back somewhere.

Paul Spain:
Now my impression at this stage is that would be, you know, potentially a third party. ICE roads share price has gone up a reasonable chunk since this was announced. But there are some concerns, I think in the background. And if we look at some of the manufacturers of these GPS units and you look at the data leaks there have been. It’s insane. You look at the vehicle manufacturers and how well they’ve been able to keep a cap on their own vehicle data, that’s, you know, equally as worrying. So what do you think about this whole picture film or is it just how the world is now?

Bill Bennett:
Yeah, well, before we get into the actual, you know, what’s gonna happen, it strikes me as this unnecessarily complicated way of going about these things. But you know, we’ve gotta pay for the road somehow.

Paul Spain:
Sure.

Bill Bennett:
And if we’re going to have a system where you, for example, you’ve got congestion charging in the cities, which I know has been talked about for Auckland, then the cameras are going to see where you’re going. And there are enough cameras watching cars on the roads anyway. So there could be a way that you could charge people for using their cars without necessarily having to go through this entire rigmarole, which strikes me as an overly complicated way. And it’s kind of a. Using a technology sledgehammer to cracker. Now I know that the devices aren’t going to be very expensive, but there’s running costs and overheads and so on. So for every dollar that the government collects in road user charges, it could be spending, you know, 20, 20 cents, 25 cents. To collect that information starts.

Bill Bennett:
At some point that starts to become a, starts to defeat the object. So yeah, yeah, I’m concerned that they would start out by looking at something that’s overly complicated like that. And that’s before we get onto the privacy. And we’ve heard stories about, for example, coppers using the vehicle databases to let people know where someone’s car is. And you can imagine that if there’s a woman in a refuge somewhere, there might be someone, she doesn’t want to know where she is. This system will find her quite quickly. There’s all kinds of privacy implications that aren’t good. In our household, we have an app which, when someone spends some money in a shop, the Westpac app pings up and says, you spent more than usual in the supermarket this time.

Bill Bennett:
But the sad thing about that is if my wife goes and buys me a present, I can see that she’s been to a shop and bought me a present. But with the car thing, you’re gonna get, you know, you’re going to find out a car somewhere where someone thinks it shouldn’t be. You know, you’re going to get that kind of information. So the privacy implications of that are huge. And the other thing which I think is, I just don’t think our government has any concept of this is it’s the moment you get into putting these gadgets in here, you’re going to have this underworld of gaming the gadgets, of turning them off or making it look like you’re not moving the car or.

Paul Spain:
Putting some tin foil around it. You can’t communicate for a long journey.

Bill Bennett:
You know when, you know when those, when those radar, the speed radar things first came in, what’s the first thing they had in J car was the speed radar, the radar detectors. They’re entering into a technological arms race with at least a certain slice of society that’s, that’s going to come in with this. So it’s all kinds of issues. I just think it’s an, it’s an unbelievably complex way of solving what could be quite a simple problem. I mean, why don’t you just. Modern cars have they tell you how many kilometers the car’s driven. You can just log that, you know, so I go, so I get a form from the government on today and it says, what’s your mileage on your car? What’s your car say? The mileage is at six months time, they ask you to fill that in again with the new mileage. Now, I know that people can cheat that, but that can be audited and it’s much, much simpler than having gadgets in cars and multiple systems.

Paul Spain:
The suggestion is that that relates to, for instance, farmers who, you know, they shouldn’t be paying road user tax when they’re on farm. I think you can have some exceptions and mechanisms for dealing with that. I landed on a similar thought, Bill, that the odometer reading should or could be the default option. That is largely what gets used, as has been the case traditionally. I guess I’ve. In my mind, I always look at technology through the lens of what are the upsides, what are the downsides? And every technology is going to land on both sides depending on how we decide to, to utilise it. Bitcoin, it’s like, oh, this is amazing. We can move funds around the world, we don’t have to pay intermediaries and so on.

Paul Spain:
And then on the flip side, these things get used for money laundering and criminal activity. So wherever you look, there’s gonna be that challenge. But I feel as though I’ve had a bit of a mind shift around some of these things where you look at it and from the immediate perspective it’s like, oh, that’s brilliant. You can do exactly this perfectly. Technology’s the perfect sol. But I think what you say around the complexity, around those privacy risks, we as society now need to start pushing back. And it’s not just on things that governments think up to generate revenue, it’s on our social media firms who will push the limits as far as they can. The ride sharing companies, I mean, Uber, the classic example, you know, they threw out the rule books in every market they went into and just pushed the limits beyond what was legal.

Bill Bennett:
Oh, that business model is changing the.

Paul Spain:
Law in multiple cases so that they could win market share and be there first.

Bill Bennett:
And when they got there, they whacked the prices up.

Paul Spain:
Yeah, once you’re exclusive, right, then you change the rules and, you know, there’s this element where when something is successful, the rules just will slowly change over time. So I was talking on TVNZ over the weekend around what Instagram are doing with Instagram Map. And so this is a feature for location sharing and it allows an individual to share with others exactly where they are. Right. And that’s in one viewpoint that’s, oh, that could be really handy for letting a friend know where you are and so on. Right. But I opened up Instagram and had a look at this curious like, is this good, is this bad? Let’s understand it. The first thing I saw when I went into the chat area on Instagram and anyone that’s listening can do exactly this.

Paul Spain:
If you go into your chat area on Instagram, it will list. If people are sharing their location with you, it will list who is sharing their location. And to be fair, I don’t use Instagram very much. And, and in fact, I’m not a big fan of Instagram at the moment for varying reasons. But I’ve just gone into the chat, I can see a bunch of people who have shared their locations with me. If I click onto that and try and get into the map. Okay, I’m getting the same issue I had the other day is unless I open up to share my location, it’s not letting me see anybody else’s location. So I’m having my arm heavily twisted to start sharing this private and confidential data with Meta in order to engage in a feature.

Paul Spain:
I shouldn’t have to do that. And so there’s this sort of slippery slope where our privacy just slowly disappears. And as we know, private companies, whether it’s a very successful trillion dollar plus business like Meta or whether it’s a government, we’re not very good at making sure data is perfectly locked down and secured and is only used for its original purpose. Not to mention all the other side effects that just kind of, you know, we stumble into in terms of data sharing.

Bill Bennett:
Right, yeah. Look, I had a conversation with someone recently who is involved in politics in a political party here in New Zealand. And it turns out that within that party, this person doesn’t do this, but within that party, all the discussion about policy and issues and so on is conducted using Facebook Messenger. Right. Well, if nothing else, Facebook messenger stuff, Facebook messenger is being fed into Facebook’s on Meta’s AI system.

Paul Spain:
If nothing else, in theory, they’ve encrypted it end to end build. Do you believe it?

Bill Bennett:
Yeah. Right. But in practice, in practice, I bet you look at the small print when you agree to use that service, they can use that for whatever they want. And I wouldn’t do it. I mean, it’s just madness because it may be entirely innocent, but that stuff can still come, even if we think that Meta is entirely innocent. And, you know, let’s face it, we don’t think that, no one thinks that. But even if it was entirely innocent.

Paul Spain:
There are great people within Meta and there have been throughout the history, but I think ultimately, you know, there are decisions that are made that probably most of us would not agree with.

Bill Bennett:
There’s enough bad stuff, there’s enough bad stuff we’ve heard about, but even if there wasn’t that, even if that wasn’t the case, it can still slip out accidentally later on. And just to use a case in point, just supposing right now you were active in, say, the governing party in New Zealand, National Party, right, And you were talking about, should we roll the Prime Minister? Because that’s been talked about in the media and everywhere, right? So you’re talking about that on a platform owned by one of these tech giants and somewhere, somewhere in bowels of their AI system, it’s cropped up. Hey, there’s this conversation going on in New Zealand about rolling the Prime Minister. What do we think about that? Do we want him to stay? Do we want to get involved? That’s what can happen. And it doesn’t necessarily have to be nefarious. It can actually happen with AI that can just pop out of the woodwork from someone querying the AI system. So I’m saying that we need to have a mature discussion about everything to do with privacy. And there are people who argue it’s all gone, we’re all in this, we’re all sucked into this, you know, great big monster and it’s nothing’s private anymore.

Bill Bennett:
I don’t know, I think I’d like to be. I would like to be able to go to the ice cream shop without my insurance company knowing that I’m actually eating an ice cream and not green leaves and changing my life insurance valuation because I’ve got a bad habit of eating ice cream. That’s the kind of thing that can come out of losing your privacy.

Paul Spain:
Yeah, absolutely. There are so many things. And look, you know, for those that sort of look through, you know, history, privacy, you know, freedom of the press, et cetera, et cetera, you know, you join the dots up and look at some of the regimes where what we take for granted as normal sort of liberties of life, where those things have disappeared or have been restricted in some way. There are always people in society who end up, you know, not getting fair treatment. And it might not necessarily be you or I, but we end up kind of, you know, unlevelling the playing field.

Bill Bennett:
I think the thing that really woke me up to that was, what, 10, 20 years ago, people like Hugh Grant were having their phone calls listened to. All their voicemail messages were being listened to by journalists from the news of the world. And they knew everything about what was going on in their lives because they could hear their voice. And I just realized that that was kind of a wake up call for just how extreme this can be. And it can be like that for everyone now because AI can do the monitoring and just use his trigger words, you know.

Paul Spain:
So, yeah, yeah, I remember a visit that I had to Russia, going back probably 25 years ago now. But, you know, these different places that we visit and the different, you know, political regimes that are around now or have been in the past, when you delve into some of the regimes that haven’t been well behaved, there are a range of elements. And so one of the lessons that you learn is there should be Some limits and some caution to how much data gets thrown around and made available. And it’s all well and good when governments and people are behaving, but that’s not something that always happens in a linear way. Sometimes changes take place. But as you say, and I think this is the thing we’ve seen time and time again, you collect data that maybe you shouldn’t be collecting and at some point that data ends up in the wrong hands regardless of whether the entity that’s collected it is behaving themselves in other ways.

Bill Bennett:
And the thing is that sooner or later someone’s gonna put behave badly.

Paul Spain:
Sad but true. Alright, onto other topics. Now we’ve got that big one out of the way for today. I’m sure there’ll be more discussion in the future. We were talking about Motorola and their handsets in the New Zealand market recently and I’d been using one of the Motorola handsets or a few of them actually to get a little bit of a handle on them recently. And I guess the key thing associated with Motorola in New Zealand recent times has been if you wanted a Motorola handset and you wanted that hello Moto, you know, tune when your phone rings or what have you, then it was Spark who was supplying that. We’ve got news today that One NZ have now launched partnership with Motorola. And so there’s a range of five handsets from their foldable Moto Razr 60 which is entering the New Zealand market at just under $1,400.

Paul Spain:
So that competes with the Z Flip 7 from Samsung but is a more, I guess, a more value conscious offering. So it’s not exactly the same in terms of thinness and sleekness, but it gives a bit more choice in the market and then a range of other handsets down to the Moto G05. So yeah, a bunch of new phones coming into the market and some, you know, some good competition to have.

Bill Bennett:
Of course, Motorola is Lenovo now.

Paul Spain:
Yeah, that’s right, they’re part of Lenovo. So it’s a Chinese company. But they’re very much their roots.

Bill Bennett:
Oh yes, very much not.

Paul Spain:
Yeah, American and so on. Right.

Bill Bennett:
The thing I think, I hope that happens here is that if I go back, say 10 years, there were perhaps half a dozen plausible brands to buy a phone from. Realistically now you’ve got Apple, Samsung, maybe Oppo for some people and really that’s about it. Motor Road has been here, but only been back in the country for about a year now I think and I haven’t heard a lot of Noise. I mean, I’m not going to say this is the first time I’ve heard of them in a year, but I think it’s pretty close to the first time I’ve heard of it in a year. But I would really like it to be a bit more competition. We want, you know, what we need in New Zealand is more phone brands and more supermarkets.

Paul Spain:
Well, I think there’s a balancing act here, Bill. I would probably, I disagree a little bit in that I think, you know, what we’ve learned or what my opinion is is that competition is good, but if we look at the differences between the brands, if a brand is too small, then it lacks the funds for research and development and delivering good updates and things like that. So the challenge I had with the Motorola handsets that I’ve spent time with is the regularity of the updates they’re getting and the length of time they get those updates for. So if I look at the Samsung Z Flip 7, I think it’s something like seven years worth of security updates or updates that you’re going to get and we’d get about that with its launch. Apple vary a little bit, they don’t make that sort of commitment. But we can look at their history and they’re usually very, very good with updates until such time as they kind of drop the hammer and it’s like about seven, eight. Yeah, that’s there. Yeah.

Paul Spain:
Maybe six in some cases.

Bill Bennett:
The iPhone 6 is just about to drop off this year, so.

Paul Spain:
No, I think we’re way past that. Yeah, okay. Yep.

Bill Bennett:
I don’t think you can’t.

Paul Spain:
But so there is that consideration. And so, yeah, there are challenges and the sort of smaller the brand or the smaller their presence in New Zealand then, you know, potentially, you know, other challenges. Now one thing that did stand out to me is that all of the Motorolas that One NZ or that are being launched in this One NZ partnership immediately proved or supporting the satellite texting capability from their Starlink SpaceX partnership. So just, I think, as you say, it’s good to have the competition. I’m not sure what the right number is in terms of, in terms of brands. I think overall it’s good.

Bill Bennett:
No, I can, I can give you, I can give you some insight into that. I’m not saying, I’m not saying this is the definitive answer. But look, two is a duopoly and that’s not enough. Right. Three is, Three is good, but it could be better. Four is about where you want to be. Right. And that’s when it’s exactly what happened in the mobile sector once 2 degrees came into the market and bought that third competitor in.

Bill Bennett:
That’s when the other stirred things up. Yeah. And that’s when it started getting competitive. And in fact, our prices are as good as anywhere in the world, really now, in general, in places where it’s not.

Paul Spain:
And I hear from the telco world that there’s, you know, at times they’re concerned that the prices are too low, that they can’t. Yeah, well, in fact, they can’t maybe innovate as much as. As they would like because there isn’t enough margin to do that now. That’s, you know, like different people have a different opinion on that. But I’ll also say about foams, we are sponsored by telcos. But, you know, this is. I think it’s good to have these straight conversations around what we think there. And look, I couldn’t answer that question, but it’s one of those things.

Paul Spain:
The Commerce Commission will tell you that it’s competitive.

Bill Bennett:
It is. When it comes to the, the handsets, it’s a little different. You’re right. When you talk about that scale. Right. But Motorola has global scale, so it’s not, it’s not like we’re not talking about a few thousand phones just in New Zealand, we are talking about a lot of phones around the world. But I don’t think Motorola has a very big market share. I look at the reports that come out about who’s selling phones, Right.

Bill Bennett:
And Motoroid is not listed in the top five. Once you go past Apple, Samsung, Oppo, you’re into a couple of Chinese brands which don’t really feature in our market, or they might feature in the one New Zealand branded phone, but they don’t tend to feature in our market. And once you get down to the others in that league table, you’re Talking about perhaps 3 or 4% for all the others put together, and that would include brands like Nokia and so on. So, yeah, the numbers are tiny.

Paul Spain:
And this is the challenge, right. You got. If there are too many brands, then those, they sort of become the bit players and yeah, ideally you want the market share spread out a little bit more because if there’s, you know, for instance, the market share that Samsung have does put them in a really, really dominant position, whereas if there was, yeah, it was a little bit more evenly spread, then we might have a slightly different picture. That said, I think one of the details that has been discussed over the years is the challenge for companies other than Apple to make a profit from smelling selling smartphones. Right. And even at times it seems like Samsung doesn’t do brilliantly on profit from their phones. Certainly when you compare them to the sort of profits that Apple make.

Bill Bennett:
Well, Samsung make more money from selling screens to Apple than they make from selling their own phones. That tells you everything. And the other thing is that the brands other than Apple all use the same operating system, which takes a lot of the cost out of it. So four, Motorola, they don’t have quite the same cost of Apple faces of maintaining their own software. So that’s. I mean, obviously there’s software on top of Android, but they don’t have quite the same level of cost. But yeah, you’re right. But look, I think the thing is that four is okay.

Bill Bennett:
I think once you get down to sort of brand number 10, you’re going to run into problems, perhaps even five or six. But I think four is okay.

Paul Spain:
Yeah. All right. So moving on. The privacy, privacy, anyway, New Zealand, I’m going to call them, the Privacy Commissioner has introduced or is introducing a binding code regulating biometric data use. And the idea here is to mandate transparency, limit intrusive applications, and require organisations to assess necessity and proportionality and aiming to sort of, I guess, you know, balance out what’s possible through, you know, the innovative uses of biometrics with the protection of people’s personal data effectively. This is interesting. Bill, what are your thoughts? Are we moving in the right direction with this guidance or as a country actually, do we need to be pushing a lot further down this track of data privacy?

Bill Bennett:
There are different levels of biometrics. I think the one that’s probably the most concerning is the facial recognition and the fact that people go into a supermarket and they look a little bit like someone who’s been banned from supermarkets. And it’s embarrassing apart from anything else.

Paul Spain:
And.

Bill Bennett:
I just think some common sense is required with these things. And it looks like what the Privacy Commissioner is asking for is some common sense to be used about these things. I don’t know if there are any abusive applications that I’ve heard of. I mean, I think, as I say, the most abusive is things like people getting chucked out of a supermarket because they look like the wrong person. And that does happen. But there is one thing that concerns me about that and that is that some ethnic groups seem to get a lot more false positives than others. And I think that’s to do with the way the data’s trained and so on. But it could be inherent in the algorithms and that.

Bill Bennett:
And I think that’s gotta be. We’ve gotta make sure that that’s working properly.

Paul Spain:
Yeah, I think what I’ve heard discussed is that with darker skin tones there’s maybe not, and this is a reflection of the camera technologies and so on, that they’re not able to differentiate as well. And so you potentially get people that actually don’t look as alike as you might expect with another skin tone to get picked up by the system as maybe being the same individual. But I think that the risks are going to be multiple. We know that AI is not perfect. Even our simple use of generative AI through ChatGPT, you get, you get dramas. And when individuals and technology label somebody a criminal who isn’t, that’s a major problem. And some of these use cases that at the moment we might think are great, maybe in a period of time we will decide, no, this is not appropriate use of the technology. And I guess my thinking is we do need to start stepping back a little bit more and looking at some of these use cases.

Paul Spain:
And it’s not just the facial recognition. There are companies collecting data around the vehicles that go past a particular billboard and they’re capturing the license plates. Right. You collect all that data up and it goes back to what you were talking about before of the equivalent of, you know, GPS type data. And if we don’t get, you know, draw the lines correctly at a legislative perspective, you know, we are going to end up with, you know, with big unintended consequences from the use of this technology.

Bill Bennett:
I think that’s true. I think that’s very real. But I think that what the privacy Commissioner is basically saying is, you know, come on, guys, call it, use it sensibly and so on, and you know damn well that there’s going to be people out there who won’t.

Paul Spain:
Yes, yeah, and I, yeah, I saw commentary it might have been in RNZ’s coverage suggesting even what foodstuffs has done, which, you know, I thought was at the, you know, wiser, more sort of balanced end of the scale, that there might be, there might be some learnings for them. So what we might have accepted yesterday, we might not feel in the future that that is actually appropriate. And look, I think it’s good that we step back, we have a look and we see the direction these things are traveling and in some cases we need to change that direction now. Big news out today, Spark NZ selling off, what is it, 75% of their data center business. This is really interesting. I think I’ve been having a few discussions recently in A range of contexts in relations to the role of data centers in New Zealand. We’ve got the hyperscalers and the big players all announced their local hyperscale data centers.

Bill Bennett:
You’ve got projects like Data Grid and.

Paul Spain:
You’Ve got Data Grid. You’ve got more locally or regionally owned ones. And in fact even some of the hyperscalers are working on a partnership type basis rather than necessarily owning everything in terms of real estate and so on themselves.

Bill Bennett:
There’s a sort of outsourcing element. I remember talking to Jody Hodson, she said that some of the hyperscalers have been using their facilities. Look, the thing about the data center business is that it’s huge, but it’s not particularly high margin business. And if you think back to when Spark demerged from chorus or Chorus demerged from Spark probably is a better way of putting it. It looked like Spark was going to be handling the, the higher margin business. You know, they got into things like Spark Sport and there’s a business called Matter which does development work and there’s Curious and so on. These things are all meant to be higher margin businesses and digital services businesses. They haven’t really been, I mean they’ve not been, they’ve not always worked right.

Bill Bennett:
They’ve not been sort of dreadful. It’s just, it’s just that the getting those higher digital margins has proved harder than it might have looked at the time of demerger. The one area where they had seemed to be making real progress was with data centers. But the problem with data centers is the amount of capital that they require is huge. Investors start to get nervous about getting a return on you putting in huge amounts of money. It’s quite possible that the announced projects, data center projects in New Zealand are probably more than we actually require as a nation. We were talking before we came onto air about how for example, both Amazon and Microsoft have made huge announcements about spending vast sums of money on data centers. But not all of them have emerged.

Paul Spain:
No. Well, you look at the US market especially and a lot of the data, data center announcements and even partly built data centers there have just gone on ice. And you know, this has been going on for months, maybe over a year now. So you do sort of start to get a little bit curious around how this particular area stacks up.

Bill Bennett:
Well, the thing is there is a demand, there clearly is a demand, demand for cloud services that you’d get from these places.

Paul Spain:
But.

Bill Bennett:
Matching the supply and demand is not easy. It’s not for the faint hearted and it’s risky. There’s an element of risk with building these things. It looks like Spark has done yet another sort of return to its core, its business focus. The thing that bothers me about this is that when Spark sold its tower network, the talk at the time was the money would be invested in building. Some of that money would be invested in building data centers. I think what we’re seeing is, we’re seeing Spark still really, it’s got a path to navigate through its sort of future from where it was when it, when it demerged, which was about 10 years ago now. In fact, more than 10 years ago now.

Bill Bennett:
It’s about 15 years ago now. It still isn’t clear where. That’s. Where it, where it’s going long term. I think it’s. I think there’s, there’s a kind of destination in sight, but it’s not, it’s not crystal clear. Whereas the other two telcos here have a much clearer picture of where they want to be. And I think that part of that’s to do with Spark scale.

Bill Bennett:
It was a much larger organisation and it had more irons in, more fires, and it’s been putting some new ones in and pulling some out.

Paul Spain:
It’s not an easy business. No, it’s a bill. I think. Yeah. We have to acknowledge today that I guess every business is always at risk of disruption from new technologies and changes. And just because a business has been very successful in the past or has a big scale, that doesn’t necessarily tell you where it’s going to be five or 10 years out. And this is kind of part of what a modern enterprise needs to do, is to be experimenting, be looking at the new opportunities. But of course, as we know, with startups, not everything comes off.

Paul Spain:
And yeah, this has probably been part of the challenge for them recently is that not everything that they’ve chosen to get into ends up working out well. But I think it’s important for New Zealand as a country that these big entities that are critical, you know, to the country, that they do keep innovating and relooking at things. And I guess this move of selling off, you know, some of the data center business is part of a chance for them to refocus and maybe, you know, move investment around in some other areas.

Bill Bennett:
I mean, they’ve been quite successful with their Iot business, for example, and you don’t hear a huge amount about that.

Paul Spain:
And part of being the kind of the big dominant player is everyone else is always gunning for your market share.

Bill Bennett:
In one form or Another everyone does it.

Paul Spain:
Yeah, yeah, yeah. So everyone’s looking and everyone’s coming after you. So yeah, it’s a challenging space to be. Well and actually, you know, on that note, it probably has time to have someone from Spark back on New Zealand tech podcast and hear some of the things. Cause there’s always so much innovation going on. But it is a tough market out there right now, you know, both locally and internationally. So, you know, we don’t expect amazing things really out of any too many companies.

Bill Bennett:
Sometimes do expect too much of some of our big tech firms as well.

Paul Spain:
All right, yeah. So there’s all sorts of places we could probably go on that discussion. And data centres. And how many do we need or don’t we need in New Zealand? How important is it to have the hyperscalers? I will say I’m very pleased that Microsoft have got their data center business running in New Zealand. I think that’s really good for us and I am hopeful that the others will come through AWS and Google, but I guess it’s a wait and see. And look. If you’d asked me before Microsoft or aws, you know, made their announcements, you know, we go back 10 years and ask me if we were likely to see data centers from those companies in New Zealand. I’m not sure it was something that I was expecting would necessarily happen.

Bill Bennett:
Well, you know, go back 10 years. The thinking was was that companies like Datacom and Spark and so on would have some facility for those hyperscalers to serve their customers in New Zealand from locally. So which I think has happened as well.

Paul Spain:
Yeah. Now we’re coming down to the wire bill, there’s a lot more we could delve into. One thing that caught my attention and you said this has been going on for a while. When we chatted earlier, I just saw this coming through online. Folks were talking about in some cases SpaceX charging a US $1,000 demand surcharge for those wanting to sign up for Starlink. So, you know, if you’re trying to get it in an area that’s already, you know, I guess got a level of congestion, then their way of turning down the congestion and turning up their profits is a surcharge. Which I guess if we would put that in New Zealand dollar terms, you know, somewhere between $1,500 and $2,000, depending on whether there’s GSD and so on in there. Now, I’m not aware of this happening anywhere in New Zealand, but if anyone does come across it, please let us know to keep us.

Bill Bennett:
Now this is Something I know quite a bit about. The thing about Starlink is that although it’s billed as a global network, and it is a global network, I mean, it’s got customers all over the world. The density of their customers is particularly high in parts of the us, Right. So, I mean, I can’t tell you the exact numbers because it’s constantly changing, but at one point, I think 25% of all Starlink’s customers were in a relatively small part of the usa mainland. Right. So in those areas it’s congested, because one of the things we tend to lose sight of using is the US has actually got rubbish broadband compared with us. I mean, if you’re in a small town in New Zealand, if your town’s got traffic lights, you’ve got fiber, right? If you’re in a small town in Midwest or Arizona or somewhere, you don’t. You’ve got rubbish broadband.

Bill Bennett:
So Starlink is much more filling the gap in parts of the US than it is here. And it’s so popular that it’s congested. And as they chuck up more satellites, that goes. But it’s. The demand can be greater than the supply. What traditionally carriers have done is if they’ve done things like they’ve put data caps in, or maybe they shape the traffic so that it’s. So you get lower speeds or whatever, but they don’t seem to do that. They think they can do this business of charging fees.

Bill Bennett:
The thing is, is that as of last week, Amazon is now talking about when Project Cooper will be live, right?

Paul Spain:
Yes, yeah, yeah.

Bill Bennett:
And it’s going to be live in Australia from the middle of next year. So we’re talking about 11 months, maybe 10 months out, being live there. And they said that it will be live in other parts of the world earlier than that. There should be. If the launches go to plan, there should be enough satellites in orbit for services to start in December. They won’t have anything like as many satellites as Starlink, but they don’t need them because they’re on a different. They’re operating on a different scale and a different model. They don’t need to have quite so many.

Bill Bennett:
And also they’re not going to have anything like as many customers anyway, so the congestion is not going to be an issue. There will be enough for a worldwide network round about the end of the this year. That’s competition. And we’re back to that competition thing again.

Paul Spain:
Yeah, I mean, this is a good thing, right, that Amazon are launching and having two. What I’m picking will be pretty decent satellite broadband options in the market in.

Bill Bennett:
The near future, probably more in the slightly longer future.

Paul Spain:
It’s going to be very interesting to see how that plays out and what is the impact on our New Zealand telcos when there’s even more pressure on those sort of prices. Now look, I think, you know, Kuiper is going to probably move a whole lot slower than Starlink. They have announced for Australia NBN Co, which of course is, you know, the national broadband network who have been through their ups and downs and their challenges over, you know, over the last 10 years, decade or so. But having that deal in place means it’s going to get marketed probably really well in the Australian market. Because you know, this is the entity that effectively provides the underlying pipes for most Internet connectivity in the Australian market. From my knowledge, you know that a bit better than me.

Bill Bennett:
Yeah, well it’s the wholesale, it’s a state, it’s a state owned wholesaler. It’s pretty much like Chorus, except it’s still government owned but it’s like Chorus and the other fiber companies and then some because it does other services. There’s a couple of things here, right? One is that Amazon’s model is more about partnering with deals like this.

Paul Spain:
So do you think Bill, that we’re going to see, and we’ve already seen this to some degree but we don’t see much of it is the likes of Spark, the likes of 2 degrees, the likes of 1 NZ, you know, offering behind the scenes if you look closely enough, or utilizing elements of Starlink right where they find it appropriate. Do you think we’re going to see Amazon Kuiper under a different name from all of those telcos in the New Zealand market?

Bill Bennett:
Pretty much my understanding is they’ll be selling direct and through partners. So in Australia you’ll be able to go direct to Amazon or you’ll be able to go through your. Not NBN Co but through a reseller. And look, one has that arrangement with Starlink, right? And I think you can draw the conclusion from that that someone else might have a relationship with Amazon. I’m not sure, I mean I haven’t heard anything concret but I know that they’re all talking. I think we will see that, yes. But I think the other thing is that there will be price pressure on Starlink but more than that, they won’t be able to get away with things like a thousand dollar congestion charge anymore once those other satellites are up.

Paul Spain:
Well, I don’t know because if both networks are congested and They’ve got different models and different pricing because you go and try and find an Uber today and it’s a busy time, then you’ve got crazy prices from Uber, you’ve got crazy prices from the competitors. Right? So, I don’t know, I’m curious. Okay, one question, and we’re not giving financial advice here, or certainly not any personalized financial advice, but if I were a shareholder in a company who was responsible for broadband infrastructure, should I be worried around a future scenario where we have multiple satellite broadband providers where the competition brings the price down? So at the moment you can get a Starlink connection, I think in New Zealand, off the top of my head, $79. If that were to drop to $39 and there was enough competition, what would that do to the choruses who are providing fibre? And of course we know that, look, fibre is the gold standard when it comes to broadband from a reliability, performance, latency perspective and so on. But if, if we had that level of competition and the prices dropped that low, which I’m not sure is likely, but just, you know, throwing it out there.

Bill Bennett:
Okay, what would that mean? Okay, this is my specialist subject.

Paul Spain:
I know, I know. That’s why I saved it for you.

Bill Bennett:
Okay, the first thing is the real threat isn’t fiber. The real threat is fixed wireless. Okay, that’s the first thing. Fixed wireless is more threatened because it doesn’t have the bandwidth. If you’re on a fixed wireless, even if you’re on 5G fixed wireless, you probably get better bandwidth from Starlink than from the 5G fixed wireless. @ best, they’re comparable. But if you look at the measuring broadband New Zealand numbers, you’ll see that Starlink’s probably a better bet than fixed wireless from performance point of view.

Paul Spain:
Although I think it is worth mentioning you made a comment earlier around, you know, throttling of performance and so on. What we have seen is Starlink performance kind of drop off and depending on the price points, they’re a different mechanism in terms of performance. So in one case we put in a business connection with Starlink and the price is, you know, to guarantee bandwidth, there’s three grand fixed IP address and so on. You want that business quality connection. Actually, your prices are pretty high and, and when we talk about these two price points in the New Zealand market for consumers at, what is it, around 160 and around $79 at the moment, a lot of people would find very little difference between the two. But I think what’ll happen at the lower price points is, you’re going to see the quality, the performance and so on, that’s going to drop off. So, you know, we’re not talking about apples to apples comparisons.

Bill Bennett:
I think they’ve changed the name of it now, but when it first came in it was called the deprioritized account. Right. Which tells you everything. Basically it means if the other guys are busy, you’re not going to get it. And you know what that means? That means if there’s a test match on the television, right. And you’re on the deprioritized plan, then your neighbors are going to be watching for all blacks and you’re not, you know, it’s that. So, so I, so for that reason alone, I think think that the terrestrial ones, yeah, it’s going to be a challenge, I think, but I think it’s going to be much more of a challenge for the fixed wireless than it is going to be for fiber. I think fiber is in a different place.

Bill Bennett:
But what I do think, where I think there is an implication is that it does also mean that fiber isn’t going to go to 100% of New Zealand. That there’s going to be places where it’s just not economic. Oh yeah. And it’s probably, probably the last 5, 6, 7% of the country won’t ever be and satellite’s just going to be their thing. And I think perhaps if you look in 15 years ago you might have thought that eventually the fiber would get everywhere that copper went. I don’t think that’s, I no longer think that’s the case. I think people, if anyone is in town and they’re using Starlink and they’re on the fiber network, then the people are gonna do that. That’s always gonna happen.

Bill Bennett:
But it’s not a wise decision. I mean, I don’t know if you were aware, but a couple of weeks ago Starlink was out for a few hours as well.

Paul Spain:
Yeah, yeah, it was a significant outage and you know, that’s something Brett Roberts and I discussed that and yeah, I mean a lot of people could be massively impacted if SpaceX don’t get their head around and solve that type of an issue. Now I’m sure they’re going to be working really hard.

Bill Bennett:
Well, there’s another issue as well and it’s this, right. The economics of it is that SpaceX is now making a profit right, at the prices that it’s, at the price structure it’s got today. But it’s always going to be more expensive to run a satellite Network. Because if you’re running fiber, Nick, once the fiber’s down, that’s down for 100 years. Right. Satellites, in theory, they can last eight years. In practice, they’re lasting about three and a half. That’s what’s.

Paul Spain:
Yeah, you gotta keep throwing more ones out there, so.

Bill Bennett:
And every time. And the thing. And there’s a problem where there’s not enough launch spots. Sorry, not enough launch slots to get all the satellites up. That’s one of the reasons why Amazon’s been slower, because they couldn’t get the launches to get it up earlier.

Paul Spain:
Come on, Rocket Lab.

Bill Bennett:
Sorry.

Paul Spain:
Come on, Rocket Lab.

Bill Bennett:
Yeah, well, there’s the cost of those launches, there’s the fact that they degrade. The other thing is that there’s a physical limit to how many satellites you can get into orbit. Right. We’re nowhere near it. I mean, potentially you could get a million satellites up there, but there is a limit. But once the more you get up there, they have to start maneuvering to not hit each other, which actually shortens the life of the satellites because they’ve got to have fuel and so on to do that. So for all sorts of reasons, the economics of the satellite network shouldn’t really be competitive with terrestrial communications over the long term. But the thing is, it’s exactly what Uber did.

Bill Bennett:
Uber came in dirt cheap, wiped out an entire ecosystem of transport options and whack the prices up. And I can easily see satellite companies coming in dirt cheap, wiping out entire ecosystem of wisps and smaller telcos and so on, and then whacking the prices up once they’ve got. They don’t have to have a monopoly. It can be a small number of them.

Paul Spain:
And this is where I think, as I guess looking at some of these challenges from a legislation sort of perspective, your governments have often sort of sat back and look, in a lot of cases, you need to. Cause you don’t know what to do and you can’t predict everything. But there are enough instances where countries like New Zealand, we probably could be a little bit more agile in terms of how we draw lines. Now, just quickly going back to Starlink, I’ve just had a. Had a look at their current offer, and they push you very, very hard into signing up for the highest plan. So when we talk about a $79 plan, you go onto their website, they’ve got a deal on a dish, and then you go through to take advantage of that deal, and they’re offering some discount, but the monthly discount is off their $159 plan. So they make it hard for you to get there. And they are in fact right now, certainly for the, for where we’re sitting in the studio, there is a demand surcharge, but it’s a fraction of the $1,000 USD when we saw it’s $150 charge.

Paul Spain:
So these things, I guess they’re working out their techniques for how to, you know, milk us and we need to stay astute to that. But a scenario you’re talking about where say a Starlink were to come in and try and break the market in a particular country. And bear in mind, they haven’t had to, you know, they haven’t had to pay for spectrum in the New Zealand market like the mobile carriers do for 3G, 4G, 5G spectrum. They’ve come in basically nothing because the spectrum for satellite is generally distributed on a global basis and they just waltz in and operate. So there are some of these areas we may actually need to rethink how.

Bill Bennett:
They operate is the. I just wanted one last thought and I think we probably should stop talking about Starlink. But one last thing is sovereignty. We don’t have sovereignty with Starlink. We do have sovereignty with the terrestrial services. And where that’s important is, and it’s been shown to be important is with Ukraine. Right. Musk has turned off the Starlink satellites in Ukraine repeatedly because they’re using them to control drones and they things.

Bill Bennett:
And he’s been turning them off and he can do that. A whim. So remember a few weeks ago, or not a week, I think it was two weeks ago when we heard that suddenly we got a 15% tariff on everything because President Trump doesn’t quite like things about New Zealand because we sell more to America than they buy from us. They kind of arbitrarily put a 15% tariff on. We are subject to the mercurial whim of a billionaire who has no interest in New Zealand and no interest in our welfare or anything. He could do what the hell he wants. And if he was to wipe out the competitive layer from a market, even if it was to have a huge market share, he could start to dictate what he wants from our country in return for us having his satellites.

Paul Spain:
I mean, it’s, it’s certainly, you know, it is a possibility that as we’ve seen, other things dictated in other parts of the world that actually, you know, an American company is told they can no longer provide satellite Internet services to the New Zealand market. Right? And that service gets turned off. Now there’s all sorts of these sorts of challenges with geopolitical situations. And, you know, this is just, you know, one of many considerations. But it is good to actually just step back and think about some of the possibilities and think as a country, how do we navigate this? Right. How do we minimise our exposure or balance our exposure to risks, you know, that come from varying, you know, governments that are much more powerful than our own. Right. And there’s a lot of things that we can’t dictate, but there are individuals we can.

Paul Spain:
Yeah.

Bill Bennett:
And we’ve all seen James Bond movies. I mean, I’m not saying that’s realistic, but I am saying that there’s a risk that we have to think about. And it’s no accident that countries like Europe, China and India all building their own satellite networks because they don’t want to be in that position. We can’t really do that in New Zealand. We can’t build. I mean, we’re small, you know, we don’t have that ability.

Paul Spain:
Yeah, and the types of satellites that we, you know, that we’re talking about here, you know, they’re not geostationary. The geostation ones are much further up. They don’t provide this type of capability. So if you wanted a New Zealand owned network, it would be a big global network. Right.

Bill Bennett:
Effectively, it’s not realistic. So the thing is that there are. What I’m really saying is, I mean, we’ve gone over a number of topics, but the thing is there are issues involved there that at some point we’re gonna have to start thinking about.

Paul Spain:
So I think my encouragement is to listeners is support Kiwi firms, let’s invest and support, let’s get behind them. Whether it’s a rocket lab or it’s our local players in the telco business, the supermarket business, et cetera, et cetera. The global giants are coming, right? And they, and they will keep coming. So, you know, today, you know, our locally owned stores don’t have a super, super high level of competition with, say, Amazon and whatnot. But there are, you know, we’ve obviously got these marketplaces, AliExpress, you know, and TEMU and so on. All of these things that, you know, are taking, you know, taking things off locals and sometimes for a fair reason, because they’re, they’re doing something better than what our local entities are doing. So we’ve got to keep innovating. We’ve got to outmanoeuvre those local, the international players where we can.

Paul Spain:
But there is also a reality in that, you know, many of those companies will keep growing and will, you know, ultimately do very, very well in our market. And some of our local companies, you know, won’t be around for forever, too, but we at least get to be part of that decision.

Bill Bennett:
That’s right. One last. Well, I know I said one last thing before, but one last thing I think I really want to make clear is that there are going to be people where Starlink is your only option. And, you know, that’s fine if that’s the case, that’s fine. But if it’s not your only option, then I think you need to think carefully about whether that’s the one. Whether you want to put all your eggs in that basket.

Paul Spain:
Yes. Something good to ponder. Well, thank you, Bill. Always, always a pleasure to catch up and delve into some of these discussions with you. We’ve got into some pretty interesting and deep ones on this occasion, which I’ve really enjoyed. Obviously, there’s a lot more happening on the tech front globally, and we’ll be picking up again on some of those other topics on our next episode next week. So thank you everyone for joining and listening in to the NZ Tech Podcast today. Of course, a big thank you to our show partners, Workday, Gorilla Technology, HP, Spark, 2degrees and One NZ.

Paul Spain:
We will, of course, be back again with you next week and feel free to drop us a message if you’ve got ideas for folks who we should be chatting to on the show or topics that you’d like to hear us delve into. Thank you, Bill.

Bill Bennett:
You’re welcome.