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Lessons from NEAL

01 Feb 2010

With the government poised to invest $1.5 billion in a broadband network, and with fibre optic cable to schools a top priority, it’s timely to look at NEAL – the North Shore Education Access Loop.

Built by Vector with a combination of private and public money, NEAL was championed by the North Shore City Council. As the council’s economic development manager Roger Matthews explained at the time, “The government has brought $4.5 million to the table, Vector has brought $2 million to the table and the council has brought leadership.”

Three years later, Matthews says the council’s objectives have not been met. Of the 45 schools connected to network, only 24 are actively using it. The council, which was also connected to 1GB pipe, is limited by a 10MB connection from its supplier, Revera.

Matthews says there are lessons from NEAL for both local and central governments looking for social outcomes when partnering with private organisations such as electricity companies and telcos in building a fibre network.

“Increasingly I think that our problem is not an engineering or infrastructure problem, it’s a marketing problem,” he says. “Whilst we absolutely need fibre, I think of the old line of ‘build it, they will come’. Well, we built it and they didn’t come.”

But, says Alan Curtis, North Shore schools are taking advantage of fibre connectivity. He’s the chair of a newly incorporated society, the NEAL Education Trust, and the chair of the Westlake Girls College Board of Trustees.

According to Curtis, one of the problems with NEAL was there was no money to show teachers how to utilise the fibre connection. “It’s not reluctance; it’s ignorance,” he says.

One of the first achievements of the Trust has been to secure funding for professional development from the Ministry of Education in 2010.

45 schools

Vector wholesales the fibre service at a Layer 2 level, but if each school has its own ISP, it can mean they are unable to connect to each other within the NEAL network.

As each school functions as an autonomous entity, with its own budgets out of which ICT is purchased, to date there has been little or no aggregation of demand. “You’ve got 45 schools with 45 boards oftrustees, making 45 purchasing decisions independent of each other, and they’re chasing 100 vendors around New Zealand, all independent. If you could get people to make the same decision at the same time, they’re certainly not going to make any money,” says Matthews.

Yet, while it might be technically possible to accommodate multiple ISPs on Layer 3 services, Matthews has found the ISPs themselves are unwilling to provide the service without also charging a connection fee – in other words, they want to retail to the end-user both Layer 3 and Layer 2 services.

However Curtis says that schools are learning about the power of aggregation, with 10 schools now connected to the same ISP. This arrangement has meant that the individual schools only pay for thebandwidth they use, when they use it – over the Christmas holiday period the bill is almost nothing, while in the peak teaching periods it rises dramatically, but Curtis says that schools need to accept that ICT is “just the cost doing education”.

He predicts that over time all schools on NEAL will be served by one or two ISPs. He points out that telcos and other ICT providers need to understand that schools, in particular secondary schools, are larger than many New Zealand businesses. The average high school principal on the North Shore is managing an annual budget of between $12 million and $18 million. In one school they required backup storage for three terabytes of data.

Service providers not interested

The connection fee that schools pay Vector is around $200 a month, so one of the obvious uses Matthews envisaged was a VoIP connection.

“No school in the country would have less than three commercial phone lines. So if you could cut the copper, you’ve made your $200 then and there,” he explains. “And two years ago we went to the market and asked for expressions of interest for fibre-based IP telephony in schools, and got nothing. The best expression we got was from WorldxChange; it was toll-only on the copper. No one wanted a piece of that business – not one.”

But Curtis says that schools already have PBX systems, and are unlikely to want to ditch them until they need to be upgraded. “Schools don’t spend money unless they have too,” he says.

Unwillingness to outsource

One of the greatest benefits for schools with fast fibre connections is to outsource their servers. Matthews says if a school only uses 10% of its server capacity there’s a huge potential for hardware savings on a virtual network – but the schools themselves have, to date, been reluctant to outsource.

Curtis says the NEAL Education Trust is currently working with data centres to outsource school servers. He says in Westlake Girls College there are about 25 servers, which are currently underutilised.

Demand and supply

Matthews says the large secondary schools are using the capacity that fibre allows, but they aren’t using it any differently to a copper connection. And therein lies the dilemma:

“No one is using fibre-based services because no one has seen them being used. Because no one is using them, there’s nobody selling them, which means there’s no demand – the whole thing is a circular argument.”

Matthews likens it to being the first person to get a fax machine: it’s of no use until someone else buys one.

Again, Curtis says it will take time for schools to understand what fibre can offer, that while those connected are using the connectivity it is probably not in the same innovative ways they will be using it in future.

Data caps and the cost of bandwidth

One of the frustrations for Matthews is that while the North Shore City Council is connected to a 1GB pipe, it can only access 10MB for its 750 staff members, because that’s all the bandwidth it can afford to purchase from its supplier, Revera.

“I sit at my desk and we’re on optic fibre – no comment whatsoever on the Vector network – but because we’re sitting on a 10MB gateway, quite often I change to my Vodafone card because it’s faster than fibre.”

Part of the reason bandwidth is so expensive is the cost of international connectivity, which in turn leads ISPs to meter out the supply through the use of data caps. This becomes a severely limiting factor if you’re connected to a fibre network.

Matthews says if it’s not cost-effective for a council to connect at full speed, how will you ever convince a consumer about the benefits of fibre to the home?

“If Vector said we’ve got fibre-optic close to your place, we’ll connect you this weekend, what would I do with it?” he asks. “Use my data cap in 38 seconds?”

Curtis agrees that one of major issues is that “NEAL is throttled at 10MG”.

Lessons from NEAL

Matthews remains a passionate advocate of fibre, and it’s obvious he’s proud to have been part of a fibre network that’s connected 45 schools, but he’s concerned about the slow uptake of services and the impact this might have on future government-funded networks.

“I have this nightmare of them getting 10 months into this, finding that the uptake isn’t there, the Minister of Finance reading the political winds and pulling the plug.”

But Curtis says that uptake is occurring; it’s just not as fast as people might like. So the greatest lesson from NEAL may be patience.

“We must all have an understanding that the process will not be overnight, and we have taken time and it has been a little like watching grass grow, but the grass is growing and it’s strong.”