The internet price gap, and what it means

Last updated 11:21 07/10/2011

I was standing in Aro Video in May awkwardly juggling six DVD cases when I had an odd epiphany.

It felt strange standing in a video store, the plastic edges of the cases digging against my elbows, and thinking about how quickly the DVD had become irrelevant. I can remember being struck by the endless futuristic capability of our first family DVD player. It had surround-sound speakers. Now, I was struck only by how unusual and large this physical space was housing all of this data. It seemed... pointless?

I was standing in the middle of the store, I felt awkward and clumsy. I felt watched, my choice seeming increasingly impossible. I left empty-handed.

I generally detest all patronising references to New Zealand as a South Pacific backwater that lags behind the rest of the world in technology. But for the first time I saw a clear and glaring gap with America in how we receive our information.

Netflix1Standing in the middle of Aro Video it dawned on me that living abroad, I hadn't been in a video store for months.

Scratch that: I haven't even seen a video store in Boston. The Boston Globe was running "the death of video store" articles two years ago.

I pay $16 a month to Netflix to rent and stream movies and television to my heart's content. The selection of titles available for streaming is uneven, but between Netflix, Hulu, individual network websites and some legally nefarious downloading, I will not want for a video store again.

Video stores in the USA survive only in small towns. LP and I rent movies when we're staying at her parentS' house in Grass Valley, a town of 15,000 a few hours northeast of San Francisco in California.

When the quality of broadband Internet dips outside of the cities, video stores seem to become noticeable again.

Now, what media people use to legally consume information is of little social significance. It is a first world problem. (I guess the demise of the video store does take one job off the "enviable student occupations" list.)

But it got me thinking about how much the cost of bandwidth in New Zealand was holding people back in new media innovation and technology.

In Boston I pay less than 50 New Zealand dollars a month for unlimited broadband bandwidth and an unlimited data plan on my phone.

Poking around online, I see that the top Telecom plan, offering 60GB of bandwidth, costs $105. On Vodafone's top $150 iPhone plan, customers are offered only 500MB of data.

It's a huge disparity.

Netflix2Netflix would break the New Zealand Internet. American studies have estimated that Netflix streaming takes up 20 per cent of primetime bandwidth use. Watching high-definition television on Netflix chews up about 1GB of bandwidth an hour.

American media innovation has realigned socially how people receive information and my expectations had shifted accordingly. While home in May, these differences all jumped out at me.

From my iPhone I send email, listen to NPR and all of my favorite podcasts (WTF FTW!), I read the New York Times, the Economist and pick up all of my RSS news feeds, as well as streaming a range of video.

My computer is now my television, video store, music player, shopping portal and telephone.

With such a price on bandwidth in New Zealand, the level of media innovation has been microscopic in comparison.

Until high-speed broadband upgrades take hold and broadband caps are removed, New Zealand will always be behind the cutting edge.


The discussion about tipping was great and prompted much discussion in our apartment.

I'm not going back to the well, but I was surprised, fascinated even, by the huge tough streak running through the remarks. 

I personally, and in no real disrespect to anyone who disagrees, think it is a bit misguided to be so cruel towards wait staff. The "I work in IT and nobody tips me for doing my job" argument is invalid. Nobody makes $2 an hour in IT.

Owners could also start paying their staff a full wage, but they wouldn't absorb those costs, you would.

I just wanted to come and say: don't hate the player, hate the game, and when someday some waitress tells me about how miserly her New Zealand customers are, I think I have a sense of now of how deep our national resentment of tipping runs!

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Post a comment
Bob   #1   11:39 am Oct 07 2011

It seems is the new Amazon of New Zealand and really seems you can buy anything there for half the price it is in a traditional retail store.

So I guess if they can deliver a good service you will see the end of the high street very soon

Bob   #2   12:17 pm Oct 07 2011

Sorry it looks like you have to get most of their stuff from the International section.

Regan   #3   12:27 pm Oct 07 2011

The U.S net experience is emulated in Australia, tho at a slightly slower pace. I pay $60 a month for 200GB at the fastest speed available. I could get higher allowance plans at roughly the same speed for less with other vendors but because I have a pretty good home phone/mobile/ipad/internet bundle deal I'm more than happy with what I have (I struggle to use half my allowance in a busy month). Even my 150GB Ipad plan is good for 12 months. When I was back in Wellington I was shocked at what sisters and friends were paying for nowhere near the equivalent.

Video stores here are mostly dead too (I mentioned in another thread yesterday that you have to go out to the Outer West suburbs, 60-70kms from the Sydney cbd to even start seeing one). Streaming via Apple TV, BigPond T-Box, TIVO, Playstation store or Foxtel On-Demand etc is really the preferred method these days. We don't have Netflix yet (well, we do, but by free-delivery post, their streaming service is coming soon apparently) but I have proxy access to Hulu which I stream to the living room TV. Then there's always downloading...

I still buy physical movies on bluray (hardly ever dvd), but then I'm a movie collector/junkie & AV purist, and tbh Amazon U.S/UK get all my custom.

I think SKY TV is emulating what Foxtel delivers, tho from what I've seen it appears to be constantly 2-3 years behind. That may be their plan, see if the service goes well in Oz, then eventually buy the tested & proven functionality for NZ consumers.

Ms. Peach   #4   12:31 pm Oct 07 2011

Another great entry: this difference has introduced several difficulties for me as an American living in New Zealand.

a) Because I feel like an elitist when I raise the issue to New Zealanders. If anyone is to "blame" it's the telecommunication companies not the consumers, but I don't know what it's going to take for New Zealand to catch up with American technology. Internet isn't the only technology drawback either- it took some time for me to get adjusted to never using a clothes dryer. We had one at my old flat but it was off limits. This seemed so odd to me but my wanting to use it seemed gluttonous to my flatmates. Oh cultural collisions.

b) Because my family and friends back home don't readily understand the differences in technology. The internet at the flat is unreliable and I know my family gets impatient with the frequent dropped calls. I also had to explain to them that I can't hang out on Skype for hours... it uses a lot of data! And I definitely monitor my data use on my arm-&-a-leg iPhone plan that only gives me 500mb of data.

As you said it's a first world problem so I feel silly complaining about it. I guess it's easier to complain when you downgrade from a convertible to a mini-van.

Bob   #5   01:14 pm Oct 07 2011

And don't believe the excuses Telecom gives you either. They could do unlimited if they wanted but the current systems makes them way more money!!

And whats with the if you use more we charge you for it but if you don't use it we don't compensate you for it.

And why do they pay bonuses and massive salaries for running a monopoly it can't be that difficult.

Crispy   #6   01:51 pm Oct 07 2011

Hmmmm, could it be the telcos keeping things like netflix and hulu out of our reach.

Interesting post. I personally really love the old experience of darkening the room and sitting down in front of the tv to watch a film. When 'Alice' reopens its store, they are guaranteed plenty more business from me - got my big IMDB watchlist haha.

Karl   #7   02:57 pm Oct 07 2011

NZ's cost is high because there's only one data cable that feeds the information to the country, meaning only one company dictates the speed and price of the internet being on-sold to telcos. This is why Sam Morgan is trying to get investors involved in building another data cable from NZ to the States. See a little bit of information here:

AndiNZ   #8   04:12 pm Oct 07 2011

Netflix and Hulu coming to NZ would solve the problems we've been having with our broadcast networks - shows that never air here, shows that are years behind, chopping and changing of schedules with no notice... everything we've been complaining about over on the television blog.

But I take your point that these services do require large volumes of bandwidth, and yes, that is expensive here, compared to other countries. The government has this high-speed internet plan under way, but it will be so long in the implementation that I think it will be obsolete before it is even complete.

Regarding video stores, I saw this week that one in a small town near me is under new ownership. Brave, or foolhardy? Hard to say, it was a *very* small town, on the main drag but in a part of the country that tends to be a bit invisible for a lot of services, so there might still be some demand left. I know several video stores have closed down nationwide in recent months. Not an area I would buy into right now, the times they are a-changin', albeit at a snail's pace.

backwards nzer   #9   06:33 pm Oct 07 2011

NZ has always been behind with internet speed, cost and availability, also compared to many countries in Europe. I've been well aware of people streaming and zipping around unhindered by caps back as far as ten years ago or more, while I chatted to them on a dial up, explaining I couldn't see that or do that... Now, it's not as bad as it was, but there is still a gap. I have had guests from overseas who continued their TV streaming here without endangering our cap or having problems with speed - so it is possible, but not as a replacement for TV or DVDs all of the time. But I am not fully convinced that it holds NZ back that much, it means you learn to do more with less, like wasting less time watching awful movies. ;)

don   #10   10:56 pm Oct 07 2011

hahaha #4 wow what is this "American technology" that you call a clothes-dryer, gee we've never heard of them.

as for the bandwidth issue well #7 Karl is the only one who seems to understand that most of our movie content (well a big chunk of ALL content, really) comes from the US, yes and doh! we're not in the middle of that huge terrestrial internet mesh, are we, but on the end of a single cable!

The US is actually a lot more constrained technology-wise, becuase they think the world starts in LA and ends in NY. Japan would blow their little minds.

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