Fears of overbuild in Ultra Fast Broadband rollout

TUANZ questions why Chorus is building on top of existing networks built by Network Tasman and Unison

Should Chorus be building a new network in areas where fibre optic connectivity is already available?

TUANZ CEO Paul Brislen is questioning the need for Chorus – which was awarded 70 percent of the UFB contract – to be building on top of networks, instead of utilising the fibre infrastructure already in place.

“To me this is a waste of resource, particularly in a time where we are supposed to be rolling out greenfields fibre,” says Brislen.

Regional fibre company Network Tasman (NT) has been rolling out fibre networks since the early 2000s, several years before the decision to roll out the government’s $1.5 billion UFB network was made in 2009.

The fibre company is an offshoot of the regional power line trust. The initial goal of the fibre network was to strengthen communication to substations and generators across the grid, which is used to manage peak loads.

Network Tasman has to date rolled out 400 kilometres of fibre in the Tasman Lakes, Nelson and Blenheim areas.

“Network Tasman has a fairly large network and customer base. Chorus should be using its open ducts and striking a deal to use its fibre,” Brislen says.

NT’s $13 million fibre network mainly services government, educational, and business premisses, but operations and telco manager Andrew Stanton says Chorus could use its existing network to service the residential market also.

In 2009 NT, along with several other regional power line companies, formed the New Zealand Regional Fibre Group (NZRFG) to tender bids to build out the UFB in their areas.

Stanton says once Chorus was awarded 70 percent of the build, NT approached Chorus to negotiate a deal to use its fibre network which has so far been unsuccessful.

Stanton says Chorus has been overbuilding in Blenheim since the beginning of the year, and is starting to do the same in Nelson.

Chorus spokesperson Robin Kelly told the Nelson Mail earlier this month that Chorus was not overbuilding, but was instead unable to use NT’s point-to-point fibre architecture which is more expensive than the point-to-multipoint GPON used by Chorus.

“To suggest that we’re overbuilding their fibre with more fibre, it’s not really true. It’s a different network,” says Kelly.

“We literally have to build another network architecture.”

Stanton says he is surprised by this statement, and says Chorus has never spoken to NT about technological problems with accessing its network.

“I think that New Zealand would benefit if the fibre is extended as far as possible. Anything that reduces the cost of the rollout would be good,” says Stanton.

Stanton says NT was looking at expanding into the residential fibre market, but those plans have been shelved following the UFB decision. The company is investing less money into expanding its fibre network because it is unable to compete with the government-backed Chorus.

Kelly says Chorus is open to partnering with other providers, and has done so with FX Networks for backhaul capacity, and Unison Fibre’s ducts in the Central North Island.

Unison built over 112 kilometres of fibre before the UFB decision in Taupo, Rotorua and Hawke’s Bay. Wayne Baird, sales and marketing manager at Unison, says Unison’s network will be complete by the end of October.

Unison’s fibre in the Central North Island now passes 6000 business premises. Baird estimates that Unison has between 200 and 250 customers using fibre internet from one of the 10 retail service providers (RSPs) using Unison wholesale.

Unison would prefer to be the sole fibre provider in the region, but Baird says he sees the Chorus overbuild as beneficial to local businesses. Chorus and Unison often plan earthworks together, he says.

Asked if he personally thought Chorus could use its resources more efficiently by utilising already existing networks in the Unison region better, Baird said he would not comment.

"It's always been an absolute known for us that Chorus would build in the same place we are," says Baird.

The retail service provider One Fibre, which utilises both Chorus and Unison networks, says competition between the two fibre networks is negligible because the price points for wholesale fibre is so low.

The Auckland-based company peers with Chorus, Unison, and players in other region like Citylink and Vector.

Co-director Dwayne Smith says One Fibre uses Unison as its preferred network in the region because it's smaller and easier to deal with.

For instance on properties that are cross leased by several business customers, consent is needed from all parties. Smith says Chorus maintains it does this process itself, which can take a long time and requires some prompting. Unison puts this consent process squarely on the RSP, which means One Fibre is able to better manage the consent approval process.

Rohan MacMahon, strategy director for CFH, says a degree of overbuild is inevetible but it is in Chorus' best interest to reduce costs where possible.

"CFH’s payment are fixed, per premise passed. So Chorus and the LFCs have an incentive to explore such measures – as they would receive the full benefit of any reduction in costs," says MacMahon