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New fibre by New Year, says Joyce

Tuesday 3rd August 2010

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Communications Minister Steven Joyce today confirmed the government's timetable for deciding who will roll out fibre-optic cable for ultra-fast broadband services.

"By October of this year I'm expecting to see Crown Fibre Holdings' recommendations on preferred investment partners. This should enable new fibre to start going into the ground around the end of the year," said Joyce, following confirmation by CFH that it had received 15 revised bids for the government's $1.5 billion UFB roll-out fund.

CFH is the government entity that will partner with chosen providers to take UFB on fibre-optic cable to 75% of the population over the next 10 years, as long as uptake by consumers is strong enough to allow the government funding to be recycled several times.

Telecom confirmed yesterday it had offered a structural separation of its fibre unit, Chorus, and the rest of the national telco's operations as part of a package it hopes will allow it to participate in the roll-out. If chosen as an investment partner, it will require 75% shareholder approval for such a separation, which it says is unprecedented around the world.

It expects approval could be gained early next year, as long as the government timetable remains on track, and is convinced its fortunes will be better if it is part of the initiative rather than being left out and having to compete directly with higher cost fibre-based UFB service providers, using its existing mixture of fibre-optic and copper cable.

CFH chair Simon Allen said some of the 33 bidders in the first round of indicative bids had now formed consortiums.

The New Zealand Regional Fibre Group, led by Vector, said late last week that it had refined its original bid structure down to "fewer than 10" bidding parties.

The CFH process seeks bids for 33 geographic areas. 

A further $350 million in government funding has also been allocated for rural UFB roll-outs, and is subject to a separate process, although Telecom has questioned that approach in its latest bid to CFH.

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