By Chris Hutching
Friday 9th June 2000
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The telco has struck arrangements with local electricity-lines company Orion, which will share overhead and underground cable network costs.
Orion is owned by the Christchurch City Council, which will also benefit from a new property rating regime for utilities. The city council has issued a certificate of compliance clearing Telstra Saturn's plans.
The broadband network is part of the company's $1 billion capital expenditure programme over the next five years.
The immediate focus over the next 18 months would be Christchurch, then Auckland, Dunedin, Hamilton and Tauranga, Telstra Saturn managing director Jack Matthews said.
Auckland was taking longer with delays in sorting out the planning issues with four councils involved, Mr Matthews said.
Christchurch businesses were delighted at the announcement, particularly Connetics, ERG and BICC Cables, which have been awarded multi-million contracts for constructing the network and supplying copper and fibre-optic cable.
Ngai Tahu Properties has already benefited with the sale of a section on the corner of Barbadoes and Cashel Sts, earmarked for a $5 million three-level warehousing and office building to be completed and occupied in October.
The network will initially be available to about 100,000 householders out of the total 180,000 Christchurch households. Later, the city periphery and hillside suburbs would probably be included.
About 45% of the cabling would be underground and 55% overhead using existing Orion poles or sharing costs of digging new trenches. Mr Matthews said one kilometre of aerial cable costs $15,000 compared with $70,000 for cable buried underground. The company would be unable to provide an appropriate return on capital if it had to pay for a total underground network on its own.
Telstra had learned from its experiences in Wellington and had improved some aspects. But it was clear Telstra Saturn's presence in the market had seen a competitive reaction from Telecom, which would be forced to respond even more vigorously in Christchurch, Mr Matthews predicted.
Overseas experience demonstrated competition only came from the construction of a competing network and that unbundling - allowing for shared networks - was seldom successful, he said. If unbundling was forced on the market, Telstra Saturn would have to target its network more carefully.
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