Telecom closer to ultrafast broadband role

Monday 13th December 2010 4 Comments

Telecom has moved a step closer to winning a major role in the Government's $1.5 billion ultra-fast broadband (UFB) initiative, raising concerns in the Labour Party.

Government agency Crown Fibre Holdings today said Telecom had been chosen to take part in prioritised negotiations for the initiative in 25 areas, which cover much of the country.

Telecom's proposal includes its structural separation into two companies, with its Chorus unit, which operates the company's physical network, becoming a standalone company.

Labour communications and IT spokeswoman Clare Curran said the move entrenched fears of a "commercial monopoly stranglehold" on the country's newest infrastructure network.

"This is perhaps the most important decision in telecommunications policy in a decade, it will have implications for decades to come," Ms Curran said.

"But it's been carried out in secret with no ability for expert industry analysis and discussion and costing $1.5 billion of taxpayers' money."

Successful bidders would also receive a 10-year holiday from price regulation and oversight by the Commerce Commission.

InternetNZ said it strongly supported the UFB progress, but repeated concerns that the proposed model for the structural separation of Telecom would not support competition.

With Telecom selected as a prioritised bidder, the Ministry of Economic Development and Crown Fibre had to urgently make progress on a structural separation model that could secure the existing copper wireline market, while allowing Telecom's participation in UFB, InternetNZ chief executive Vikram Kumar said.

Parts of the country excluded from the 25 areas on which Telecom is negotiating are those where agreements have been approved. They include Hamilton, Tauranga, Tokoroa, New Plymouth, Hawera and Wanganui, where an agreement was approved with Ultra Fast Fibre, and Whangarei where an agreement was approved with Northpower.

Also excluded from negotiations with Telecom is Timaru, which was covered by an Alpine Energy bid selected for prioritised negotiations in September.

Crown Fibre said a binding final offer had not yet been received from Alpine.

Also selected for prioritised negotiations today were Enable Networks covering Christchurch and Rangiora, and Flute Joint Venture represented by Aurora Energy covering Dunedin.

Crown Fibre said Telecom, Enable and Flute, had provided attractive proposals, including the ability to complete the UFB build within the Government's allocated budget, as well as having industry experience and financial strength.

They also had access prices in line with those announced last week for the Northpower and Ultra Fast Fibre deals.

Those included wholesale household prices starting at $40 or less per month for an entry level product and $60 per month for the 100 Megabit product, with no connection charges for households.

Crown Fibre chairman Simon Allen said negotiations in the next phase would be focused on the three parties named today, as well as Alpine, but discussions would continue with all respondents previously short-listed.

Groups on the shortlist include Vector, with a proposal covering the Auckland region, CityLink covering the Wellington region, and the Central Fibre Consortium covering some areas south of Auckland and parts of the central and lower North Island.

NZPA

Comments from our readers

On 13 December 2010 at 6:34 pm Concerned said:

Price up, value down - that is essentially Telecom's business model which could also be decsribed as Charge the most for the least. If the current government is unable to learn from our tortured history of telecommunications then perhaps that is where the first change must come.

On 14 December 2010 at 8:35 am Why said:

Telecom's history is one of exploiting its position at the expense of the consumer and have struggled since competition was allowed. Why are we giving them the opportunity to go back to their bad habits.

On 14 December 2010 at 9:30 am Robster said:

NZ does not scale for a multi-player competitive market and Telecom is a logical choice; as adding a further national fibre infrastructure without the demand would have been a massive waste of tax payer money.

On 14 December 2010 at 4:02 pm concerned said:

Telecom is only a logical choice for those with a vested in interest in Telecom.