Chorus chair Strange defends complaints over UFB rollout, says uptake higher than predicted

Monday 5th September 2016

Chorus chairman Patrick Strange has hit back at complaints of poor service in its ultrafast broadband rollout, saying uptake has been far higher than forecast and a shortage of qualified technicians is hampering its efforts.

Speaking at the NZ Shareholders’ Association conference on the weekend, Strange said the company had been stretched “more than we would like to” to gear up to do fibre connections but the uptake was higher than anyone could have predicted five years ago.

Ultrafast broadband is being built to 75 percent of New Zealand following a government investment of about $1.35 billion toward the total $2 billion cost. Chorus is responsible for 70 percent of that work, including in Auckland, with the remainder being done by Enable, Northpower and Ultra-Fast Fibre.

Chorus is now 57 percent of the way through its part of the rollout and out-sources connecting households once the fibre arrives in their street to four contractors paid a set fee per job. Strange said some workers are doing as many as four connections per day. In Auckland, in particular, three site visits can be necessary per connection, especially when homeowners don’t turn up to scheduled appointments for access, he said.

Last week one of the contractors, Downer, said it would not re-tender for ongoing fibre installation work, preferring to concentrate on the copper network and communal UFB build. In April, it was dropped from providing fibre installations in Wellington, Kapiti Coast and Manawatu, and replaced by Visionstream.

Downer’s planned exit in February prompted the unions representing the workers to claim it exposed the poor treatment of Chorus contractors who were not being paid enough to ensure a quality network and led to many complaints about poor workmanship.

On average, Chorus completed about 560 fibre connections a day in August, up from 440 in February.

“The volume is enormous and it’s lifting all the time,” Strange said.

The real constraint is a lack of qualified technicians despite a drive to hire migrants, he said. It takes between three to six months to train a technician depending on their skill level

“We’ve doubled the workforce in the past six months and are going to have to raise it again,” Strange said. “It’s quite a challenge because it’s a quite peaky programme and within three to four years all of this will disappear again if we’re not careful but we’re getting there.”

Chorus now has 540 out-sourced fibre crews, up from 380 in January, and said last month it was looking to hire another 250 technicians by the end of this year.

There have been 156,000 connections within the UFB footprint, or an uptake of 24 percent to date.

Strange said there had been complaints from around 10 percent of those connections.

“We need to get it to 2 percent but won’t do it overnight,” he said.

Chorus also owns the bulk of the copper network that provides broadband and telephone connections. It was swamped by copper faults in July due to wet weather, Strange said, which caused a blow-out in the time to fix faults and exacerbated customer complaints.

Strange said Chorus has had a rocky road with regulators in the past over copper pricing which saw a lot of New Zealand retail investors and institutions exit the stock.

“The damage the regulatory cycle can do to New Zealand’s ability to invest in infrastructure is massive,” he said.

He spends a lot of time with Australian investors who want confidence the New Zealand regulator has got things right, he said. The next tipping point for Chorus will be the fixed 2020 regulation which covers copper pricing and also fibre coming off the contract pricing.

“I have confidence the government is getting its head around the regulation and back the Commerce Commission as a reasonably mature regulator that they probably will get it right,” he said. “They did get it wrong once and international investors, who we rely on for putting the rest of fibre around New Zealand, are watching this with interest.”

Chorus shares rose 0.2 percent to $4.18 and have gained 6.7 percent so far this year.

BusinessDesk.co.nz

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