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Telecom backing down fast its all or nothing approach: Vector

Thursday 9th September 2010

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Crown Fibre Holdings’s short-list of ultra-fast broadband providers is a sign that Telecom cannot expect the whole project to itself, and a spur to local governments to make UFB installation as easy as possible, says Vector chief executive Simon Mackenzie.

Vector is vying with Telecom’s Chorus unit for rights to deploy UFB infrastructure in Auckland, the largest national market.

“The government has remained strong in the view that regional, locally owned solutions are hugely valuable,” Mackenzie said. “That’s a really important signal."

“They have potentially taken off the table the all-or-nothing national solution and Telecom appears to have shifted its position today where they now say are open to partnerships.”

CFH has announced it is prioritising three regional deals involving Timaru’s Alpine Energy, the Central North Island Fibre Consortium, and Whangarei’s Northpower, in its short list for the government funded roll-out of an ultra-fast broadband network.

It has also whittled its list down to 14 contenders for the remainder of the country, and has excluded Canadian fibre provider AxiaNet.

By putting three regional bids at the top of its negotiation list, CFH appears not only to be damping down Telecom’s hopes for a national solution, but rewarding areas where local government has been willing to facilitate fast, low-cost UFB roll-out, said Mackenzie.

Waikato local government had, for example, changed district plans to speed installation of “above ground”, or aerial, fibre, the cheapest and most efficient way to string new fibre connections to individual premises.

“There’s a signal there to some of the councils to ensure they are making it easy to get a low-cost build,” Mackenzie said.

On the battle for a slice of the action in the Auckland UFB roll-out, Mackenzie said Vector would participate “in a process that continues.”

“We look forward to being able to deliver an outcome that works for both CFH and for local ownership in Auckland.”

Mackenzie speculated that community-owned bidders may be more able to make attractively priced bids than NZX-listed entities such as Telecom, since local owners might accept lower rates of return on their investment in the interests of their communities having UFB services.

Vector’s shares fell 1.4% in trading today, while Telecom’s tumbled 6.1% to $2.00.

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