Chorus ups the ante on fibre speeds
Chorus [NZX: CNU] has announced a new line-up of fibre products designed to encourage uptake of the UFB.
In essence, this is a very good move. In a world where VDSL can offer equivalent speeds (albeit with caveats on that) at the same price but without the horrendous experiences of having your street/garden/house dug up to connect, any fibre service will need to offer significantly more in order to compete.
Chorus is proposing a 100Mbit/s download speed and 20Mbit/s upload speed service s its new entry level product for residential customers.
Business customers can get a 1Gbit/s symmetrical service for a wholesale price of $275 a month.
This is great news as it gives customers a real reason to move to fibre. Stuff 30/10 – if I can get 100/20 for the same price, I know where I’m going.
It’s good for Chorus too, because the more customers taking up fibre, the fewer there are on copper which, as you know, is fully regulated and will be providing far less revenue in the future than it did in the past.
Ultimately, we want more investment in fibre, more customers using fibre and less effort and money spent on the copper network. Once the fibre has been installed to my house, I’ll be ringing someone (Telecom, presumably) to come and take out the copper connection.
For many in government, this question of what happens to the copper network is a big issue. I don’t see it that way. Eventually, 75% of the population will have fibre to their home. At that point, the copper network in those areas can be switched off and pulled out of the ground. It is surplus to requirements and given the price of copper on the open market, should fetch quite a pretty penny.
On top of that, Chorus won’t want to keep two networks operating when it doesn’t have to. I would back switching off copper to that 75% as soon as the lines are in. It’s not forced migration, but it is a one-way door. There is no going back once the fibre is connected.
That leaves us with the 25% of the population that won’t get fibre under this current project. That’s also clear cut, in my view. Chorus is still required to offer those essential services, the old Kiwi Share services, to that population base, and until there’s an alternative it must continue to do so. Of course, we need to come up with that alternative as quickly as possible, and make sure it’s capable of delivering on the broadband future promise.
At the recent NorthPower launch celebration, the Prime Minister hinted that the UFB network isn’t going to be static once it’s completed. He suggested (vaguely, mind you) that there could be more to come, and frankly that’s a good thing. Solving the rural broadband problem is going to be key to any future economic strategy in New Zealand.
There are caveats around Chorus’s new product set. These are commercial offers, and exist outside the Crown Fibre contractually-obligated regime. They’re Chorus offers, so may not be offered by the LFCs who will once again be miffed at Chorus making changes they’ll have to either match or ignore. By going it alone, Chorus runs the risk of alienating its LFC partners and we could end up with a two-tier structure of Chorus versus the LFCs. That’s down to Crown Fibre’s management plans, and I’d strongly urge CFH to do more to coordinate these kinds of activities.
The devil will be in the detail, as ever, and we need to know about the quality of the service. What will the committed rates be, what happens next year when these contracts expire – will the prices go up – and what role, if any, will the Commerce Commission have in the future fibre price disputes, because these are commercial products, not the ones offered through the Crown Fibre contracts and so, presumably, are open to regulation.
But when you’re facing declining revenue in the copper world, as we’ve said all along, the best way forward is to encourage the migration to fibre and these new plans should certainly help with that.
Paul Brislen is CEO of the Tuanz, the Telecommunications Users Association of New Zealand.