Telecom to govt: let Chorus build a national fibre network

In a bold counterproposal to the government, Telecom’s Crown fibre submission suggests abandoning Steven Joyce's vision of 25 local fibre companies in favour of one of two options. Both involve the telco’s Chorus division taking charge of a single, national roll-out on an  accelerated schedule.

The 25 local fibre companies could pursue a fragmented technology strategies, Telecom says and have the potential to fail, concentrating investment in a few areas.

Telecom says both its suggested schemes would see all hospitals and all schools get fibre connections within two and a half years - rather than the six years timetabled in Communications and IT Minister Steven Joyce’s discussion document.

It would also cover more areas than the 25 population centres suggested to be covered by local fibre companies (LFCs) under the discussion document. Telecom would add Waiheke Island, Queenstown, Greymouth, Rangiora and Gore.

Under Telecom’s “Option 1”, the government’s mooted Crown Fibre Investment Company would not select partners and co-invest in 25 local fibre companies, as proposed by the minister’s discussion document. Rather:

“The CFIC contracts directly with Chorus to invest in infrastructure for FTTP (fibre-to-the-premises).”

Telecom says this option would achieve the discussion document’s aim of not replicating existing infrastructure. Chorus would utilise Telecom’s existing fibre and that already laid by other companies as it constructed the network, which would work on a “no economic profit basis”.

Open, unbundled access to the network would be available to any provider - at least for the "government-funded" parts of the network.

Under Telecom’s “Option 2” the government would establish a new company, the Crown Fibre Network Company (CNFC).

The CNFC would build a national fibre ducting network of up “up to” 10,000km, which would “compete directly with existing local access network operators.”

Telecom says the CNFC should outsource building of the duct network, and suggests Chorus as the logical contractor.

The duct network would be designed to connect to ducting and fibre backhaul networks already deployed by Telecom, TelstraClear, Vector, Velocity, CityLink, Network Tasman, Christchurch City Networks and FX Networks, among others.

These providers would blow fibre down ducts to customers homes at cost of between $2000 and $3000 depending on physical obstacles. Telecom sees it costing $800 to $1200 to blow fibre down a duct from the curbside to a home. This cost could be borne by a service provider or the home owner, depending on the business model. The customer and the service provider then face $333 to $1500 and $513 to $1500 rewiring costs respectively, by Telecom's estimate.

In naming itself as both a network builder and one of the providers that could “light” fibre to homes, Telecom seems to be running counter to the minister’s discussion document, which prevents retail telcos from holding a majority stake in a local fibre company - but then again, Telecom is dispensing with the LFC model altogether.

The minister's discussion document calls for separate ownership; Telecom chief executive Paul Reynolds posits that it should be enough that Chorus is already separated, operating at arm's length and respected by the industry.

Telecom says the CNFC could operate commercially, but also be required to meet non-commercial objectives, such as specific fibre update targets.

Submissions on the government's discussion document outlining a Crown Fibre Investment Company and 25 public-private Local Fibre Companies closed yesterday.

The next step in the process will see Mr Joyce report back to cabinet on submissions toward the end of May.