The Ultrafast Broadband (UFB) rollout is stalled. Fibre has been rolled past 76,000 premises under the project, which is subsidised by $1.35 billion in taxpaper funds.
But Chorus, responsible for the majority of the scheme, says it has connected just 200 homes.
Chorus boss Mark Ratcliffe says UFB numbers won't take off until major ISPs launch residential fibre plans. So far, only Orcon has. Telecom, which holds around half the retail market, won't launch until early next year.
Arm wrestling over costs
On Friday, Vodafone NZ boss Russell Stanners told NBR, "We’d like to be in the market as soon as we can."
But "soon as" might be some time off.
"We’re waiting on clarification on the installation costs," Mr Stanners said.
Like all retail ISP players (including a nervous Orcon), Vodafone is waiting to see if a Chorus free connection offer will be extended beyond the end of this year.
Chorus CEO Mark Ratcliffe recently refused detailed comment on the issue, other than to say talks with Crown Fibre Holdings and other parties were ongoing.
This is a crucial bit of arm wrestling for the NZX-listed company. Retail ISPs want Chorus to keep baring the cost of connecting fibre from the kerb to a home (the spun-off Telecom division has received $929 million in interest-free loans and non-voting shares from the government, but is already spending an average $3200 to pass each premise). Mr Ratcliffe told NBR the best solution would be one where the cost is spread across different parties. Retail ISPs fear if they have to bear the cost.
Retail ISPs fear customers will take fright if they have to pay $1000-plus for connection. They are also wrangles over internal wiring, and who installs, and controls, a gateway inside the home.
Beyond the thorny issue of who pays for an install, the actual experience is far from ready for prime time, the Vodafone boss says.
"I’m grateful to our pilot customers. But having seen staff and other people go through it it's bloody … it’s tough. We need to do better. We have to get that fixed before we launch because the customer experience is absolutely the key,” Mr Stanners told NBR.
"It needs a lot of work at a Vodafone end at a Chorus end. Or for that matter NorthPower, Enable and Ultrafast Fibre."
He added, candidly. "We had some customer feedback saying 'We really love it, the speed's great. But Vodafone you don’t want to go to the mass market until you’ve fixed that [install experience] because that was bad'."
Trial installations for Vodafone, Telecom and others, have involved a small army techs crawling over, under and around a house for a day. Before fibre can go mass market, with hundreds of thousands of premises connected, that needs to improve.
"And that involves us negotiating with our upstream partners [Chorus, Enable etc] and that’s a tough set of negotiations to figure that out," Mr Stanners said.
Among other things, Joe Public doesn't know or care about Vodafone's wholesale and network partner.
"What we’re realising is that if we put our brand on something, the customer is saying is 'We don’t care who does the installation, it’s you guys," Mr Stanners said. "And we need to do a lot of work to get to the point where we’re willing to put our brand on it."
He, for one, is not surprised it has taken a while.
"The government spent two years building up supply agreements and some very high level service requirements," Mr Stanners said. It would take some time to work out installation issues at the retail end.
T-Box on UFB?
Earlier, Telecom told NBR that once it does launch UFB plans, it will put a big emphasis on value-added services, including video - with an emphasis on sports (an apparent nod to its partnership with Sky TV, which allows Telecom to create a clone MySky box).
Mr Stanners told NBR that if his company's acquisition of TelstraClear is approved, his company will look at expanding TelstraClear's MySky clone (the T-box) from areas of Wellington and Christchurch covered by TelstraClear's HFC network to areas covered by the UFB.
The Commerce Commission had been due to rule on the takeover on Friday, but delayed its decision until October 23, citing the complexity of the deal.