Orcon offers free fibre, reports lousy UFB take-up, hints at big Chorus move

Orcon CEO Scott Bartlett

KeallHauled

Chris Keall

July 18: Orcon is offering free fibre under the Ultrafast Broadband (UFB) rollout – at least until the end of this year.

What are the catches?

One, you have to sign a contract until the end of 2013 (not too bad as these things go; I had expected Orcon to demand a longer paid commitment follow the free period).

Two, the free residential plan (usually $75) is a reasonably modest, by fibre standards. You get 30Mbit/s up and 10Mbit/s down with a stingy 30GB data cap (at a time when some providers are now offering half terabyte or 500GB options on copper DSL).

If you want a more realistic data cap, or more speed, you have to pay extra (in terms of data caps that means $14 for an extra 60GB, $24 for 200GB or $124 for 1000GB.

All of those data caps are for 30Mbit/s speed plans. To upgrade to full-tilt, 100Mbit/s download speed, you'll need to shell out another $35 on top of that).

Connection is free.

Orcon (state-owned by dint of being a Kordia division) is also offering $130 "base" business and school plans free until the end of this year. Unlike the home plans above, they don't include a SIP (business-grade VoIP or internet calling line). The data cap is 30GB; download speed 30Mbit/s, upload 10Mbit/s.

Lousy UFB uptake
CEO Scott Bartlett also confirmed at a media event today that his company – the first of the big five ISPs to offer a UFB plan – only has 200 customers (most in Auckland and Whangarei).

To put that in context, fibre now runs past 45,000 homes (expected to be 140,000 by the end of this year).

Orcon says it has 8500 on a waiting list for when fibre reaches their street.

Mr Bartlett said nationwide, there have been only 1012 connections under the UFB plan, for which the government is chipping in $1.35 billion (most in the form of an interest free loan to Chorus, and through buying non-voting shares in the Telecom spin-off).

He suspects most of the 200 beyond Chorus belong to network operators or telcos.

That waiting list? Actually not too shabby
I'm a fibre fan, and I appreciate Orcon is trying to shake things along.

But there's also a degree of gamesmanship going on here.

Two hundred is a lousy number of live connections.

But 8500 on the wait-list is arguably not too shabby.

The government has always said it would priorities education, health and business in the project's first half-decade. As the head of one the country's largest retail ISPs, Mr Bartlett is obviously inclined to agitate for a broader roll-out, faster.

Big Chorus move?
Beyond ultra-slow take-up, a second controversy has been over Chorus' connection fee policy. Chorus has offered free UFB residential connections until the end of this year, but has been fuzzy on its stance past Christmas.

Now, Mr Bartlett hears Chorus – after talks with Crown Fibre Holdings – is on the verge of announcing a long-term free connection policy.

The Orcon boss has previously told NBR that uncertainty about connection cost could weigh heavily on the project once Chorus' free connection policy ends at the end of this year. Punters would be unwilling to shell out $1000+ to connect fibre from the curb to their home (Chorus holds around 80% of the UFB project by premise.

The other local fibre companies – Enable, Northpower and Ultrafast Fibre have been much more on the front foot with free connection offers – both because they have no legacy copper broadband business to fall back on, and because they negotiated lesser contracts with Crown Fibre Holdings.

For example, Chorus is only required to cover the cost of fibre 5m into a home – not as the crow flies but as the cable ducks and dives – while Enable, Ultrafast and Northpower have to cover 10m before they can charge. Similarly, in terms of drive ways and right-of-ways Chorus only has to cover a buried lead-in of 15m vs 30m for other companies).

But why the slow up-take now, when Chorus connection is free?

One limitation is simply that fibre has only been run past a limited number of homes so far in keeping with the government's policy of prioritising other sectors.

But beyond that, Orcon maintains most people are simply unaware that fibre is now an option (to check out when it's coming to your address, a good place to start is the Broadband Finder on Crown Fibre Holdings' website).

It wants the government, or Crown Fibre Holdings, to run a TV campaign similar to one in Australia to promote the National Broadband Network.

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26 Comments & Questions

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"Orcon maintains most people are simply unaware that fibre is now an option."

bull. Chorus, Orcon, and the other UFB ISPs have been plastering the homes where UFNB is available with leaflets non-stop. The only people who will not be aware of UFB in their area will be the illiterate.

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Also, there is scope for more generous starter plan. A 30GB data cap is not an attention-grabber, at all - apart from the negative standpoint of how poorly it compares to the generous allowance you get on most mid and upper-end copper/DSL plans.

And while 30Gbit/s down/10Gbit/s up is not to be sniffed at (especially as fibre doesn't suffer the contention ratio or rush-over traffic crawl that besets copper/DSL), if you're already on a DSL line that can clock 10Mbit/s to 15Mbit/s, it might not be enough to motivate you. And you might object to having to pay another $35 to hit 100Mbit/s.

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What are you talking about? "doesn't suffer the contention ratio or rush-over traffic crawl that besets copper/DSL". UFB delivers a non-contended service to a local handover point. From there the rest of the network is unchanged. Regional connectivity, ISP contention and management and International connectivity haven't changed. What magic thing do you think is happening to slow down DSL traffic that won't slow down fibre?

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Chris, hate to be the nitpicker but we're decades away from "30Gbit/s down/10Gbit/s up"

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Hmmm 30 up 10 down huh? FAIL.

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I am sure you will judge me, but I had no idea it was avaliable. I knew they were working on it. At the same time though, I don't know if I really care, and I am not sure my neighbours really care. I mean it is nice to have, but at what $$$ cost. I like most consumers will just wait until it is reasonably priced, or I have a use for it. Right now, I think most are happy with the current set up, it doesn't prevent me from doing anything me or the family want. In the future this might change if TV is delivered via it, but until then, don't really care.

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I'd say most people are just genuinely satisfied with their copper service, and can't be bothered to change to something they don't really understand. For the majority, it'll just be a case of "don't fix what isn't broken". I'm a heavy internet user, work in the telco/isp industry, have fibre outside my house but haven't bothered to connect. If I haven't bothered, I'm sure this will be the reason for many others.

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+1 Andy

Also comments re relatively small caps

Outside of the tech-savy, people are pretty gunshy of changing service given the legacy of extended downtime and f&*kups. Of course Chorus have picked up their game hugely 'but the meeemmmmory remmmains'

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The offer from Orcon is similar to what I currently pay for what I pay for. On taht basis, I would change so that my house is ready for when I want to upgrade to a higher speed connection.

BUT - they dont come past my house. I am out in the whop whops of the North Shore 10min from Auckland CBD. My guess based on demographics of my area, uptake would be high, just for the "I have UFB" brag factor. We will also pay for new services once offered.

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Time to remove the wonderkid and put a grown up in charge of Orcon?

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No. I've given Scott some jip for the starter fibre plans not being generous enough.

But it's good brand positioning to be the first retail ISP into fibre, and putting the heat on Chorus over free connections is good for everyone.

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As one of luck 200 early adopters (30/10, 200 GB) I can only confirm that the UFB installation process is a big adventure. At one point of time the team of five technicians were on my property dealing with various issues. After my ADSL was disconnected it took more than two days to get UFB running - after the optical network terminal and modem devices were replaced and the 'configuration' was properly done on the Orcon/Chorus/??? side. Everyone involved tried be helpful but the service is new and people learn as they go. Based on this Orcon made a good move to give early adopters a discount (bear on mind it takes at least couple of weeks to get the installation done).

Porting my phone number from Telecom to Orcon was another excitement, it also took some additional efforts and helpdesk calls.

Once installed and configured properly UFB works great, on data and voice side. Fingers crossed.

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so are orcon giving you free UFB until 2013 too? or did you sign up before this offer and so have to pay?

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Just received the email from Orcon confirming they will credit me the base plan each month during the promotion period. Their email finishes with "We hope you are enjoying the fibre service and have told your neighbours dozens of times just how great it is. "

Nice.

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good to see an SOE is using money wisely, would be nice if I could give away free UFB for 6 months, but then again im not an SOE that wont goto the wall.

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Fibre uptake isn't going to be any faster with the ComCom forcing down the price of existing copper based broadband.

Megafail of the govt to spend over a billion on laying fibre while another agency of govt makes the alternative cheaper.

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Who is offering 500MB data caps? At full speed?

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Yeah but Orcon's service sucks major.

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there is no point in having Fibre witht the NZ data caps, as a software engineer with an MSDN lisence subscription i have access to DL all microsoft products it is the prefered method, but the state of NZ interent data caps means i still get mailed the DVDs, its just npot viaable any other way

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Chris,

Can you confirm whether or not Orcon as a SOE is subject to the commerce act?
1) UFB input costs $37.50 pm (so free until 2013 is a write off of $187.
2) at $75 including International and national traffic at a 70:30 split, even capped at 30gb they will not be making much gross margin
... so are they selling below cost?

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Most providers do NOT offer 500GB plans. Most providers peak off between 120-250GB with 3 providers giving Unmetered (with varying performance).

The article also says speeds up to 100MGbit which I guess should be 100Mbit.

I pretty much agree with Chorus though, that the lack in Fibre uptake is probably more due to the fact that not many consumers ARE aware that Fibre is actually live in their area...also coupled with the fact that only 2 providers are really providing fibre on UFB right now, with Slingshot & Telecom still in small trials in isolated areas.

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FTTH is still a technology that exists without demand.

Cu services can more than handle individual requirements now, and will be able to for some time (VDSL2+). The delivery architecture in the form of the ONT is not in the best interests of the end user, its just an artifical demarcation for the network company...gotta preserve the home wiring contracts.

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I wonder why Orcon are so keen to get customers on to Chorus' fibre network? Could it be because Scott Bartett isn't competent enough to get his own LLU/VoIp network working properly and provide a decent customer expirance for their customers?

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"Of course Chorus have picked up their game hugely "

comedy Gold.

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Being able to get to the airport at the speed of light is no use when the data has to travel across the rest of the world whilst competing with all the other 'cattle class' data. Plus you may have a ferrari, but the guy you are communicating with interactively may still have a horse and cart.

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