Leaked document confirms Crown Fibre wholesale pricing plans

A leaked Crown Fibre Holdings "pricebook" confirms the state-owned company is pushing its partners to provide wholesale pricing that's cheaper than today's "naked" (broadband only) DSL copper plans – and potentially big savings with plans where a phone line is bundled.

The document, obtained by freelance technology journalist Juha Saarnen – and quoted in part in today's New Zealand Herald – align closely with figures previously published by NBR, and others, following Crown Fibre Holdings release of "template" wholesale pricing at the time it signed its Whangarei contract with NorthPower late last year.

Communications Minister Steven Joyce has said that retail pricing should be around 20% above the wholesale pricing.

The template wholesale pricing (listed on Crown Fibre's website here) says a "consumer entry-level" plan will cost less than $40 per month wholesale for 30Mbit/s downstream and 10Mbit/s up - that is faster than any copper/DSL broadband today).

The pricebook obtained by Mr Saarinen lists a $35 a month pricepoint for a plan at that speed, or $38.75 with a phone line and IPTV (TV delivered by broadband) bundled – indicating retail pricing of $47.50 a month or $52.60 a month respectively.

Similarly, while Crown Fibre Holdings' template pricing calls for a 100Mbit/s upload/50Mbit/s download plan for a wholesale price of "under $60." the pricebook quotes $55.

NBR understands that Crown Fibre Holdings partners must commit to the template pricing for 10 years (opponents accept there is a pricing cap but worry broadband pricing may drop elsewhere in the world over the next decade – but stay at the top of the cap here, or at least fall more slowly). 

Ultimately meaningless
However, the wholesale pricing does not include several key factors, including data caps. The above pricing could constitute entry-level pricing with plans with more realist data caps costing an unknown amount more.

Nor does the template pricing include international data - no small thing given the number of sites hosted overseas - or sundries such as billing costs.

Pricing, not frills, will drive uupdate
Mr Joyce has previously told NBR that pricing – not bundled killer apps like pay TV – will be the key to driving fibre uptake among homes and business (which is likely true in itself, although the minister is also seeking to dissuade those who think Sky TV's near-monopoly on the pay TV market should be regulated as it expands into broadband deliver).

Crown Fibre retailers will face competition from ISPs that continue to offer a copper broadband service (soon to be boosted by the faster VDSL) and, down the track, 4G mobile broadband.

Crown bears connection cost
According to the template pricing, there is no connection fee for consumers. The price of the fibre connection will be borne by Crown Fibre Holdings as part of its strategy to make fibre more attractive to householders, and minimise financial risk for its private partners.

In a majority of the 33 areas covered by the government's $1.35 billion ultrafast broadband (UFB) initiative, Crown Fibre Holdings is still negotiating with Telecom, and various lines and fibre companies vying for Local Fibre Company (LFC) contracts.

Earlier this week, Crown Fibre Holdings released the names of 13 retail internet service providers who have committed to buying from Local Fibre Company wholesalers, so far.

Telecom and TelstraClear were conspiciously absent from the list.