As flagged earlier earlier this week (read: Joyce: ‘pragmatic' Crown Fibre changes lift investor appeal) Communications Minister Minister Steven Joyce has announced changes to the ultrafast broadband (UFB) tender today.
As flagged earlier earlier this week (read: Joyce: ‘pragmatic’ Crown Fibre changes lift investor appeal) Communications Minister Minister Steven Joyce has announced changes to the ultrafast broadband (UFB) tender today.
READ ALSO: Vodafone boss: UFB will cost $10b. Minister: ...
The revisions are aimed at strengthening the Crown fibre business model and attracting "additional co-investment from the private sector”, the minister said in a statement this morning.
The chief change is that organisations bidding to co-invest in the up to 33 Crown fibre regions will now be able to offer both layer one (dark fibre) and layer two (lit fibre) open access to retailers (chiefly, ISPs).
Buyer in control
”The decision to require LFCs to offer both [dark and lit fibre] is a pragmatic and effective solution," Telecommunications Users Association chief executive Ernie Newman said.
"It will allow the buyer, rather than the seller, to choose the service they require.
"This decision may vary depending on the kind of buyer (large telco, small ISP, large end user), the geographical and commercial character of the specific market, and factors such as population density."
Dark vs Lit
In fibre industry parlance, dark fibre means bare cable in the ground; lit fibre adds the necessary electronics for connecting a home or business (retail options such as a broadband connection or a pay TV account are known as layer three and layer four services.
IDC market analyst Rosalie Nelson said the layer one approach was chosen because the government considered a dark fibre network would be relatively easy for cable newcomers like power line companies to implement. It would also be relatively straightforward to regulate, with competition happening higher up the fibre food chain.
Wanted by bidders, retailers
Mr Joyce said the revised tender was in response to broad requests from those who had placed UFB tenders so far, and from retailers who considered it layer two would provide them with more pricing and service options.
“We are talking about a long-lasting investment that will fundamentally shape the future of the New Zealand telecommunications industry,” said Mr Joyce.
Only the 18 companies that submitted initial expressions of interest can submit revised tenders.
Still competition
Mr Joyce also moved to allay fears that Local Fibre Companies, by offering lit fibre as well as dark, would be moving too far up the cable food chain from being straight wholesalers:
"Prices will be set by CFH through negotiations following the tender process, and there will be limited scope for regulatory intervention to alter those prices while the industry is still immature. However, there will be safeguards in place to ensure that effective competition will develop."
Both dark and lit fibre services will be "open access" - that is, available to any ISP or TV provider other retailer, that wants to buy them.
Another delay, but this time a small one
Mr Joyce also said that Crown Fibre Holdings is now due to recommend preferred investment partners to the government in October.
Previously, the target month was September.
There have been several previous delays, which have drawn criticism from Labour. At a speech to the TelCon11 conference on Tuesday, the minister said it was more important to get the solution right than hit arbitrary target dates.
