Unbundling fibre network won’t be easy
Vocus Group and Vodafone have announced a joint venture to unbundle New Zealand’s governmentbacked Ultra-Fast Broadband (UFB) fibre network.
The Government will allow “unbundling” of the UFB network from 2020, meaning the four companies that have built the network so far have to allow rivals to access their fibre-optic cables.
But if history is anything to go by, the incumbents won’t cede ground without a fight — and that battle is likely to be about price and terms.
A similar unbundling of the copper phone network in the late 1990s and 2000s took years, several court battles between Telecom NZ (now Spark) and wannabe players, and interventions by the Commerce Com- Construction of a big planned new Auckland apartment project was meant to start last year, sparking buyer concerns but the developer says the builder is now on-site and work will begin next month.
A buyer of Fabric, the 240-unit scheme planned for Onehunga, said he paid a deposit based on advice he was given last year that construction would start in the middle of 2017.
Other buyers have also complained about delays and raised concerns after a design change was announced recently.
“We as purchasers signed up in January 2017 on the understanding that the project would be underway in the middle of that year as advised in the Fabric FAQ sheet. Test bores which I presume were done so detailed design of the foundations could be completed were not drilled till October that year. Hence that initial start date was never achievable,” the buyer said.
“Since then, we have had many start dates given, all of which have been and long gone.
“The only date they have ever given is demolition would start at the end of May and it did,” the buyer said.
But Tim Lamont of developers Lamont & Co said yesterday: “Kalmar Construction has established on-site and demolition commenced in late May. Construction was originally anticipated to commence early 2018.”
Deposits had been taken on 106 apartments, which makes up fewer than half the total number on offer, he said. People had paid 10 per cent of the full purchase price and that money was being held in a trust account of solicitors Thompson Blackie Biddles, Lamont said.
Asked what was at the site now, Lamont said it was two warehouse/ office buildings which adjoin residential housing to the north.
The buildings on Fabric’s stage one land are now being demolished so the mission before Telecom eventually offered prices and conditions that were acceptable to its rivals.
The biggest player in the ultra-fast broadband roll-out is Telecom’s network spin-off Chorus.
Internet NZ’s outreach and engagement director Andrew Cushen said the announcement, which caught the industry by surprise, was “great news” for consumers.
“It’s an aggressive play, in an innovative, customer-friendly way . . . without competition providing an ex- first 161 apartments can be constructed, Lamont said.
“Finance has been secured to complete the development and presales thresholds have been met to allow the development to proceed,” he said. Interest was being paid on ternal impetus for innovation, why would Chorus and the other LFCs [local fibre companies building the UFB network] roll out better services.
“We would like to see better speeds; we would like to see better prices and more options for consumers. This allows more competition and more choice.”
Announcing the deal, Vodafone chief executive Russell Stanners and Vocus CEO Mark Callander said the present arrangement with the fibre companies allowed the 100 or so retail service providers to buy only a handful of different products — 30Mbps download speed/10Mbps upload speed, for example, or 100Mbps down/100Mbps up. Retailers then on-sold these packages to customers, selling mostly on price.
Unbundling the network should allow the Vocus/Vodafone joint venture (and other RSPs) to buy fibre at wholesale and then put together their own packages.
While this would mean “tens of millions of dollars” of investment in deposits “at standard solicitors’ trust account interest rates”.
Changes have been made to the original design, with a large central glass atrium going.
Lamont said the first stage would be three buildings “established technology, it would allow the partners to introduce more innovative products for customers, Stanners said.
“We might introduce a service with very low latency for gaming, or a student product for university students, or bandwidth on demand, so people can get faster speeds when they need it. For example, you might need a lot of bandwidth when your older kids come home from university and want to game, but you don’t need it the rest of the time,” Stanners said.
“[Introducing competition on the fibre network] will bring a marketplace that competes on product, not just price, and where innovation can happen a lot faster. I think there has not been serious innovation on the fibre network so far.”
But there’s the rub. Getting the LFCs [Northpower in Northland; Waikato Networks in some central North Island areas, including Hamilton, Tauranga, New Plymouth and Wanganui; Enable in Christchurch; and Chorus around a central pocket park and landscaped grounds. A central atrium style accessway has been replaced with a 2.5m wide corridor with full height glazing to the southern fac¸ade. No apartment sizes have been reduced. Due to the design change, everywhere else] to agree on fair prices and conditions to sell the fibre to their competitors won’t necessarily be easy.
Vodafone, Vocus and others argued that the Government should set the price, but the Government decided to leave it to the market, as it did with unbundling the copper network.
Callander accepts there could be problems trying to get agreement.
“That’s why we are not leaving it until 2020. We need to put the LFCs on notice.”
He says overseas benchmarks from countries where the fibre network has already been unbundled — eg, Italy and Singapore — will be useful during the negotiations. And having four fibre companies might also be an advantage — some might be more prepared to negotiate than others.
If all else fails, the Commerce Commission has a government mandate to review whether the system is working or not — but only in 2023.
Vodafone/Vocus joint venture hailed as great for consumers but battles lie ahead
the development benefits from increased green space with the distance between buildings increased by up to 30 per cent from around 18m to 24m at the widest part. This will lessen any shadowing impact to the buildings,” Lamont said.