Path cleared for fast fibre

The Government has "cleared the decks" for a $1.5 billion investment in an ultra-fast fibre optic broadband network by scrapping the previous government's $325 million Broadband Investment Fund.

That fund was to have financed a series of smaller, regional initiatives to improve telecommunications infrastructure.

Communications Minister Steven Joyce expected in the next "two or three weeks" to set out how the Government would work with companies that wanted to take part in a public-private partnership to fund, build and run the fibre network.

"I am having good discussions with stakeholders and will present a paper on options to Cabinet soon," he said.

The Government would make its initial investment over six years, concentrating first on connecting schools but with the goal of extending fibre to three-quarters of homes and businesses.

Telecom executives have hinted they expected to be involved in detailed talks with the Government following the election, but chief executive Paul Reynolds has maintained his silence on the fibre policy and there has been no indication of negotiations over any special role for the company.

Former communications minister David Cunliffe, now Labour's finance spokesman, last year labelled National's fibre network proposal extravagant and "Stalinist".

Telecom's wholesale division recently said it would deploy VDSL2 internet access equipment in exchanges and roadside cabinets that promises to raise broadband speeds on much of Telecom's existing copper network.

Wholesale boss Matt Crockett said the higher speeds that could be delivered over copper phone lines by the new technology did not negate the case for investing in fibre-to-the-home, but advised pragmatism.

The right answer to raising broadband performance would be a mix of VDSL2 in some areas and fibre all the way to premises in others, he said. "I think we need to be thoughtful, particularly in the current environment, of getting the biggest bang for the buck."

Several financial analysts remain sceptical about the fibre plan, despite growing evidence from the Government that there would be no U-turn.

"None of that has really moved beyond what I would describe as broad aspirational statements," BBY analyst Mark McDonnell said.

"I dare say the new Government is going to go through a process of seeing what can be done, but will probably end up better informed when they do the real work than when they were electioneering on this.

"The biggest question in all of this is the timing. I don't think anyone doubts that eventually full fibre networks will be the basis on which all telco services on fixed networks are provided, but . . . that is really a longer-term scenario."

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