Govt's fibre policy under 'extreme pressure'

A series of complications may force the government to dip into money set aside to build its $1.5 billion ultra-fast broadband (UFB) network to pay for further policy advice on the project.

When the broadband plan was announced, the government gave itself a year to consult and develop its implementation plan. However, more than 18 months after it took office, the final shape of the policy remains unclear.

In response to questions from parliament's commerce committee, Communications Minister Steven Joyce said the appropriation for policy advice in his portfolio is under "extreme pressure", and a transfer of up to $2 million more than the $3.7m already budgeted may be needed early in the current financial year. That $2m would come from capital set aside to pay for fibre.

Among other issues, Telecom now says it will consider separating into at least two businesses to allow it to play a role in the project. The resources of Telecom's Chorus network division, which manages the extensive fibre and copper networks, could then become part of the proposed UFB network.

That's something even rivals such as Vodafone support. "We don't see a model that excludes Telecom as working," said Vodafone NZ CEO Russell Stanners – although he doubts the $1.5b set aside for the project will be enough.

Stanners said Chorus's rollout of fibre to the node – to roadside cabinets – was done at speed and quality. "It's the kind of company you want to have engaged in building a nationwide network."

Despite spending only $49m out of a budgeted $295m on the project in 2010, Joyce said the timetable for the rollout has not changed, with urban areas to be completed in 10 years and rural areas in six.

However, on July 1, Joyce announced amendments to the government's broadband model to deliver open access to the planned fibre network, kicking off another round of consultation and delaying recommendations on the rollout plan until at least October.

A spokeperson for the minister said the government is concentrating on getting the model right.

Crown Fibre Holdings (CFH), the vehicle for the fibre investment, is contacting organisations that responded to the UFB tender and inviting them to provide revised proposals.

Stanners said New Zealand is undertaking the largest transformation of any global industry.

"New Zealand is absolutely leading the world into uncharted territory," he said. "You can't look at [UK teleco] BT or any other blueprint."

The UFB rollout should be thought of as a civil construction project, Stanners said. In that context, $1.5b over 10 years (with an equal private sector co-investment) is arguably not enough, given we spend $3b a year on roads. Estimates to deliver fibre to the kerb range up to $5b and to take it to the home, excluding in-home costs, take it up to $7.5b, he said.

- © Fairfax NZ News