Fibre to the fore

Fairfax

OPEN SESAME: Telecom has opened the doors of two of its exchanges to rivals, in the first step toward unbundling the local copper loop.

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The National-led government will face an uphill battle persuading financial analysts it is serious about its plans for a $3 billion open access fibre network, co-funded by taxpayers, despite more pieces of the jigsaw falling into place.

Parliamentary newbie Steven Joyce – who promoted the fibre plan as National's campaign manager – is set to be confirmed as infrastructure minister today. Fibre plan architect Maurice Williamson is expected to be offered the post of communications minister, if it is retained as a stand-alone portfolio.

ACT leader Rodney Hide has spoken out against the fibre plan, but as part of the party's deal announced yesterday he agreed to support legislation underpinning National's "key commitments", which specifically include increasing investment in broadband.

The Economic Development Ministry has meanwhile suspended processing applications for funding from the outgoing Government's $325 million Broadband Investment Fund.

National vowed before the election to scrap the fund, saying it was incompatible with its fibre network proposal.

"The Economic Development Ministry will ensure that all applicants and other interested parties are kept informed of developments as government decisions in this area are made," the ministry said in a statement on its website on Thursday.

Analysts are uncertain about the implications for Telecom if the fibre access network is built.

Telecom attributed a book value of $1.6 billion to its network business, Chorus, when releasing its first quarter results this month. Analysts said it was too early to comment on whether much of the value of Chorus might have to be written off, were its copper phone lines to be overlaid with fibre, as National has envisaged.

Forsyth Barr analyst Guy Hallwright doubts fibre to the home is required "with the rate that DSL technologies are evolving".

BBY analyst Mark McDonnell says "no one can question the vision", but National's proposal is "aggressive" and it is very early days.

"The economies globally that are instituting fibre to the home are typically the highly urbanised ones. Japan is the world leader, and highly-urbanised parts of the United States. Singapore has only just announced plans to do fibre to the home and it is going to take several years. Given Telecom is in the relatively early stages of a cabinetisation programme, it is obviously going to take some time for this to be fully implemented and there are some risks the ultimate costings will be higher than the provisional estimate.

"It is not just about money, it is about having the personnel with the requisite skills and training."

Another analyst says National may be more likely to support changes Telecom is seeking to the regulatory regime, such as the right to challenge Commerce Commission decisions on their merits and higher returns on regulated services, and doubts it will see through the fibre plan.

"When you are in government and things are tough, you want to be doing things that are going to give you political capital. I don't think it was such a big thing in this election. I think it would be quite easy for them to back down."

Phil Harpur, an analyst with Australian telco-watcher BuddeComm, says it remains to be seen whether National can pull off its "ambitious nationwide network plan", questioning the likely impact on Telecom's competitors.

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