The Government has rejected a call by Vodafone New Zealand chief executive Russell Stanners to scrap the roll-out of fibre-based ultrafast broadband in much of Wellington and Christchurch.
Stanners said the cost of the UFB scheme could be cut by $500 million and taxpayers could save $145m if people instead used its cable networks in the two cities.
The company would be prepared to wholesale the networks, acquired through Vodafone's purchase of TelstraClear, on equal terms to other retailers.
But Communications Minister Amy Adams said Vodafone was "obviously pursuing its own commercial interests" and the Government "will not be stopping the UFB build in any of the candidate areas".
Stanners said he was not discouraged by Adams' response, and he did not expect his idea to find immediate favour in an election year.
"I think it is a great reaction first-up, at least we are engaging," Stanners said.
"We are thinking long-term and this is a conversation we will continue to have because there is money to be saved here for taxpayers. I wasn't expecting them to say 'great idea' we will do it tomorrow."
Vodafone's HFC (hybrid-fibre coaxial) cable networks passed 145,000 or 11 per cent of New Zealand homes, Stanners said. Fibre-optic cable all the way to people's homes was the "bee's knees" but the cost of the UFB scheme exceeded its funding, and utilising Vodafone's cable networks could bridge that gap, Stanners said.
Vodafone has connected between 2000 and 3000 homes to the government-backed UFB network so far.
In the event his proposal was rejected, Vodafone would continue to maintain and run the cable networks and "eventually there will be a competing UFB network", Stanners said prior to Adams' rebuttal. The company would not proactively migrate cable customers to fibre in that scenario though they had the option of buying it from any retailer, including Vodafone, he said.
InternetNZ said earlier today it strongly opposed Stanners' proposal.
"This suggestion by Vodafone begs the question, why would Kiwis choose to make use of a second-class network when we are already on our way to having a first-class network?" chief executive Jordan Carter said.
"It makes good economic sense for Vodafone to seek to make best use of the HFC network it bought when it took over TelstraClear, but replacing the UFB isn't the way to go." An industry source said Stanners' proposal, set out in a letter to Crown Fibre Holdings chief executive Graham Mitchell, had always appeared a long shot.
UFB residential fibre connections
Orcon About 6000
Snap Internet More than 4000
Telecom About 4000*
Vodafone 2000 to 3000
CallPlus/Slingshot several hundred
Note: *Telecom figure as at December 31
Source: Company statements