Chorus goes mainstream with VDSL

Chorus has announced it will introduce VDSL to the mass market as part of the wholesale bundle currently available to retailers.

That means instead of the niche, pricy product we see on the market today, VDSL will cost the same to the retail ISPs as ADSL products do today.

This is a fantastic move and one that TUANZ has been backing for quite some time for a number of reasons.

Firstly, most residential users won’t see fibre for several years to come. In order to help drive demand for fibre, TUANZ has long maintained that VDSL is the perfect introduction to faster broadband services. If I can get 30Mbit/s down and 10Mbit/s up on copper, when fibre finally does arrive in the market I’ll be more interested in the 100/100 plan than the entry level stuff. This is great for the retailer (better margins) great for the network provider (better uptake) and great for the economy because we’ll have more people keen as mustard to take up the fibre offering.

Secondly, it’s a way out of the copper wholesale price debacle foisted on the industry by the government’s clumsy intervention in the Commerce Commission’s wholesale price determination.

The Commissioner is required under the Telecommunications Act (introduced by the current government in 2010) to in effect review the wholesale price of ADSL services and move from a “retail minus” model to a “cost based” model. That move would see the wholesale price of ADSL services slashed – something that Chorus screamed blue murder about and which the government foolishly accepted would hurt uptake of fibre.

As we discussed in our submission on the copper pricing, VDSL is an unregulated service and the simple answer to Chorus’s woes is to move as many customers over to that unregulated offering as possible, because the margins for Chorus would be much better than under the regulated scheme.

EDIT: Chorus tells me it has not matched the regulated wholesale price but rather, added VDSL to the regulated price list. That means whatever the Commerce Commission decides for copper pricing VDSL is included alongside ADSL. This intrigues me - more on this in future I expect.

Thirdly, this should be great news for the retail ISPs, who have a pent-up demand for faster broadband but a lack of opportunity to deliver it in the market. By offering faster broadband today, the retail ISPs will be able to build the products and services that we all want – content, predominantly, for home users, but also cloud services for SME businesses and a range of other things we don’t know we need yet.

Once they’ve built that customer base they will have a much easier time of it moving them over to fibre once the network is deployed.

Chorus appears to be having a bob each way on the whole question of migration – VDSL will only be offered until the middle of 2015 and will stop selling it as fibre is deployed (where Chorus has the UFB – I wonder if it will continue to offer VDSL in areas where it isn’t the UFB operator), but by then we should be well on the way to migrating to fibre. We’ll have to keep an eye on that – if the rollout slips then we’ll need to talk about keeping VDSL on, but I have high hopes that we won’t need it. It’s a useful way of “encouraging” customers to migrate – either go back to ADSL speeds or swap to fibre. I know what I’ll be doing.

Of course, VDSL has its limitations (one of the reasons why it is not a competitor to fibre). It’s only better than ADSL in a very short-run scenario (less than 1000m as the copper lies) which means some customers won’t see any difference at all and so won’t be encouraged to move over.

Ironically, given the Australian situation at the moment, we already have in place a “fibre to the node” network that means most of us are a lot closer to fibre today than we’ve ever been in the past. The upcoming Australian election is likely to see a change in government and the chances are they’ll scrap the NBN deployment in favour of the same kind of network that we already have today.

This is great news, and now I’m left with just two questions – how much will it cost and when can I have it?