Transfield is, apparently, responsible for building out only 10% of Chorus’s commitment to the UFB project, but entirely responsible for UltraFast Fibre’s work.
UFF is currently tracking ahead of the projected completion date and by all accounts is doing very well indeed with its deployment. I’ve heard none of the complaints about delays to connect up homes, astonishingly high failure rates or any of the rest of the noise associated with the Chorus build and although the Local Fibre Companies (LFCs) are reluctant to talk publicly about either costs or connection targets, both are said to be tracking well ahead of the averages reported by CFH.
I find the mix of businesses in the fibre world intriguing.
On the one hand we have a telco – Chorus – spun off from Telecom and in many respects the heir to the Telecom role of network provider of last resort. Chorus is responsible for the lion’s share of the UFB but also owns almost all the copper lines in the land and is uniquely conflicted as a result.
Chorus is listed on the stock market and must return money to its shareholders.
The LFCs are all owned by trusts and are more used to investing returns back into the networks they run.
Chorus claims its costs are around $3000 per connection – double what it expected and double international standards in such instances. The LFCs don’t report their figures but I’m told they’re a lot more in line with what you’d expect.
It puts me in mind of the TUANZ conference held many years ago in Napier. We had a guest speaker visit from Canada – Bill St Arnaud who, at the time, ran CANARIE, Canada’s advanced research network.
Bill was an affable chap who talked about MUSH networks (Municipal, University, School, Hospital), about building advanced networks and what students were doing with them as a result of having a 10Gbit/s wavelength all to themselves.
He also talked about who you get to build your networks and why choosing a telco is the worst mistake a country can make.
Canada gave each province a bunch of money to deploy these MUSH networks to connect state-owned organisations together. Some provinces hired companies that owned diggers. That’s all – they were just very good at digging trenches and putting the pipe or the duct or the cable or whatever you wanted in the hole. They weren’t interested in running networks, they weren’t interested in clipping the ticket on all the traffic that passed over those pipes, they were just interested in putting pipes in the ground.
Other provinces got in the experts – the telcos – who were interested in clipping the ticket for all those things, were interested in ongoing costs of raising capital, were interested in returns on investment to their shareholders and who ultimately gave the provinces a wavelength on existing fibre lines already in place.
The digger guys simply laid the fibre and got out of the way. The telco guys hired digger guys and got them to do the work, with a nice margin on top, of course.
Currently we have a situation where presumably CFH has paid Ultra Fast Fibre for its deployment. UFF has presumably paid Transfield for its work, Transfield has not paid its contractors and the contracts have not paid the sub-contractors who have stopped working.
The amount of money flowing down this particular waterfall is not inconsiderable but there’s a lot of money not making it to the guys doing the actual work.
Even if this model works with 100% efficiency, we’re losing a lot of money in overheads, margins and the such to each player along the way. Surely a better model would be for CFH to hire the contractors and subbies and just get them to dig in the network we want. Lighting and running it can be left to the LFCs and RSPs and we’ll save a bunch of money in the process. St Arnaud estimated that in Canada those areas that deployed using utility providers rather than telcos achieved higher uptake rates at a third of the cost because they just provided the service.
Chorus has launched its “Gigatown” initiative which I whole heartedly support. 1Gbit/s service would dramatically change the way SME businesses operate. My question is, if we can offer this as a service today, why are we still talking about 30Mbit/s download with 10Mbit/s upload and why are we still paying telcos to dig ditches?