TUANZ welcomes Vodafone’s offer (but does Big Red understand what it’s saying?)

I think it’s great that Vodafone has offered to let us use the cable network it got from TelstraClear as part of the UFB build. Just think of the cost savings it would deliver to Chorus, and of course Chorus would be freed up from working in Wellington and would be able to fibre up my house sooner rather than later.


But I wonder if Vodafone has worked through all the ramifications of its offer, not least of which is that the UFB contracts were awarded on the basis that the winners have no retail business. Vodafone will, presumably, have to structurally separate to take up the mantle of UFB provider.

It would have to spin off its cable and fixed network assets into a separate business or, depending on which way you look at it, sell off its retail arm and mobile phone network. Then the fixed line business (let’s call it “Saturn” because that has a nice ring about it) would be free to pitch for the UFB business.

Interesting times.

Putting aside that approach, Vodafone’s suggestion does raise a very interesting question: why is Chorus overbuilding networks at all?

In the Hawkes Bay, Unison Fibre is an offshoot of the power company and has an extensive fibre network around the main centres. Yet Chorus has overbuilt it street by street.

In Nelson, I attended the opening of the UFB network build with the minister and the mayors of the region. The mayors were forced to point out to the minister that in fact the UFB wasn’t a bright and shiny new toy for them to play with, that they’d had fibre in the region for a decade or more and that a community initiative had built The Loop long before central government came knocking. Again, Chorus has overbuilt the network already in place.

Why is it that we’re seeing new fibre laid side by side with existing fibre (and yes, with existing cable) when Chorus should be working with these partners rather than excluding them? The UFB network deployment doesn’t require Chorus to build every kilometre of fibre in its region, but rather to provide a service at a certain service level. So why overbuild when there are places that don’t even have fibre?

I’m all in favour of infrastructure based competition, but not when there are still areas that don’t have access at all. Rather, we should build out the network and then see about building competing technologies.

I would hope someone at Crown Fibre Holdings is making this suggestion to Chorus right now, because it still has a lot of Auckland and Wellington to build and plenty of that already has fibre owned by FX Networks, CityLink and even Vodafone and Telecom. Leasing capacity is a lot cheaper than building, but of course Chorus wouldn’t then be able to reap the rewards of owning the infrastructure for the next hundred years.

It also raises another key question, that probably should have been asked before the “fibre to the home” project began. Should we have defined the technology we wanted or should we instead have demanded a certain level of service and been technology neutral?

I for one don’t care how the hole in the wall connects me to the world, so long as it’s blisteringly fast. If it’s copper or fibre or fixed wireless or 4G or bean cans on string, I really don’t mind so long as I get high speed, low latency and a consistent service.

A technology neutral approach would mean that Vodafone’s offer could be considered and that the model we are using for rural New Zealand would be applied to the entire country. We’d have more ultra fast broadband service offerings and more competition, and that’s not a bad thing. As it stands, however, we’re wedded to fibre and unfortunately cable isn’t fibre any more than copper is. 

I think Vodafone would be unwilling to structurally separate the company in order to deliver UFB over its cable network, but I do think Chorus and Crown Fibre Holdings need to take a close look at what’s already in the ground and whether or not UFB can be delivered over existing infrastructure. 

2 replies
  1. Paul Brislen
    Paul Brislen says:

    I can see where Vodafone is coming from on this and in many respects, I agree. Overbuilding existing infrastructure before fully completing the rollout is counter-intuitive and Chorus should not be doing it.

    The UFB and RBI projects should have been seen as an opportunity to deploy fibre in places where current service levels are poor. It’s supposed to be a way of leap frogging ahead of everyone else. Instead, some folk have multiple options while others (myself included) are stuck on ADSL.

  2. Andrew
    Andrew says:

    The way I think of it Vodafone is going around this the wrong way, I don’t believe using the HFC network instead of rolling out UFB to areas that are able to get HFC already is in anyway a decision that will benefit anyone apart from Vodafone, but I do think utilizing this existing infrastructure could help the roll out of UFB in the wider area.

    Instead of trying to compete with the UFB network, Vodafone should be wholesaling it’s HFC network to providers at the same rate of wholesale UFB and having Chorus delay the roll out of the UFB network in areas that are already covered by HFC and instead speed up the roll out to areas that otherwise would be stuck with their struggling ADSL connections until 2019. I have family who have the option of HFC, UFB & VDSL where their friends 200m down the road struggle to get 8Mb on their ADSL connection and have no set UFB date.

    * Disclaimer – I work for Vodafone but these views are (Obviously) my own and do not reflect that of my employer *

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