Fibre to the Home proposal finalised

September 16th, 2009 at 2:28 pm by David Farrar

I’m very very happy with today’s announcement from Steven Joyce:

Communications and Information Technology Minister Hon today released the details of the government’s $1.5 billion ultra-fast investment initiative. …

Key highlights of the proposal include:

  • An open, transparent partner selection process, which will be initiated in the next month.

  • Government investment directed to an open access, wholesale-only, passive network infrastructure.

  • A new Crown-owned investment company (“Crown Fibre Holdings”), which will be operational by October, to carry out the government’s partner selection process and manage the government’s investment in fibre networks.

  • Crown Fibre Holdings and each partner establishing a commercial vehicle, a “Local Fibre Company” (LFC), to deploy fibre network infrastructure and provide access to dark fibre products and, optionally, certain active wholesale Layer 2 services.

  • Provision for national and regionally-focused proposals, as well as consortium and proposals aggregating any combination of LFC regions.

  • Independence, equivalence and transparency requirements for LFCs.

  • Expansion to 33 candidate coverage areas based on the largest urban areas (by population in 2021).

What is really good is the commitment to open access to dark fibre, and the regional approach to the issue. The Government has held firm to most of their draft proposal, with the main change being an increase in the number of coverage areas to 33.

Computerworld reports on positive reaction:

“This ushers in the biggest and most fundamental change to telecommunications in New Zealand since the privatisation of 20 years ago,” CEO said in reaction to the news.

“The paper builds very constructively on the work done previously,” Newman says. “It takes into account most of the key issues raised in submissions, and sets a timetable with milestones. It is an excellent blueprint on which to build.” …

also welcomed the plan, saying it is “delighted” with today’s announcement of a regionally-based approach to investment.

“This is a world-leading programme that can be expected to deliver the infrastructure New Zealand needs,” spokesperson says.

“Steven Joyce and the Government have put in place a framework that over time can deliver a widespread fibre rollout across urban New Zealand.”

Those unsure about the benefits of ultra-fast broadband, might want to read the guest post from Rod Drury earlier this week.

(and Kelly Gregor) at NBR cover the proposal in detail. Keall highlights a new focus:

In the proposal document released today, the minister also flags that “The capacity and reliability of New Zealand’s international data connectivity will become increasingly important as LFCs’ [local fibre companies'] networks are deployed over the course of the UFB Initiative.”

The Commerce Commission recently identified slow international data as a roadblock to better domestic broadband performance, with testings showing that overseas pages take twice as long to load as those hosted locally – even with our current copper-dominated networks.

International bandwidth and data costs are often cited as a big issue also.

In a fit of good timing, Juha Saarinen has an article in Computeworld on dark fibre, and how you basically can not get it from Telecom or TelstraClear. Have a look at this price comparison and weep:

, who runs Palmerston North-based ISP Inspire Net, says the reason dark fibre is attractive to his customers is because they can “do whatever the hell they want with it.” Inspire currently charges $595 and $995 for intra-town dark fibre pair leases, depending on contract terms, and double that for inter-town unlit circuits.

To light the circuits, Watts says his company sells Gigabit Ethernet transceivers for $140 each.

A similar 1Gbit/s circuit from Telecom apparently costs $7000 a month, plus installation charges.It’s $69k a year according to Telecom’s pricing book.

Finally a focus on the issue of fibre providers being discouraged from also operating retail telecommunication services, both here and in Australia. Steven Joyce said in a Q&A:

Will Telecom have to structurally separate its network business to participate?

Any such decisions are up to Telecom.  The Government has made it clear that it will only invest money into fibre companies that are not controlled by shareholders who also operate retail telecommunication businesses.  The Government is also clear that potential partners who already own fibre assets can table options that involve those fibre assets being vended into any new fibre companies.

Preventing vertically integrated monopolies is crucial. This basically means Telecom can not be a majority shareholder in any regional fibre company unless they structurally separate (ie sell off Chorus). They can have a minority stake however.

In Australia, the Government has done similiar:

The government could also deny Telstra access to new spectrum for advanced wireless broadband unless the telco sells off its cable network and 50 per cent stake in Foxtel (25 per cent owned by News Corporation, owner of The Australian)

If you want to be part of the future, you need to be separated.

For those who think separation is not a big issue, think what it would be like if Air New Zealand owned the airports and could set access terms for other airlines. Or if Ford owned the roads and set the rules for what other cars could drive on them, and for how much.

So as I said, very pleased with the announcements today, and now working my way through the details.

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16 Responses to “Fibre to the Home proposal finalised”

  1. Nigel (514 comments) says:

    It’s good, but also bad. For the 75% of NZ in cities > 10k brilliant. For the small towns & areas where broadband access would enable them to compete internal to NZ as this is intended to allow NZ to compete globally, it’s really ugly & yeah I’m one of the ones who live in a town smaller than 10k, so it feels very much bitter-sweet this proposal.

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  2. peterwn (3,271 comments) says:

    Judging by the way Infratil people carry on, Air NZ would like to ‘control’ the airports and the way they are run. In the 1980’s Air NZ was quite happy to operate out of a tin shed while the newly established Ansett domestic operation built a new terminal for itself. Air NZ moans about landing charges at Wellington, but forgets that landing charges + taxi is cheaper in Wellington than Auckland.

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  3. TG (4 comments) says:

    It seems that NZ and Australia are moving in much the same direction in telecommunications – both building a broadband network and dismantling the old monopoly telephone operators. Surely, this would be a good time to begin moves to a common telecommunications market (one of the few areas not included in the CER/SEM agenda). This would undoubtedly be good for competition, but could also be taken further and have substantial benefits for the whole economy. Just some of the benefits could include:
    – integration of telephone systems, allowing numbers on both sides of the Tasman to be called as if domestic without the need for international codes or charges – would also mean that a business could operate with a single number to call from both sides of the Tasman, being able to operate across Australasia from a single office.
    – end of international roaming charges for cell phones
    As well as the savings made from ending international charges, this could have a big effect on how people perceive the other country and would do much to make John Key’s desire for it to be as easy for someone in Melbourne to do business in Auckland as in Sydney.
    Probably the biggest things blocking a single market to this point has been the existence of national monopolies in the form of Telecom NZ and Telstra – now that these monopolies are being dismantled progress should be a lot easier.

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  4. getstaffed (9,186 comments) says:

    Can someone please find philu’s address… and ensure he stays on the best old copper we can find? No point in have flash new dark fibre overdosed with punctuation.

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  5. Will de Cleene (485 comments) says:

    Good plan. One way to mitigate the international bottleneck is to locally re-peer the internet again.

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  6. Repton (769 comments) says:

    Good plan. One way to mitigate the international bottleneck is to locally re-peer the internet again.

    +1. I’m on Telstra. speedtest.net gives me great speed to Sydney, reasonable speed to LA, and mediocre speed to my home town Wellington..

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  7. davidp (3,581 comments) says:

    TG>integration of telephone systems, allowing numbers on both sides of the Tasman to be called as if domestic without the need for international codes or charges

    All of Australia is covered by four area codes, with 08 (WA, NT, SA, and bits of NSW) covering about 5 million square kilometers.

    NZ could share an area code with Qld, perhaps? People wouldn’t know if they were phoning Brisbane or Bulls.

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  8. davidp (3,581 comments) says:

    Will>One way to mitigate the international bottleneck is to locally re-peer the internet again.

    I understand peering. But what does “re-peer” mean and why would you do it? Is there some deficiency in how it is set up in NZ?

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  9. wreck1080 (3,906 comments) says:

    I reckon this will be a bit of a mess in some places. This fragmentation of network operators is asking for trouble.

    You will get good service in some places, poor in others. We’ll end up with a network class system, with some better off than others. Just my opinion though, maybe i have totally misread the situation.

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  10. TG (4 comments) says:

    NZ could be integrated into the Australian numbering system pretty easily, especially if it used one of the unallocated area codes, e.g. (06). You could just combine the current area codes into the phone numbers to create eight-digit numbers.

    To take a couple of NZ numbers for example, say one from Auckland and one from SI:

    In NZ you would currently dial: (09) 624 6908, (03) 338 7743
    In Australia you would currently dial: 0011 64 9 624 6908, 0011 3 338 7743

    This could be changed to:
    In NZ: 9624 6908, 3338 7743
    In Aus: 06 9624 6908, 06 3338 7743

    NZ mobile numbers could either be assigned new numbers in the (04) range, like Australian mobile, or put onto a totally new area code, e.g. (09).

    Given that more and more and more kiwis are living and doing business across the ditch integration of the two systems would make sense and would not be unreasonable – W.A. is further removed from most of the Aus population than N.Z.

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  11. RodD (12 comments) says:

    What is the Government’s thinking around dark fibre? Genuine question I just don’t know why this would be desirable. I would have assumed that open access to a home router would be ideal so you can flip services easily. Essentially you have an IP address.

    Also I’d like to see local peering mandated so as much traffic stays on net and local for cost, efficiency and resiliency reasons.

    But like to know why MED has pushed for dark fibre specifically.

    Thanks

    Rod

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  12. Will de Cleene (485 comments) says:

    I plead guilty on muffing the jargon :-)

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  13. Falafulu Fisi (2,179 comments) says:

    The question here is, how would this partnership government/private going to advance this technology? Here is what I suspect. This partnership starts with standard fibre and then the infrastructure will rot there exactly as current Telecom copper network is, so where is the incentive to upgrade?

    PS : I assume that this intended fibre network is just the standard traditional fibre network and not the hyper-fast ones that have been available in the market recently.

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  14. getstaffed (9,186 comments) says:

    For any statistics junkies… check out NZs Internet Stats. Our rankings are sobering.

    And additional info on homepage of speedtest.com. You’ll see that The Republic of Moldova is listed at the 10th fastest internet downloads at 9.8Mb/sec while NZ appears at 48th on 4.11Mb/sec. I wonder if porn is Moldova’s biggest export!

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  15. Poliwatch (335 comments) says:

    Rod, the industry asked for the ability to provide Layer 2 and it got that. I suspect you will see much more Layer 2 than open access fibre being provided into businesses and homes. Service Providers will bundle their services on top of Layer 2 to provide a full service.

    I think MED know this, but politically it looks like they are still placing a focus on open access fibre.

    Open access fibre might be an option in larger centres – Auckland and Wellington (although I suspect it is still uneconomic). Layer 2 will be provided in smaller centres. That is the service already being requested by and being provided to Service Providers. It makes economic sense for all levels in the industry.

    Also have a look at the full proposal and note the economic feasibility pull-out ability for Stages 3 and 4. That is the role out to homes. So business, education, health get roll-out and a first tranche of households but no guarantees after that. National is selling this as FTTH without any real promise of delivery – but they do get the biggest benefit by delivering the first two stages. I don’t disagree with the outcomes – but it is a bit of political smoke and mirrors.

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  16. Luke H (73 comments) says:

    Yay, faster internet for downloading porn! And all paid for by the taxpayer.

    Wait, that’s me. Crap.

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