Joyce leaves door open for Chorus partnership in broadband roll-out

Wednesday 16th September 2009

Communications Minister Steven Joyce has left the door open for Telecom Corp.’s Chorus division to buddy up with the government’s new investment company to roll-out ultrafast broadband.

Joyce confirmed a single partner could win the contract to multiple regions, including national bids, in rolling out broadband in the 33 largest urban areas.

This is good news for Telecom, which pitched its local access network manager to partner with the government agency in April saying the government would be able to leverage the telecommunications company’s existing infrastructure without Chorus taking “one cent in profit from any government investment.”

If Telecom is selected as a partner with the agency, “any consequential changes to its operational separation undertakings will be managed according to the processes set out in the Telecommunications Act 2001,” and will be subject to public and industry consultation for approval, according to the Ministry of Economic Development overview of the initiative. It also stipulated that the partner companies “must not provide retail services.”

Shares in Telecom, the nation’s largest listed company, fell 0.4% to $2.67 and have gained about 19% this year.

The $1.5 billion investment to offer ultrafast download speeds to three-quarters of the population within the next decade will be overseen by Crown Fibre Holdings, a new government-owned agency, which begins next month.

The government has pledged to lift the nation’s uptake of high-speed internet from near the bottom of the OECD. Joyce said the government will only invest in open access, wholesale-only, passive fibre network infrastructure.

Crown Fibre will work with each partner to establish a commercial vehicle to roll-out the dark fibre products, which provide raw access to the underlying network. The partner selection will begin next month and is expected to be completed in the June quarter next year.

“Already a number of companies have shown interest in the government’s broadband initiative,” Joyce said in a statement. “It’s time to get on with finding the right partners to build these networks.”

The government “is prepared to accept a less than commercial return” from the partners. It aims to hold less than 25% in the partnered investment vehicles and will resist contributions of more than 50%.

Joyce said he expected to make an announcement on the government’s rural broadband strategy soon, and last week said the $300 million needed for its plan will be a mixture of public and private funding.

The $1.5 billion ultrafast broadband fund “generally” isn’t intended for the rural strategy, according to the MED report. Achieving technical and operational consistency across the country will be necessary for the success of the initiative, and the MED signaled industry- developed standards would be beneficial.

Businesswire.co.nz

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