Chorus chair challenges telcos on slow VDSL uptake

Friday 28th October 2016

Some 400,000 internet users in New Zealand are on a slower form of internet connection than is available, with almost no cost involved in changing to the faster version, says Patrick Strange, the chairman of telecommunications infrastructure provider, Chorus.

In the latest poke from Chorus at telecommunications retailers, Strange said there some 179,000 customers on the fast copper line-based VDSL broadband service versus around 400,000 subscribers to the slower ADSL service, for which Chorus charges retailers the same price as VDSL.

Asked why retailers, such as Spark and Vodafone, weren't offering VDSL actively to the ADSL customer base, Strange said: "Good question."

VDSL provides online speeds of between 50-and-60 megabits per second, compared with speeds of up to 24MBs on ADSL, with most users experiencing much slower speeds. Fibre connections, which are becoming increasingly available nationwide, offer 100MBs as a standard, with demand for 1 gigabIt per second not far off, Strange said.

Strange's comments follow guarded criticism by Chorus chief executive Mark Ratcliffe last week of Spark's promotion of wireless broadband rather than fixed line services, as the retailer seeks to carve out defensible market positions in the fast-developing telecommunications market.

"Mobile has its place," Strange told BusinessDesk. "But they are always going to be constrained by capex (capital expenditure) and how much data they can put through their cellsites", with speeds falling off for home users if several different devices were drawing on large amounts of data at once, such as watching several TV programmes.

"My view is that fixed line will always win out" and that while data caps were almost a thing of the past for fixed line connections, they would continue to be a feature of mobile broadband packages.

"The retail market is still a little immature in New Zealand," Strange said, with exponential growth in data usage likely to continue for the foreseeable future, especially as consumers start experiencing the speeds available from fibre-optic cable connections that are now becoming widespread because of the government's accelerated roll-out programme for ultra-fast broadband.

"The one thing Chorus can do is to take more of a role to champion broadband," said Strange, an electricity industry veteran who has chaired the regulated, NZX-listed provider of the country's telecommunications backbone for almost a year. "You will hear a lot more from us about what's available to you."

Strange said that while a long period of regulatory uncertainty was now behind the sector, it was vital that the current review of the post-2020 telecommunications environment did not create a new source of uncertainty because New Zealand would be punished for it by international investors.

"They hate uncertainty and arbitrariness," said Strange, referring to the capital flight from Chorus shares that occurred during the Commerce Commission's see-sawing decision-making process over several years about where to draw the line between regulated prices for services provided by the existing, ageing copper-line network and the new fibre network. "A second strike will turn them right off."

Strange said the hunt for a chief executive to replace Ratcliffe, who has announced he will leave by mid-2017, was advancing, with New Zealand rating as an increasingly attractive location for Australian, international and expatriate New Zealanders.

"I'm sure we'll make an announcement in the New Year."

BusinessDesk.co.nz

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