Telecom pitches Chorus as partner for broadband network

Tuesday 28th April 2009

Telecom has pitched its Chorus division as a partner to the government’s roll-out of ultra-fast broadband, taking advantage of the utility’s existing infrastructure.

The first option proposed by Telecom would see the government’s Crown Fibre Investment Company, which will invest alongside private sector groups in regional fibre companies, contract directly with Chorus using existing fibre.

The second option would see the government create a new agency called the Crown Fibre Network Company that would outsource the building of a duct network to Chorus. The duct network would be designed to connect to ducting and fibre networks already deployed by network operators.

“Through Chorus, the Government can deliver more fibre, faster, to more people than any other company, and do it in a way that ensures that Chorus does not take one cent in profit from any government investment,” said chief executive Paul Reynolds, in a statement.

“Prices would be set so that Telecom would not make a profit from the government component of any investment - all of the value would be returned straight to the nation.”

The government pledged to roll out ultra-fast broadband to 75% of New Zealanders over the next 10 years, aiming to lift the nation’s take-up of high-speed internet from near the bottom of the OECD. The government will spend some $1.5 billion for the roll-out and expects private partners to invest a similar amount.

In its submission, Telecom agreed with Treasury’s consultation document that expects the cost of the roll-out to balloon, with the $1.5 billion likely to provide 20% to 40% of the total cost of fibre. It also raised concerns over the potential profitability of smaller regional partners, and said “competition from existing network operators could further undermine the business case for a fibre network operator.”

The carrier also raised reservations about unnecessary costs it faces due to its operational separation undertakings.

The company’s stock rose 2.7% to $2.70 in trading on the NZX 50 index today.

Across the Tasman, Telstra, Australia’s largest phone company, was initially left out of the bidding round to roll-out that country’s high-speed network after it failed to include a small business plan in its proposal in November.

Businesswire.co.nz

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