NZ's broadband bill total could hit $7 billion

The total investment required for rolling out fibre to the home and connecting those homes to fibre could be up to $7 billion.

A fibre-to-the-premise cost study (pdf) prepared for Treasury puts the fixed passive investment required for coverage of urban New Zealand premises -- the 75% the government proposes should receive broadband over the next 10 years -- at between $2.6 billion to $3.3 billion.

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The study, released to Computerworld under the Official Information Act, was prepared by Murray Milner, of Milner Consulting. Milner was chief technology officer at Telecom up until 2005.

However, the total investment required for connection of those premises will lie in the range of $5 billion to $7 billion, the report says.

"It is very challenging to achieve a premises-passed unit cost of substantially less than $2000, even using low-cost deployment techniques to the greatest extent possible," the study says.

It concludes that the government's proposed investment of $1.5 billion will provide about 50% of the investment required to deliver fibre that passes premises.

"The cost of connecting a premise remains a substantial component of the total cost of deployment of fibre to the premises (FttP), even after the premises have been passed by fibre infrastructure."

Deployment techniques analysed include: aerial; micro-trenching; and intelligent directional drilling. The latter is a new approach.

The study recommends a uniform policy be established for the use of aerial plant across urban areas, which clearly defines where it can be used and where it cannot.

It says a set of best practice guidelines should be established for such aerial deployment.

It also recommends a pilot of micro-trenching be funded by the government to determine the best practice guidelines to be applied nationwide, along with applicability and costs for intelligent directional drilling be investigated and then be reflected into updated cost models.

The study claims current models have significant limitations in terms of an accurate assessment of the likely cost of providing an FttP solution to the lowest cost 75% of premises in New Zealand.

It recommends a more detailed cost modelling exercise be undertaken, based on a block-based, high-level solution design. The coverage area would be divided into blocks, each of which had some consistency in terms of deployment characteristics -- for example, blocks suitable for mainly aerial deployment or mainly micro-trenching.

The study recognises that such an exercise would cost "some hundreds of thousands of dollars".

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