Telecom and Enable announced as partners in UFB

UPDATED: Chorus offers insights into its rollout plans, announces new Chair, looks to partner with Enable

Telecom and Enable Networks in Christchurch will partner with the government in the Ultra Fast Broadband network.

ICT Minister Steven Joyce announced today that Enable Networks, which is owned by the Christchurch city council, will build the UFB network for Christchurch, Rangiora and surrounding areas. Telecom will build the fibre network in Auckland, eastern and lower North Island and most of the South Island.

Contracts for the central North Island and Northpower were previously awarded to lines companies.

Having won the lion’s share of the UFB, Telecom must now structurally separate, that is split off its network arm Chorus into a separate company.

Joyce says the rollout in Christchurch will be among the first: “The rollout will start immediately with schools, hospitals and businesses covered by 2015, and links to all homes completed before 2019.” All 33 UFB candidate areas have now been awarded by Crown Fibre Holdings to its partners. The approved agreements, as listed by CFH, are:

  • Northpower Limited: covering Whangarei
  • Ultra Fast Fibre Ltd, led by WEL Networks: covering Hamilton (including Cambridge and Te Awamutu), Tauranga, Tokoroa, New Plymouth, Hawera and Wanganui
  • Enable Networks Limited: covering Christchurch (including Rolleston) and Rangiora
  • Chorus: covering 24 Candidate Areas (all areas except those covered by Enable, UltraFast Fibre Limited and Northpower): Auckland, Waiheke Island, Pukekohe, Waiuku, Rotorua, Taupo, Whakatane, Gisborne, Napier-Hastings, Palmerston North, Feilding, Masterton, Kapiti, Levin, Wellington, Nelson, Blenheim, Greymouth, Ashburton, Timaru, Oamaru, Dunedin, Queenstown and Invercargill.

Chorus rollout

Chorus, in a statement released hard on the heels of the UFB announcement, says that between 2012 and 2015 fibre will be delivered first to priority customers – schools, hospitals and businesses. In the first 12 months 299 schools and 30 hospitals will be connected and by 2015 an additional 736 schools and seven hospitals will be connected.

Telecom CEO Paul Reynolds says Chorus will be able to deliver fibre past all premises in the 24 regions by 2019 and “ensure wholesale prices for fibre products are in line with current copper pricing.”

The statement says that before the end of 2011, Chorus’s existing fibre will be also made available to Retail Service Providers as open access for connecting customers. The entry level wholesale price per month for a 30Mbps plan will be $37.50 and 100Mbps plan will be $55.

Telecom splits

Telecom intends to demerge Chorus by the end of the calendar year. It has named Sue Sheldon, currently a Telecom director based in Christchurch as Chairman of Chorus. Sheldon also sites on the boards of several other NZX companies such as Freightways and Contact Energy.

The structural separation is subject to certain conditions, including stakeholder approvals and legislative change, but Telecom "intends to demerge via a court approved scheme of arrangement by late 2011."

Meanwhile Telecom will become a "retail-focused telecommunications business comprising fixed, mobile and ICT businesses".

"It will also provide some other non-regulated services to the industry, such as national backhaul and certain commercial wholesale services. After a demerger Telecom will no longer own local access fixed networks and will build and deliver services to end users using the Chorus network, just like other RSPs. Telecom’s ownership restrictions will pass to Chorus,” the statement reads.

Empire building

Chorus has been awarded around 75 percent of the UFB coverage area and it is looking for a stake in Christchurch, despite this area being awarded to Enable Networks. In a statement today, Chorus says it intends to engage with Christchurch City Holdings (CCHL) and its subsidiary Enable in partnering discussions “which could result in Chorus taking up to a 50 per cent stake in a joint venture in Christchurch and Rangiora.”

Together with its joint-agreement with Vodafone to partner with the government on the Rural Broadband Initiative, Chorus has secured its future as the main telecommunications infrastructure provider in New Zealand.

Meanwhile Nga Pu Waea, the Maori working group on rural broadband, has had its mandate extended to include the UFB network, the Government announced today.

Maori Affairs Minister Pita Sharples and ICT Minister Steven Joyce made the announcement, together with a name change to the National Maori Broadband Working Group, as the outcome of the UFB tender was announced.

“Representatives from all partner companies will be required to meet every two months with the Working Group, and together they will report every six months to me and Sharples,” Joyce says in a statement.

Enable victorious

Enable has been awarded the contract to construct the Government-backed fibre network to 180,000 premises in Christchurch, Rangiora, Kaiapoi, Woodend, Lincoln, Prebbelton and Rolleston.

Enable Networks Chairman Bill Luff, in a statement, welcomed the company’s involvement in UFB. “We anticipate that for the initial 20 year spend of around $500 million, some 3500 jobs will be generated in the region, providing a significant stimulus to local GDP. We haven’t seen a local infrastructure project of this scale in our lifetime.”

He says Enable’s UFB success confirms the decision four years ago by the Christchurch City Council and Christchurch City Holdings Ltd to invest in building a world class broadband network for Christchurch businesses and schools.

Luff claims the build will total 3.5 million metres of new fibre optic cable and will be completed within the government’s network build deadline.

“The UFB project will provide significant direct employment opportunities within Enable and we expect to generate over 250 contracting and construction jobs in the next year, which will be a welcome boost to businesses and employment in the city.”

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