Vector’s bid to partner with the government in the Ultra Fast Broadband network has failed, but the company may still have a role to play – working with Chorus in its roll out.
Mark Ratcliffe, current Chorus CEO and the man widely tipped to head the new Chorus after Telecom’s structural separation, says it is open to talking with Vector.
“I think if Vector has got something that could speed up the build process or could bring us better economics, I think we would be happy to entertain them,” he told Computerworld.
He was speaking after the press conference which took place in Auckland today to explain the decision to award Telecom and Enable Networks in Christchurch the remaining 25 candidate areas in the UFB. It was run by ICT Minister Steven Joyce and attended by representatives of Telecom, Enable Networks and Crown Fibre Holdings, the government agency that brokered the deals.
The wholesale pricing starts for the UFB network at around $40 a month for a basic connection and Joyce says he expects the retail margin is likely to be similar to what it is for the copper network.
Joyce says the total cost of the build is likely to be around $3.5 billion; of that $1.3 billion is a taxpayer contribution, although this is expected to be paid back to the government over time. The goal is that in eight and a half years, the fibre network will pass 75 percent of New Zealand homes, schools, business and hospitals.
Chorus treated differently
Chorus is to be treated differently than the other three partners the governemnt has selected. The government will fund Chorus directly up to $929 million and this funding will be a 50/50 split of debt and equity. Crown Fibre Holdings chairman Simon Allen told the press conference this would be repaid over 15-25 years (it is understood the other partners will be expected to repay their taxpayer contribution in less than 10 years, so that the Local Fibre Company effectively becomes a private company by 2020).
Allen says the deployment schedule – as in which area will get the UFB first – have yet to be agreed. But he says Chorus will start rolling out fibre to all its 24 urban centres this year.
When asked why Telecom was chosen over Vector in Auckland, Crown Fibre Holdings chief executive Graham Mitchell replied that it came down to number of factors including pricing, confidence of the build and financial position. “This was a process run right to the end.”
Speaking to Computerworld after the press conference today, Chorus' Ratcliffe says it hasn’t been possible to speak to Vector because of the commercial nature of the negotiations.
Meanwhile Vector released a statement to the NZX today wishing Telecom and Enable Networks “well in their endeavours”.
“Our offer was for open access fibre to the home and also sought regulatory certainty given the continual and widespread uncertainty of regulation in New Zealand,” Vector CEO Simon Mackenzie says.
“We note that the arrangement struck with Telecom differs from that set out in the ITP and is subject to shareholder approval and legislative change.
“Vector has been and will continue to operate a successful competitive fibre business. It performs well and this change creates further opportunities for us.”
Computerworld has sought direct comment from Vector today.