Crown Fibre Holdings has concluded negotiations with Northpower and WEL Networks in a $200 million deal to roll out fibre as part of the government’s Ultra Fast Broadband network.
ICT Minister Steven Joyce has announced that the two companies have successfully negotiated with CFH following their selection as preferred partners in September. Northpower will roll out fibre in Whangarei. WEL Networks has formed a subsidiary called Ultra Fast Fibre Limited to roll out fibre in Hamilton, Cambridge, Te Awamutu, Tauranga, New Plymouth, Wanganui, Hawera and Tokoroa.
“Northpower will commence its roll out in Whangarei before Christmas with Ultra Fast Fibre expected to begin laying fibre early in 2011. Both companies will have completed their rollouts by 2015,” the Minister’s statement reads.
“These joint ventures represent nearly 16 per cent of UFB premises and a combined value of more than $200 million. The UFB Initiative will see 75 per cent coverage of ultra-fast broadband across New Zealand by 2019.”
Joyce says the access price CFH has negotiated will ensure the fibre network is within reach of both businesses and “everyday New Zealanders”.
“Wholesale household prices will start at $40 or less per month for an entry level product and $60 per month for the 100 Megabit product. There are no connection charges for households,” the statement reads.
In the accompanying fact sheet it states that UFB pricing is at the wholesale level. "End users should bear in mind that prices of retail UFB-based services will reflect non-LFC costs, such as national backhaul, international bandwidth, provisioning, billing and so forth. CFH, Northpower and Ultra Fast Fibre intend to publish final UFB wholesale prices priort to intial sales of retail UFB services."
CFH will shortly announce a list of parties with whom it will negotiate with in the remaining 25 UFB regions.
In September CFH announced it would be negotiating with Northpower and WEL Networks, as well as Alpine Networks in Timaru. In a Q and A posted on the CFH website it notes that Alpine remains a shortlisted party. “A recommendation to Ministers would only be made if a final binding offer had been made by Alpine and one has not yet been made.”
UPDATE 10.25am: InternetNZ's reaction
InternetNZ chief executive Vikram Kumar has issued a statement praising the decision by CFH to sign up two electricity companies to the UFB. "InternetNZ commissioned research in 2008 exploring the options for delivering National's ultra-fast broadband policty. That study showed that the economics of electricity line company investment in fibre stack up."
Kumar says the pricing information released today is "excellent". "The services will be affordable and really will drive uptake of fibre services, which is essential to making the UFB investment work, and to realising the economic gains the network can offer."
"The decision to impose no connection fee for households adds to the compelling nature of the offer, and avoids what could have been a real barrier to families taking advantage of fibre services."
Meanwhile ICT Minister Steven Joyce is due to make an announcement on UFB at The Beehive this morning.
UPDATE 12.20pm: Telecom says it is still in contention for remaining UFB areas
Telecom CEO Paul Reynolds says its proposal to participate in the UFB is “focused on the remainder of the country.”
“We continue to engage in the process being run by CFH to determine the successful partners for the rest of the country, however time is running out and we are conscious that our shareholders need resolution,” Reynolds says in a statement.
“We are firmly of the belief that a structurally separate Chorus as the cornerstone of a national framework for fibre is the most efficient and effective way to deliver the government’s fibre vision and that is reflected in our proposal.
“We are also open to partnership with other public and private sector owners of fibre assets, including the parties selected as CFH’s partners, where partnership can improve the overall economics of a national solution to deliver fibre further and faster for New Zealand,” he says.
Update 2.20pm: NZRFG says deals endorse regional approach
New Zealand Regional Fibre Group CEO Vaughan Baker says the awarding of contracts to Northpower and WEL validates the NZRFG’s regionally focussed approach.
“CFH has endorsed the model we have proposed from the start and I see strong merit in more of our members completing fibre network builds in the other urban centres around the country. This really has reinforced the expertise our members possess when it comes to fibre network builds,” says Baker in a statement this afternoon.
Jack Ninnes, WEL’s UFB Bid Project Manager, says work is scheduled to begin mid next year on the 5000km network with completion in five years. It will potentially bring fibre access to 430,000 customers.
Ninnes labels it a great result for the Government and the community. He believes it has paved the way for the Government to strike deals with more members of the New Zealand Regional Fibre Group.
Northpower CEO Mark Gatland says today's announcement is the culmination of three years of hard work by the Northpower fibre team, alongside members of the NZRFG.
“The Whangarei fibre network will provide widespread economic and social benefits for the city. It will be revolutionary,” he says.
Gatland says the consumer-owned company intends to get the UFB build underway and built in three years. Starting off with the central business district will revolutionise opportunities for local businesses.