ICT Minister Steven Joyce told a press conference today that the electricity companies confirmed as partners in the Ultra Fast Broadband network are not expected to behave like telcos.
“They’re not being asked to be telcos,” Joyce says. That level of business will be driven by the ISPs. “CFH has been in considerable discussion with a range of ISPs to ensure they’re up with the play and ready to take advantage of the initiative.”
Northpower and WEL are experienced at the level of fibre networking for which they have been engaged, he says; Northpower in particular has been “very active in the fibre space”, so Joyce has no fears of problems arising from any lack of experience.
In the event of either providers or those subsequently chosen not proving up to the task and having to back out – as Woosh Wireless did on three regions of the previous government’s Probe schools broadband initiative - “there are always contingency plans”, he told the media, without providing further into detail. “But I don’t see a reason why that [non-performance] would occur. These are very good deals, for the companies involved and for CFH.”
There will be a retail margin factored into the cost of UFB services to the end-customer, he says. However, since the agreed wholesale price is comparable with that for existing ADSL services, the end price can also be expected to be similar to those services, for a much faster connection along with new services that have not been possible before.
The risk of UFB take-up falling below expectations will be shared between the Crown and the private partners in a way “very close” to that outlined in the original Invitation to Participate, Joyce says. “I think both parties have gone in very carefully with their pricing and their plans to encourage uptake and I don’t have any concerns in that regard,” he says.
The final price to the customer will be left to the mechanisms of free competition, he says.
The “killer app” in Joyce’s opinion will be “video and particularly two-way video” – both in the business videoconferencing context and for home users. He also cites the well-trodden promise of health and education applications.
Asked why smaller centres have been chosen to receive service first, Joyce replies that those are the centres serviced by the providers that have been chosen. The logical following question – why were those providers first to conclude contracts with the Crown? – he referred to CFH, from which the following reply was later emailed to Computerworld:
"Northpower and WEL subsidiary Ultra Fast Fibre were selected on the quality of their offers, rather than the areas they cover. These parties presented offers which displayed the best combination of access prices, funding provisions, industry experience and financial backing," says CFH spokesperson Paul Clearwater.
The relative ease of laying fibre in less urbanised areas was no doubt a factor, says Joyce, but only one among a number. “Price is another,” Joyce says, but various parameters will come into the negotiation with the providers; “every company has a different view as to what’s value for them.” WEL and Northpower “were just the ones that were closest to CFH’s aspirations first.”
He was not prepared to put a timetable on conclusion of negotiations with potential providers to other parts of the country. “Obviously as far as I am concerned the sooner the better, but if you put limits around negotiations, that makes it far more difficult for CFH to do its job and to get the best value for money for taxpayers. We have to give them time to make those calls.”
Joyce declined to comment when asked how much more of the country could be put out of reach of Telecom, before it would lose interest in participating in UFB. “That’s a question for Telecom to answer,” he says.
Telecom in a statement today acknowledges, “time is running out and we are conscious that our shareholders need resolution,” while at the same time emphasising that it is “open to partnership with other public and private sector owners of fibre assets, including the parties selected as CFH’s partners.”