The government agency charged with selecting partners in the $1.5 billion Ultra Fast Broadband (UFB) network has announced it will start negotiating with three regional fibre providers.
Crown Fibre Holders (CFH) intends to commence negotiations with providers NorthPower (Whangarei), the Central North Island Fibre Consortium (Hamilton, Tauranga, Cambridge, Te Awamutu, Tokoroa, New Plymouth, Hawera and Wanganui) and Alpine Energy (Timaru). The announcement signals a regional approach is being taken to rolling out the UFB.
In addition, CFH has announced a shortlist of 14, which includes Telecom but excludes the Canadian bid Axia NetMedia.
Telecom announced a trading halt after 10am this morning, and has released its own media statement in which it estimates that three initial areas will cover about 12 percent of the country. Telecom CEO Paul Reynolds pushes for a national solution.
“We continue to believe that a national solution is the most efficient and effective way of delivering fibre to New Zealand while avoiding duplication and waste. We stand ready to work closely with the government to make sure that we can, in the spirit of partnership, make the most of this once-in-a-generation opportunity for New Zealand."
Reynolds also points out that CFH do have the power to make legislative change. “We recognise that our bid is more complicated than those of other bidders, and that Crown Fibre Holdings does not have a mandate in the areas of RBI, regulatory reform and legislative change. Telecom’s proposal includes a potential structural separation by demerger in July next year. Telecom will need appropriate engagement with the whole of government in order to meet this challenging timeframe.”
Bit of a blow
IDC market analyst Rosemary Spragg says today’s announcement is a “bit of a blow” for Telecom but, most importantly, they haven’t lost the major centres of Auckland, Wellington and Christchurch.
“The announcement signals a regional approach but doesn’t rule out Telecom in the other regions,” she says.
“But a regional approach will be of most concern to Telecom, rather than a national focus for broadband.”
She says she was expecting a “full hog” announcement rather than a piece-meal one. “This reflects the government desire for action.
“If Telecom gets the remaining regions, I don’t think it will impact too much on the company.”
TUANZ and InternetNZ celebrate
InternetNZ CEO Vikram Kumar says: "Assuming these agreements can be brought to a conclusion, they represent a tangible step forward in bringing unconstrained broadband to these areas. We look forward to the recommendations for binding offers in October." TUANZ CEO Ernie Newman writes on the organisation's blog: "This is great news if you live in their respective catchments - Whangarei, Hamilton, Te Awamutu, Cambridge, Tauranga, Tokoroa, New Plymouth, Hawera, Wanganui, or Timaru. Unless the negotiations trip up, those cities like being first cabs off the broadband rank - and remember, John Key is still on record signalling fibre in the ground somewhere before Christmas."
- CityLink Ltd covering Wellington Region including the Hutt Valley and Porirua
- Central Fibre Consortium. This is a consortium between Counties Power Ltd, Eastland Group Ltd, Horizon Energy Distribution Ltd, Unison Networks Ltd, and Centralines Ltd, and covers Pukekohe, Waiuku, Rotorua, Taupo, Whakatane, Gisborne, Napier, Hastings, Palmerston North, Feilding and Masterton
- Electra Ltd covering Levin and Kapiti
- Electricity Ashburton covering Ashburton
- Enable Networks Ltd covering Christchurch and Rangiora
- Flute Network. This is a consortium between Aurora Energy Ltd, Electricity Invercargill Ltd and The Power Company Ltd, covering Dunedin, Invercargill and Queenstown
- Network Tasman Ltd covering Nelson and Blenheim
- Network Waitaki Ltd covering Oamaru
- Telecom Corporation of New Zealand Ltd covering all 33 Candidate Areas
- Vector Ltd covering the Auckland region
- Westpower Ltd covering Greymouth
Axia NetMedia Corporation, covering all 33 Candidate Areas
Minister's press statement
"Crown Fibre Holdings’ announcement today of a shortlist of partners for the Ultra-Fast Broadband (UFB) Initiative and plans to commence negotiations for the first stage of the roll-out shows further solid progress, says Communications and Information Technology Minister Steven Joyce.
Of its shortlist of 14, Crown Fibre Holdings (CFH) has initially elected to commence negotiating binding offers with three regional fibre providers: NorthPower (covering the Whangarei area); the Central North Island Fibre Consortium (covering Hamilton, Tauranga, Cambridge, Te Awamutu, Tokoroa, New Plymouth, Hawera and Wanganui); and Alpine Energy (covering Timaru).
Mr Joyce says the announcement is an important and exciting step closer to the business end of the UFB Initiative.
“CFH’s shortlist shows there are a good list of potential partners for the Crown to deliver on its UFB objective of 75 percent coverage across the country within 10 years.
“Throughout the UFB process I have been urging potential partners for the Crown to put their best feet forward. The government will partner with those groups that will deliver the best value for New Zealand taxpayers.
“The proposals of the three parties elected for negotiations as part of the first stage of the roll-out show significant promise and would deliver a strong first step in the roll-out of UFB.
“I look forward to receiving CFH’s recommendations on binding offers in October and to seeing the first deployments commencing before the end of the year.”