Vector CEO Simon Mackenzie claims that if Telecom partner with the government in its Ultra Fast Broadband, the fibre network will be delayed.
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Copper has run its course and should now be decommissioned in favour of fibre-optic says Vector, and warns that delays in delivering fast broadband to everyone will see New Zealand fall further behind its trading partners.
Vector’s view is that fibre to the premises is the only option to deliver the targets set by the government’s Ultra-Fast Broadband programme. Referring to OECD economist and telecommunications specialist Dr Taylor Reynolds speech in Wellington in April this year, Mackenzie says “no-one’s talking about rolling out VDSL2 anymore.”
“Advanced countries like Japan and Korea are abandoning VDSL2 according to the OECD,” Mackenzie says. Japan and Korea have the most VDSL2 subscribers in the world.
Copper is legacy infrastructure, Mackenzie says, and says it’d be “a hard sell to ask anyone to invest in it”. Telecom offering to de-merge or split off Chorus as an independent unit in the hope of taking part in the UFB won’t change this fact, Mackenzie says.
As for overbuilding Telecom’s copper network, Mackenzie doesn’t see it as a problem. “Telecom did just that when they overbuilt their own CDMA network with XT – why would a fibre network be any different?” he says.
Telecom Wholesale is presently preparing to further trial VDSL2 service with customers. It will be from exchanges and from its fibre-to-the-node (FTTN) roadside cabinets that are being deployed around the country, with the aim to eventually provide a premium, high-throughput broadband product.
An earlier, VDSL2 pilot showed promising results, according to Telecom Wholesale’s head of broadband Tim Pegler. Customers on the pilot have been achieving 50-60Mbit/s downloads and 10-15Mbit/s uploads.
In comparison, the government’s UFB programme aims to provide 100Mbit/s downloads and 50Mbit/s uploads with the bandwidth being dedicated and not shared with hundreds of users as it is on DSL.
Vector is pushing its open access fibred-up vision of the future hard at the moment, with Mackenzie saying fast broadband is “absolutely fundamentally critical for New Zealand as destination to live and to establish businesses in.”
Building a fibre network is also a perfect fit for Vector, which is in the business of providing infrastructure assets says Mackenzie.
According to Mackenzie, an investment in fast broadband needs to be looked at from a broader societal perspective, as it confers many benefits and savings in areas such as transport, education and health. The OECD says “spill-over effect” is estimated to provide 0.5 to 1.5 per cent savings on government expenditure. That alone is enough to pay for the investment required to build a point-to-point national FTTH network, Mackenzie says.
New Zealand politicians understand this, Mackenzie says, and describes Prime Minister John Key and Communications Minister Steven Joyce as “the two greatest broadband evangelists in the country.”
Infrastructure company Vector is making its bid for a share of the government’s promised $1.5 billion fibre-to-the-home broadband investment – provided the terms of the investment are favourable.
Yesterday the company reported its half-year results for the period ended December 2008.
CEO Simon Mackenzie said Vector was well positioned and financially strong enough to take advantage of opportunities that arise.
One of those is clearly the government’s broadband push, which he described as a “key focus'.
He said: “We have already had discussions with the Government outlining how Vector can deliver a cost effective, quality fibre broadband service in a short timeframe.
“We believe the Government must stay on track with its bold vision to deliver a first world, high speed broadband service to New Zealanders.”
Vector is well placed to deliver broadband infrastructure and coordinate with other network investors, he said, provided the arrangements meet the company’s investment criteria.
Vector has been investing in a fibre network in Auckland and Wellington for some years through its Vector Communications subsidiary, which styles itself as an open access network operator. It is expected an open access approach, under which access to the network is sold at wholesale prices, will be a key requirement for the new infrastructure to encourage retail competition.
If Vector were to win a significant portion of the government’s broadband business, that could be good news for Ericsson, the company’s technology partner in its current network rollout.
Mackenzie reported net profit after tax from continuing operations of $90.8 million, compared to $77.4 million in the prior year.