Will Chorus woes put brake on NZ economy?

Communications Minister Amy Adams called for an independent review to find if Chorus can still build the ultrafast broadband network.

Does this mean New Zealand businesses might not get the fibre infrastructure needed to propel the nation’s economy into the fibre age?

Clearly there’s a risk. Ms Adams wouldn’t spend money on a review if there wasn’t a question to answer. And just look at scale of the political and industry hand-wringing.

Yet any threat to businesses is minimal.

Facts of fibre life

Some facts: Chorus is one of four companies building the government-supported UFB network. It has the lion’s share of contracts and is building Auckland’s fibre network.

Building started in 2011. The job is scheduled to complete in 2019. However, business areas, along with schools and health facilities, have priority. Those parts of the network should be finished by 2015.

Crown Fibre Holdings’ 2013 annual report says About 56 percent of priority areas are already connected. Almost two-thirds of schools are able to connect. So, for business, schools and health we are better than halfway home.

Depending on how events turn out with Chorus, government reviews and the Commerce Commission, the copper access price – which is at the heart of the current fuss – changes at the end of 2014.

By then around a third of the overall network will be complete and more than 75 percent of business areas connected.

Chorus should still be able to complete the build to business areas before its money runs out. Of course, there could be more government money, changes to the copper access price or some other form of respite.

On the other hand, if it comes to the worst case and Chorus pulls the plug, New Zealand’s business areas are a lucrative enough proposition to tempt other commercial network builders. It might not be the same UFB deal, but we can reasonably assume, the business part of the network will complete either on time or shortly after.

Things might not be as clear-cut for the residential build, but no-one is panicking about that yet. In the CFH 2013 report only 18 percent of homes were connected. That figure would be higher than 25 percent today.

One overlooked aspect of this, is many small businesses rely on home broadband connections. And so do remote workers and workers who may occasionally want to work from home. We don’t have statistics on how many there are, or what the economic effect of them not getting a fibre connection might be. Mind you, it may be that having a fibre to the node connection and VDSL may be good enough. That’s what I have to put up with for the next three or four years. It’s not that bad.

3 thoughts on “Will Chorus woes put brake on NZ economy?

  1. I’ve said this before, but I don’t really see how cheap fibre (fibre has always been available to anyone near a city who wants to pay. Mr Dotcom has had a high capacity fibre out in Coatesville for some time) is going to transform anything.

    I work from home on ADSL/Telstra Cable and from work on the same thing. My old job (I’m a web developer) we had fibre and even Karen access – it was marginally useful but not transformational.

    The main advantage I can see is that it increases the number of staff one can have connected before a wholesale fibre connection becomes a requirement, which will marginally cut a few firms overheads, at the expense of e.g. Citylink / FX Networks who will be struggling.

    • There is a difference between ‘well if you’re willing to pay a LOT’ and ‘everyone can reasonably have it’.
      Where would we be if mobile data was still at EDGE for most people, and only a few had 3G? Things don’t usually become transformative until the masses can get access. The thing is not to look to what today’s industry can do with it, but what tomorrow’s industry will be capable of doing.

    • I will say I am a web developer too and we have 2 fibre links to the office. Without this we would not be able to do our job, and almost need a third. We churn through more data in a day than most household would manage in a month. We are not situated in a big centre, so our Internet landscape is hugely different than working in, say, Auckland.

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