4 min read

First copper cabinets decomissioned

Chorus turned off the first batch of copper cabinets while the Commerce Commission cleared the Orcon-2degrees merger

Urban copper removal underway

If everything goes to plan, by the time you read this Chorus will have turned off the power at 28 roadside cabinets serving the copper phone network. The cut off was scheduled to take place this week.

It is the start of a process to decommission cabinets on the copper network in places where people have access to fibre. The process could take up to four years.

The copper switch off comes at a time when connections on the network are plummeting. In its recent Annual Telecommunications Monitoring Report, the Commerce Commission reports that copper connections dropped 30 percent in the year to last September. At that time there were 308,000 copper connections.

The technical part of moving customers off copper may be simple, but following the Commerce Commission’s Copper Withdrawal Code is less straightforward. The code specifies the notice Chorus has to give customers before it can remove their connection.

At least six months

In normal times the process takes at least six months and involves three written notices. It took much longer to decommission the first 28 cabinets because parts of New Zealand went into lockdown after the process started making it hard to install new fibre connections. That saw the process put on hold for six months and more rounds of notification letters.

Because Chorus is a wholesale company, it doesn’t have a direct relationship with the customers using its lines. This means it has to work with retail services providers during the shut-off process – they own the customer relationship.

There’s a Commerce Commission-lead review of the withdrawal code scheduled for May which may refine the process.

Chorus plans to cut the copper connections to a further 13,500 customers this year.

There are no plans to turn off the copper network in places beyond the fibre network.

Regulator clears 2degrees – Orcon merger

The Commerce Commission says it is satisfied a planned merger between 2degrees and Orcon will not “substantially lessen competition in any New Zealand market”.

The decision means instead of four major retail telecommunications companies there will now be three.

Deputy Commission chair Sue Begg says: “The evidence before us indicates that the merged entity will continue to face strong competition from existing competitors, including Spark and Vodafone”.

She says: “While the transaction will result in the vertical integration of 2degrees’ mobile network with the largest mobile virtual network operator (MVNO), Vocus, we do not consider the transaction will significantly change the incentives of network operators to grant access to MVNOs.”

MVNOs make up less than one percent of the mobile phone market.

While the merger is not certain, at this point there is little to stop it completing.

Orcon CEO Mark Callander, who will head the merged business says it is the first step in the regulatory approval process.

He says: “While we await further regulatory approvals, both companies continue to drive their businesses forward, delivering quality services and support for all customers.”

Before the two companies entered merger negotiations both were planning listings. The business was part of The Australian Vocus group and until late last year was known here as Vocus NZ. The Australia parent company’s new owner was looking to float the New Zealand business on the NZX. 2degrees has also explored a local float.

Analysis: 2degrees-Orcon merger

One of the justifications for merging two telecommunications companies is the huge potential cost savings that can come from combining and simplifying internal resources and processes.

That and cross selling opportunities such as exposing former Orcon customers to 2degrees mobile network sales or 2degrees customers to Orcon’s power utility products.

It sounds good and it can be, yet New Zealand telecommunications sector mergers have been notoriously messy affairs in the past. In part this is because of difficulties consolidating back-end systems. Vodafone took years to integrate systems from ihug and TelstraClear. That was one reason Vodafone struggled with customer support for years.

Even if the new merged business can avoid the Vodafone-TelstraClear experience, it will be inwardly focused for months to come as it works through aspects of bringing two companies together.

Monitoring report shows fibre, fixed wireless progress

The Commerce Commission’s Telecommunications Monitoring report for 2021 shows fibre now accounts for 64 percent of broadband connections. In September 2021 1.78 million households were able to connect to fibre and 1.18 had made the move.

Fixed wireless climbed 25 percent in the year to September 2021 and now accounts for 15 percent of connections. The report says this means New Zealand now ranks at the fourth highest OECD nation for fixed wireless.

The report suggests that high-use broadband customers get a better deal by international standards than low-use customers. The reverse is true for mobile users. Entry level plans are cheap in New Zealand by international standards while local high use mobile plans are more expensive than overseas.

Worldwide telecom equipment market up 7 per cent in 2021

Dell’Oro Group says the telecommunications equipment market grew 7 per cent in 2021. It was the fourth consecutive year of growth underpinned by investment in wireless technology. The total equipment market is now worth close to US$100 billion a year.

Huawei remains the largest supplier with about a quarter of the worldwide market. However, this is in part because China is the largest single market. Taking that country out of the picture would see Nokia and Ericsson tie for top spot. Each have around a 20 per cent market share. Outside China, Huawei is third with 18 per cent share.

… in other news

Customers of the soon to close Vodafone TV service who bought the companies set-top boxes from retailers will get partial refunds. The move affects about 40,000 customers. Those who purchased the $179 box in the last nine months will get a full refund. Others will get a smaller amount depending on when they purchased the device.

High-tech is now a major part of New Zealand’s exports to the US. A report issued by the NZUS Council says digital services accounted for $682 million in exports to the US.

A study by security company Norton found a third of New Zealanders experienced cybercrime in the past year. On average we each spend 4.8 hours attempting to resolve the issue and there was an average loss of $135.

The Office of the Privacy Commissioner has awarded its Privacy Trust Mark to Securiti’s PrivacyOps. The product is a tool to help organisations understand the data they hold. It can link to the data allowing them to use it more efficiently.