Free non-standard UFB install scheme extended

At the New Zealand Herald Sophie Boot writes about non-standard UFB installations:

Chorus, the telecommunications network operator, will continue to provide free non-standard^[1] residential ultrafast broadband installations until 2019, under an agreement with Crown Fibre Holdings which could see its debt repayments to the government entity delayed.

The could part of that sentence is complicated.

There is a regulatory review in the pipeline. The Telecommunications Act will be updated by the end of 2019. That’s about the time Chorus and the local fibre companies will finish the first stage of the UFB network build.

Building block regulatory model

One of the proposals is to move to a building block regulatory model. If that happens, the cost of non-standard installations will most likely become part of the regulated asset base. In effect they become investments and Chorus will be able to earn a regulated return on the costs.

Chorus chief financial officer Andrew Carroll says: “In the event that this hasn’t occurred by 31 December 2020, or not all of Chorus’ actual UFB non-standard installation costs are included in the asset base, the dates on which Chorus must redeem or provide dividends on the CFH debt and equity securities will be postponed.”

Delay

In other words the debt repayments are delayed.

The Wellington-based company won the lion’s share of the government’s programme to build a fibre telecommunications network to 75 per cent of the country, a target which has since been extended to 80 per cent.

The first stage of the UFB programme will reach the 75 percent of the population living in cities and towns. It is due to finish by the end of 2019.

The government plans a second phase that will extend the reach to about 80 percent.

Non-standard UFB installs

Chorus has previously estimated the fibre network will cost between $1.75 billion and $1.8 billion to build, and forecast capital expenditure of between $580 million and $630 million in 2016. It has been providing funding for residential non-standard installations since late 2012, initially funding $20 million, which it increased to $28 million in 2014.

There was always going to be some way of extending the free non-standard installs. Apart from anything else, not doing so would be a political problem for the government. Yet the available money for this may not be open ended.

If you think you might want a fibre connection in the future and you live in a place which looks non-standard, it would make sense to take up the connection offer as soon as the fibre is laid in your area. If you leave it beyond the end of the UFB build, you may get caught with the installation cost.

Non-standard UFB installations are usually where someone lives down a long driveway, a right-of-way or in an apartment. ↩