New Zealand businesses are embracing fibre rapidly according to new figures, but there are storm clouds gathering on the horizon, with several ISPs already snarling over proposed pricing for new unbundled fibre services.
Last week Chorus released its proposed unbundled fibre pricing with Vocus and Vodafone – which have already showcased an unbundled offering – immediately hitting back with claims the pricing is too high and will result in a NZ$40/month price increase for fibre users.
InternetNZ quickly jumped into the fray, calling on the ISPs and Chorus to reach an agreement – quickly.
Unbundling will enable retail ISPs to gain direct access to fibre broadband cables so they can install their own technology and manage the full service to their customer, rather than having Chorus or other local fibre companies manage the broadband package details such as speed.
From next year, fibre companies – of which Chorus is the largest in New Zealand – will be required to provide unbundled services.
Chorus’ proposed pricing would see a monthly access charge of NZ$28.70 per month to cover access to the fibre between the premise and the splitter. Retail service providers would also have to pay NZ$200 per month to access the feeder fibre from each splitter – which can have up to 16 customers connected – to a central office where RSPs can pick up the unbundled service.
The network provider has warned the industry not to expect the same level of savings seen from unbundling the copper network.
Ed Hyde, Chorus chief customer officer, said: “While I’m sure some RSPs will argue for even lower input costs, the economic and technical reality of unbundling a newly-built, world-class fibre network is much more challenging than unbundling much older, often fully depreciated, copper network assets that have a fundamentally different architecture.”
“However, we are confident that an RSP that is committed to providing unbundled fibre services will be able to do so at this price point,” he added. “The pricing released for feedback today is the latest step in a near year long process of industry engagement, that has sought extensive feedback on the product and processes that will enable unbundled fibre.”
Back in the mid 2000s New Zealand went through copper unbundling – an extended process that proved to be one of the more contentious periods in New Zealand’s telecommunications history.
Jordan Carter, InternetNZ chief executive, said it would be a shame if an agreement could not be reached.
“Price is a major factor of why some New Zealanders don’t have access to the Internet. Any changes that could potentially increase Internet prices would be a terrible thing and would only expand digital divides,” Carter said. “It’s important that ISPs and Chorus work together to find a mutually agreed solution to unbundling fibre, otherwise the Commerce Commission will need to be involved to find a fair price.”
“It would be a shame if New Zealand’s Internet users had to wait for the Commission to sort this out,” he said.
The flak comes as newly released Stats New Zealand figures show more than half of Kiwi businesses with six or more staff used fibre-optic broadband connections last year.
Geraldine Duoba, Stats NZ business performance manager, said: “Fibre usage has more than doubled to 52 percent, compared with four years ago. Access to faster broadband is seen as an important factor in enabling increased productivity and promoting economic growth.”
A further eight percent expect to be using fibre within a year.
The financial and insurance services industry had the highest proportion of businesses using fibre, at 82 percent, followed by the professional, scientific and technical services industry – which includes scientific research, legal and accounting, advertising and computer systems design services – at 78 percent.
Across New Zealand there were 714,258 users connected to UFB at the end of December – a 6.8 percent increase on the previous quarter.
New Zealand’s UFB build, which aims to provide UFB access to 87 percent of Kiwis across 390 towns and cities by the end of 2022, was 77 percent complete at the end of December.
The number of small businesses with no plans to use fibre has also dropped, however, 28 percent of businesses with fewer than 20 employees still say they have no plans to use fibre. That’s down from 41 percent in 2016.