Internet providers and their customers in Auckland, Wellington and a large chunk of the South Island will not have to pay to connect houses down long driveways to the Government's ultra-fast broadband network, an industry executive expects.
The question of who foots the bill for these types of fibre internet installations has yet to be finalised and threatens to stem the already low rate of uptake for the Government's billion-dollar initiative.
While Chorus - the project's major player - has agreed to fund all installations until the end of December, the industry has not decided on who will pay the extra cost of connecting a house down a long driveway or at the back of a subdivided property in its areas of the fibre rollout.
Vodafone New Zealand boss Russell Stanners said the problem of installation costs was one reason holding his company back from entering the fibre market.
"We want to provide certainty to customers and at the moment it's quite variable," Stanners said.
But Telecommunications Carriers Forum (TCF) chief executive David Stone believes retail internet companies or consumers will not have to bear the cost.
"What we are being assured by both Chorus and Crown Fibre Holdings is that it is in the process of being sorted and it won't represent a cost we believe to either retail services providers or their customers. That is the understanding the industry currently has," Stone said.
The TCF is an industry group whose members include Vodafone, Telecom, Snap as well as Chorus and other network builders.
Chorus, who is responsible for the UFB rollout in Auckland, Rotorua, Nelson, Wellington and a large chunk of the South Island, could not comment on the negotiations.
Crown Fibre Holdings, the body responsible for the Government's $1.5 billion investment in the scheme, did not return calls yesterday.
Orcon said this week that it cannot afford to pay for extra connection costs and does not want them passed on to consumers. Orcon retail general manager Taryn Hamilton said the issue would be a "silly thing to trip over" given the funding that has been committed to the roll-out.
"We are convinced that UFB is a superior network that New Zealanders should be jumping onto as soon as they can but install fees will severely hamper uptake," Hamilton said.
Telecommunications Users Association chief executive Paul Brislen said failure of the industry to sign agreements was one reason UFB uptake was so low.
"I would have thought by now, a year in, we would have been starting to see some real traction ... it's taken so very long for Chorus and the retail services providers to reach any kind of agreement," Brislen said. "There are a lot of RSPs [retailers] out there who simply aren't pushing this in a big way and without the RSPs on board the whole thing grinds to a halt."
Information and Communications Technology Minister Amy Adams said last month that around 1600 people were hooked into the UFB network.
This is a mere 2 per cent of the 76,000 premises which Chorus and the Government's three other build partners have rolled fibre past.
Adams admitted this number was small but said it was expected, especially since the likes of Telecom and Vodafone have not yet entered the UFB market.
The UFB initiative aims to provide download speeds of 100 megabits per second to 75 per cent of New Zealand by the end of 2019.
Hard-to-reach customer frustrated over long wait
Although Chorus is agreeing to fund the cost of connecting hard-to-reach houses for the moment, an Auckland man living down a right-of-way is frustrated by the delay in getting hooked up.
Business manager Roger Matthews has waited almost a year to get plugged into the Government's ultra-fast broadband network since fibre cables were run past his driveway last November.
Matthews, who lives in Albany's Schnapper Rock, said he was keen to get fibre straight away when cables were put through his suburb.
More than six months ago he approached Orcon, which was the first internet company to go to market with ultra-fast broadband services in March, looking to get hooked up.
"Orcon extended that offer to me and I said 'thank you very much' and immediately that went back into the system again. Because I'm down a right-of-way, Chorus weren't interested even though there are four sections on my driveway so there's conceivably four customers for one run of fibre," Matthews said.
"I'm conscious of the fact that a very large amount of money is being spent on an asset that as they are not connecting people to it is not returning a return. That's taxpayer money going into that."
After months of frustration - including getting consent for Chorus engineers to access a vacant lot near his property - Matthews said he arrived home on Monday evening to find work had finally begun.
A Chorus spokesman said gathering the consents needed to connect houses down a right-of-way took time.
"We can't, obviously, do work on a shared driveway when we don't have permission from all the owners and that does take time," Robin Kelly said for the company.
"The same with multi-dwelling units. Once we actually want to access that building what the residents may not understand is that we need many different parties to agree to that work."
Who pays for hooking up a house to UFB?
* Chorus, responsible for the UFB rollout in Auckland, Rotorua, Nelson, Wellington and a large chunk of the South Island, is required to only meet the cost of 15 metres of underground cabling or a single span of aerial line from the roadside when hooking up a house to its network.
* Negotiations between Chorus and other industry players on who pays to connect a customer further from the road are ongoing.
* Whangarei's Northpower and Christchurch's Enable Networks have agreed to fund 30m of underground cabling from the roadside to a residency or a double span of aerial cabling from a power pole to a home. Both companies indicated earlier this year that retailers would be required to contribute to the cost of additional lines.
* Ultrafast Fibre, which is responsible for the roll-out in the central North Island, has agreed to connect all customers at no extra cost.