Leaked Govt broadband plan comes in for criticism

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Government still says the UFB would provide downlink speeds of at least 100 Mbps and uplink speeds of at least 50 Mbps. But the CFH price book reveals that the starting point is a substantially more modest 30/10Mbs. Photo / Thinkstock
Government still says the UFB would provide downlink speeds of at least 100 Mbps and uplink speeds of at least 50 Mbps. But the CFH price book reveals that the starting point is a substantially more modest 30/10Mbs. Photo / Thinkstock

Leaked documents show that New Zealand's new ultra-fast broadband network will come with a variety of options and moderate prices, with connections starting at an estimated $47 a month.

The Herald has obtained a "price book" revealing the wholesale charges set by the Government agency in charge of the UFB, Crown Fibre Holdings.

The wholesale charges are for the Local Fibre Companies bidding on UFB contracts around the country, and will be set at different levels for the next ten years.

While retail costs for UFB plans remain unclear as of now, they can be estimated by adding an 18 per cent retail margin as defined by the Commerce Commission previously, and GST.

See details in the table below.

Until now, the price book has been kept secret by CFH unlike similar documents for Australia's next-generation broadband network, which have been published in full.

Despite the government's promise that New Zealanders will receive at least 100Mpbs downloads and 50Mbps uploads on the fibre-optic network that will cost tax payers $1.5 billion, the price book shows that the entry-level service runs at more modest 30Mbps downstream and 10Mbps upstream.

Today's broadband over the country's ageing copper phone network provides up to 15Mbps downloads and 800kbps uploads.

With a ten-fold increase in upload speed, the UFB is expected to substantially improve people's broadband experience.

More importantly, the government guarantees the minimum speeds of the UFB even though each fibre-optic network segment will be shared between as many as 24 residential customers.

While broadband today can slow down to below dial-up speeds, the UFB service guarantees either 2.5Mbps or 10Mbps minimum speeds for customers, depending on the plan chosen.

In the price book, CFH outlines wholesale costs for a range of services including internet TV and telephony options, as well as Wi-Fi ports and standard phone service.

The price book is structured so that internet providers can build their own plans with different speeds and minimum bandwidth guarantees, for additional charges.

As an example, a provider can take base 30/10Mbps plan for $35 plus GST wholesale, and build a 70/30Mpbs one by adding extra bandwidth from the LFC. The wholesale cost for the faster plan goes up to $44.79 plus GST per month.

Data charges are not mentioned in the price book however, as these are to be set by retail internet providers.

Telecommunications Users Association of New Zealand head Paul Brislen said customers would greatly benefit from the increased speeds of the fibre-to-the-home network.

Brislen expressed concern over the long period of price-fixing and regulatory holiday that accompanies the UFB.

"We don't know what will happen over the 10-year life span of the project, whether that goes down, whether that goes up, whether that includes international bandwidth."

"So trying to predict what I'll be doing in 10 years, let alone what I'll be paying for it seems odd."

He said he did not understand why speeds offered would begin at 30Mbps when the network had capacity for 100Mbps.

However, "The beauty of fibre is that it's upscalable ... so it's not like they have to dig up the roads again," he said.

According to Brislen, New Zealanders may end up paying more for existing broadband while the UFB is being built over the next six years.

"The government is proposing to make regulated wholesale broadband over copper in the country 20 per cent cheaper while in urban areas it goes up by the same amount," Brislen says.

However, with little or no competition in rural areas, Brislen expects the net effect to be prices going up in urban areas with rural users paying the same as now.

Brislen also says that Telecom wants to exclude areas served by exchanges with two or more telcos having unbundled access to its network from the new pricing calculations for rural areas, and only include those where the incumbent faces no competition.

Telecom intends to compete aggressively on price in unbundled areas, Brislen says, and therefore doesn't want the lower charges to be included as they would bring down the average charges.

InternetNZ chief executive Vikram Kumar says CFH has got the balance right for the first year of the UFB project, but not for year ten.

He is concerned that fixing prices for ten years will lead to higher costs for everyone. "In the telco business, nobody can tell you how much internet service, 3G or whatever will cost in five years' time. How can we fix it for ten years with the UFB then?" Kumar asks.

Commenting on the service options, Kumar says the guaranteed minimum speeds will make a huge difference for users.

However, he says the UFB network is designed with "a copper mindset". Kumar believes the 30/10Mbps plan, while well-priced, may not be enough to lure over customers on copper broadband.

"People don't care if they use fibre or copper - they want to know what they'll get for their money," Kumar says.

"Fibre is the world of plenty, whereas copper isn't," Kumar says. He criticises the UFB for not providing symmetric service with equal download and upload speeds, and says the CFH is "making commercial decisions" for providers by designing the network with a fixed set of services.

So far the UFB roll-out has got under way only in Northland, but the aim is to have ultra-fast broadband available to 75 per cent of people within the 10-year life of the project.

- NZ Herald

Residential service type Residential service type
Wholesale price* Wholesale price*
Estimated retail price# Estimated retail price#
30/10Mbps 2.5Mbps CIR $35.00 $47.50
30/10Mbps 10Mbps CIR with phone line and IPTV $38.75 $52.60
100/50Mbps 2.5Mbps CIR and phone line $55.00 $74.65
100/50Mbps 10Mbps CIR with phone line and IPTV $58.75 $79.75
* Per month ex GST
# Price per month including GST

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