Connection cost, video key for UFB uptake - Commerce Commission

Contractors laying out fibre optic cable. The Commerce Commission says connection costs and availability of video content will be key factors in the uptake of ultra fast broadband. Photo / supplied

New Zealand consumers wanting to tap into the ultrafast broadband network will be mainly concerned with the cost of connection and availability of video content, according to the antitrust regulator.

The Commerce Commission identified the cost of connecting to the network as a significant threat to broadband uptake if it's too expensive, and video content as the biggest drawcard for households to buy into the service, according to its draft report on facts that could affect uptake of high-speed internet. The antitrust regulator also noted rural users are lacking connection to a basic network.

"Two main areas have been identified as being important to consumers - costs relating to connecting and using high-speed broadband, and the availability of video-on-demand services," Telecommunications Commissioner Ross Patterson said in a statement. "Users in rural areas have identified a more fundamental need, which is to be connected to basic broadband."

The draft report comes after the regulator last week launched a probe into Sky Network Television's rights over video content and contracts with internet service providers amid criticism the News Corp-controlled pay-TV operator was using its market position to unfairly squeeze out rivals.

In the first issues paper published by the regulator, Telecom estimated replacing customer premises equipment to switch over from the ageing copper network would cost some $811 million.

The regulator said it expects a competitive market will ensure retail services providers won't dump the entire cost on end-users, which could deter uptake.

Video content was considered likely to be "the primary driver behind consumers' uptake of high-speed broadband over the next several years," and will be "affected by the diversity of video on demand services that are available and the quality of content that they offer," the report said.

The commission launched its investigation in April last year to ensure to check whether there would be any impediments to uptake of the government's $1.35 billion broadband fibre network.

Potential issues relating to data caps, backhaul capacity, and internet protocol interconnection will likely be resolved by market forces, the regulator said.

It is seeking submissions on the draft report until June 11, and intends to publish a final report on June 29.