A Herald analysis prompted by complaints of poor service has found telco infrastructure company Chorus cut spending on maintenance, under-estimated demand for fibre connections, runs a set-fee-per job system for its outsourced labour force and can't find enough technicians. Phil Taylor reports

This may come as news to Chorus but winter comes round every year.

Faults to its copper network soar when it is wet. It got caught short by Auckland's weather and unexpectedly strong demand for connection to the ultra-fast broadband network it is rolling out.

Despite the project being in the fifth year of eight, its services were stretched when a quarter of businesses and households wanted to connect to the fibre network when it arrived in their street. Time to fix faults blew out, some fibre connections were badly done and complaints spilled into the media.

Maybe we should have realised this demand [to connect to fibre] was really going to kick in and we should have been ready for it.

Chorus noted "very wet weather and several major cable cuts by third parties" as factors.
The Herald invited readers to report in. We received 40 emails in a day. They were from people such as Richard Stewart, whose business in Henderson was in its sixth week without a phone connection, Ian Douglas in Riverhead, who had been waiting six months for an apparently damaged fibre tube to be repaired, and Yvonne Marsh in Pukekohe, who relocated and buried her fibre cable, so dissatisfied was she with the job done.

Shoddy fibre broadband installation by Chorus. Photo/supplied
Shoddy fibre broadband installation by Chorus. Photo/supplied

A homeowner's concrete block fence was knocked down to run fibre instead of digging under it, lines were gaffer-taped to fences, copper lines were fixed one week then faulted again the next, technicians turned up unexpectedly or not at all, and customers waited on hold for up to three hours to speak to customer service staff.

Key points of a Herald review include:

• Chorus is counting its pennies. Forced by regulators to cut its copper network price, it took a revenue hit and responded by adopting a policy of "managing for cash focus". It cut proactive repairs, "a core part of certain fault fixes", and warned in its 2015 annual report that "some initiatives, while saving cash in the short term, will result in more faults in the mid to long term". It trimmed $5 million (5 per cent) from its spend on network maintenance.

The company has told the Herald the halt on proactive repairs ended after the Commerce Commission last December allowed the company to charge more for its copper network.
Money remains tight, however. Chorus wasn't allowed to backdate the price rise and the company noted it receives $50 million a year less than it did in 2011 when it became a stand-alone lines company in the Telecom demerger. The company's out-going chief executive Mark Ratcliffe told the Herald the cuts were small in the scheme of things and he doubted they had impacted on performance.

• There is a significant shortage of skilled technicians. Though twice as many are working on Chorus' network now than in 2011 (2000 workers had been added), another 250 are needed urgently. More and more are being recruited overseas, from countries such as India and the Philippines. Chorus last month asked the Government to add telecommunications technicians to the list of skills shortages, something that could help foreign workers gain visas.

• Outsourcing technicians to companies that run an owner-operator contractor model has, according to critics, driven down quality and contributed to the skills shortage. It encouraged haste and resulted in experienced technicians leaving the industry, said Joe Gallagher, communications industry coordinator for the union E tu. Gallagher said the volume of recent complaints vindicated the union's warnings in April when Downer lost its installation contract in the Wellington region to Visionstream, an Australian company that uses owner-operator sub-contractors.

Fixed fee per job

Chorus regards the owner-operator model as best for both productivity and quality. Gallagher disagrees. "This is about bringing in a provider which enables them [Chorus] to reduce cost. But the consumer suffers, the workers suffer and so does the network." A lot of contractors can't make money, so they hire a subcontractor, he said. "It's clip, clip, clip. That's why you start to see the quality go down ... They are paid per job so if they get one that takes half a day, they are chasing their tails."


Visionstream replaced Downer as the contractor for Auckland in late 2009 in a reorganisation by Chorus which said it was taking the opportunity to "reshape" its field force. Such reorganisations led to companies Downer and Broadspectrum firing staff, said Gallagher. Some set up as owner-operators and contracted to Chorus' partners but Gallagher said many in Auckland were not making enough money to survive. "In my view [Chorus] is sacrificing quality for getting a cheaper job done."

Telecommunications Users' Association of NZ (Tuanz) chief executive Craig Young, a former Chorus executive, questions whether changing to the Visionstream model is relevant. "It is hard to say in 2016 that we are suffering from a model change that started six years ago." What might be questioned, he said, was whether skilled workers were lost to the industry as a result.

Tuanz represents about 200 members, mostly corporations. "It's all about getting the incentives in the right place and ensuring that the technicians know how to do their job," said Young. Uptake of UFB, at 24 per cent, was higher than expected, he said, and was growing as the roll-out progressed and so technicians were moved from the copper network, resulting in time to fix copper faults growing. "They haven't quite got the balancing act right across the industry."

Ratcliffe said it was telling that it was easier to attract people with an offer for them to be self-employed rather than waged. Only about 5 per cent were union members, he said.
A technician - an Indian working in Auckland on UFB installations - told the Herald he aimed to do three installations a day. He said he was paid by the hour by his boss who contracts to Visionstream. The technician, who spoke on condition he not be named, understood that his employer, the contractor, got 60 per cent of the fee per job, the rest went to the technician. A top-up payment could be made for difficult jobs, the technician said.

Visionstream had stressed to contractors the procedures they must follow since news reports featuring shoddy installations. Installations usually followed the existing copper line. If it was overhead, fibre would come in overhead. "We try to use the duct that is already there but if we can't get through it, maybe we will put it on the fence, but we do it neatly."

Shoddy fibre broadband installation at the home of Frank Van Der Zwaag. Photo/supplied
Shoddy fibre broadband installation at the home of Frank Van Der Zwaag. Photo/supplied

Lines under driveways were a problem, he said, because if the concrete was cut during an installation it meant reinstating the driveway and Chorus would not approve that, he said.


Why the shortage of technicians?

Chorus long ago laid off its own technicians and contracts the work to Visionstream (50 per cent), Downer (25 per cent), Universal Communications Group (13 per cent) and Broadspectrum (12 per cent). The technician who spoke to the Herald worked previously as a building hand. He'd always wanted to be a Chorus technician, he said. "I like to solve problems."

Training, at a cost of $3000, combined with learning on the job had taken three months, he said. He works a six-day week and takes home about $700.

Young said Chorus had rightly admitted that it got some things wrong. "Yes, winter happens every year, and this year winter came quite late so we had significant drying up of the network. The copper network's biggest enemy is water. Once things had dried up and the ground cracks, when it starts to rain it causes significant issues on the copper network."

It's one thing to know that, another to respond. "One of the critical elements is manpower. If you take a long view ... perhaps there was a failing a couple of years back. Maybe we should have realised this demand [to connect to fibre] was really going to kick in and we should have been ready for it."

But the fibre roll out is New Zealand's biggest communications construction project and competes with Christchurch's rebuild and a wider building boom. Attracting and training labour is an issue for the country not just fibre companies, said Young. That meant conversations were needed about teaching IT in schools. "Engineering-type skills need to be increased. This isn't going to go away because we only have 24 per cent connected, plus there is the rest of the fibre network to be built, and then there will be new technology."

Fibre-optic cables held together by duct tape. Photo/Dean Purcell
Fibre-optic cables held together by duct tape. Photo/Dean Purcell

But Young's predecessor at Tuanz, Paul Brislen, said Chorus should take some responsibility. The association had voiced its concern when Chorus outsourced its engineering facility. "We thought it could lead to real pressure when it was time to ramp up for fibre roll out. The answer we got then was that it would be the obligation of the contract companies to ensure adequate staff and training. We thought that was incredibly short-sighted."

The model was to fire its technicians, tell them to buy a van and tools and then offer a fixed price contract, Brislen said. "A whole bunch of engineers left to work on Australia's fibre roll out [and now] there is a global shortage of fibre technicians."

Outsourcing and fixed-price contracts help Chorus control costs but meant sub-contractors were the ones who got pinched. Brislen understood that the Skills Organisation several years ago unsuccessfully pushed for more apprenticeships in the industry. "Everyone knew this was coming. It is no excuse to say they didn't. The Government could see the huge potential demand and Telecom seemed shortsighted or uninterested in meeting the demand." That, said Brislen, was part of why the Government forced the separation of Telecom into Spark and Chorus.

The Skills Organisation is no longer responsible for training teleco technicians and a spokesman declined to comment. Connexis took over industry training last year. Its chief executive, Helmut Modlik, said the trend was for asset owners across industries to contract out, and they did so for good commercial reasons. But that came with a lag when a much bigger workforce is needed as there was no financial incentive for contract companies to recruit and train labour before work was waiting.

"There is huge investment and effort now in telecommunications to attract and train people," said Modlik. "The timing question is the most challenging question across all industries. There isn't any way to be dead certain you are going to have it covered unless you over-invest, and that's a big call for companies to make."

There are parallels in the booming building sector, he said. "But at what point should building companies have been investing in new apprentices so they will be ready, and who coordinates that? There is no such co-ordination mechanism, so we always have a lag."


Conflicting incentives

Chorus makes 80 per cent of its money from its generally ageing copper network and is also charged with deploying what will inevitably replace it. Brislen said that muddied the company's incentive to push fibre uptake, though fibre broadband speed was 20 times that of copper and would soon be a hundred times quicker again. Brislen: "They are not selling the sizzle of the fibre network. Chorus says that's for the Internet Service Providers to do. They are not doing it either. They sell price points and plans, they don't sell you on the dream."

Another conflict was that the Government paid for the fibre network roll out per the number of properties that fibre passes, and it sets targets. As a result, said Brislen, Chorus was trying to roll it out down the streets as quickly as possible. "At the same time every house that wants to connect to the fibre takes technicians away from the network deployment. This creates a perverse tension."

Meanwhile, the likes of Netflix and Network For Learning burst on to the scene, fuelling demand for fibre connections. "That's a double whammy".

Broadband incorrectly installed, St St Heliers. Photo/supplied
Broadband incorrectly installed, St St Heliers. Photo/supplied

Chorus sees its customers as the Internet Service Providers rather than the end user, said Brislen, which leaves the public as piggy in the middle. "When a Chorus contractor fails to arrive they ring their ISP who tells them the network company said there was no one home. They say that they were home but the job gets booked again for weeks later."

Call centre staff of the Internet Service Providers cop the fallout. The wait time on Spark's customer service line hit three hours in July, prompting Spark head Simon Moutter to tell one unhappy customer that Spark had 2500 customers with faults on Chorus' copper lines. Spark warned customers that the lines company was not resourced to deal with the faults in a timely manner. All Spark could do was hire more people to field complaints.


Ratcliffe agreed Chorus hadn't strongly promoted fibre. It didn't make sense when it has more work than it can currently cope with. Demand for fibre had outstripped every body's expectation, he said, and had been difficult to estimate as New Zealand is one of the first countries to deploy it.

"As we move to a fibre world, technicians are thinking about their future and deciding to work on the future network rather than the old one, and have retrained or upskilled. We are skewing towards that. And we didn't get the resourcing right for those months. I'm frustrated at my team's efforts ... we just didn't get the balance right, coupled with some weather bombs and cable damages and have struggled to recover from it."

Data published by Chorus in response to the bad news of July suggests that faults have reduced to a more usual number, from more than 3000 unresolved faults to about 1700 out of the 1.7 million lines the company owns.

Has the old copper network done its dash?

Gallagher: "A large proportion of the copper network is wet [increasing the number of faults], particularly in Auckland. Chorus knows that." Maintenance was being neglected as resources were directed to the fibre network.

Brislen: There will come a tipping point where there are too few customers on copper to keep it. "The future is fibre. The carrying capacity is so high and the maintenance so low. Copper is run by pumping electricity down it so it heats up and expands and contracts, it cracks and needs a lot of maintenance work to keep it operational. Fibre is a plastic tube that you shine a torch down. So the maintenance, so long as no one cuts it with a spade, is negligible. And you can increase the capacity just by swapping the equipment at either end of the connection."


Ratcliffe: Although 80 per cent of copper lines have broadband capability it can't compete with fibre in terms of speed and those who just want a voiceline are a dying generation. "It is hard to see that in urban New Zealand copper will have much of a role past 2030."

Allan Hearn's dog chewed through an exposed fibre broadband cable installed by Chorus. Photo/supplied
Allan Hearn's dog chewed through an exposed fibre broadband cable installed by Chorus. Photo/supplied

Should we be worried about the quality of the fibre build?

Gallagher: "I think there has been significant under reporting of the true state of things. "[His contacts] don't regard it as a quality install. One thing we can all agree on is the unheralded number of faults [that have become public] in the network. We have seen clear evidence around shoddy workmanship and the minister should be on to it."

Brislen: Examples of shoddy work had made him nervous. "Are we going to find in five years' time that some of these jointing connections fail because they were done in such a hurry? What's the error rate going to be?"

Ratcliffe: "I think if the media calls for people to contact them if they have had a bad experience then you will get all the bad experiences. But the worst things are truly awful. Those are the ones we get onto as soon as we hear about them." He was unhappy with the performance in Auckland this winter but believed it was a blip in a trend of decreasing faults on copper lines.

As for fibre connections, Chorus does 14,000 per month. Its own quality control staff check 250 of them while its contracted providers look at another 350. "We think at the moment we can find something wrong with about 10 per cent. Most of the things being publicised are where it doesn't look good or it has just been really badly done. Some of the faults we find are things the customer wouldn't know about. Our target is to get to 98 per cent compliance. The incentive is for us to get the job right first time to limit subsequent work and for technicians to do so too because they get paid for a completed job that doesn't get a fault within a month."


The fibre network will prove to be good, Ratcliffe assured. His job may depend on it, he said.


Mark Ratcliffe this week gave notice he will step down as Chorus CEO and Managing Director around the middle of next year. He has held executive positions in the telecommunications sector since 1999 and said it was time to move on to something new.

Unhappy customers

The Herald asked readers to tell of their experiences. We received 40 emails in a day. Here are some.

Shoddy fibre broadband installation. Photo/supplied
Shoddy fibre broadband installation. Photo/supplied

Vijay Nanu, Westmere

"There was a five week delay for fibre installation. We were fortunate to have all our services underground including what we thought was ducting pipe for a future fibre installation but Chorus installers said that they would have to attach our fibre cable to the fence, which I thought was a backwards step, considering our copper cable was buried underground. Installers finally agreed to put the fibre underground, but their idea of putting the cable underground was parting the ground with a spade and dropping the cable about 10cm below the surface. They also cut the concrete driveway, laid the cable just below the surface and re-concreted. Some of the concrete has come away and now exposed the cable. It sounds like they are really overloaded and try and get installations done in the quickest way possible and incur as little cost as possible."


Yvonne Marsh, Pukekohe

"I explained that we were having a new gate and driveway put in beside where the original source for the wires was and to keep the fibre away from that area ... They wanted to put the new line along our fence line which has hedging that I cut with electric trimmers. The end result was an ugly piece of piping sticking out from a larger pipe - right in the line where I told him we would be driving. They actually took that pipe/wire over the old broken concrete footing from our old fence. They then dug it in across our proposed driveway about 10 centimetres deep.
"It ended up that we had to cut the old concrete footing ourselves, bury the pipe and we also took the pipe nearer to the edge of our property instead of in the middle of our drive. I have never seen anything so ridiculous in all my life. They also told me that this was standard installation!"

Ian Douglas, Riverhead

"We have been waiting nearly seven months for Chorus to repair an apparently damaged fibre tube. First they blamed the house, then the tube from roadside to house, then the tube from roadside to local junction box. We have complained to Chorus, (the fibre owner), Visionstream (the contractors) and Vodafone (supplier), with only Vodafone attempting to help. I manage a company for which all contact and planning is done via email meaning I'm having to leave for work in the city 30-45 minutes early in the morning and stay after work late to plan days for workers which I should be able to do from home."

Izzy Easton, Morningside

Connection faults have been happening for four months. Connection would cut in and out and then fail completely. She was given different reasons, such as faulty cables and overcrowding of a local box, and different fixes. It was not working again at the time of writing. [August 8]. At least twice she waited on hold for two hours to speak to a Chorus representative. "The last solution fixed our disconnection for all of a week."


Phil Deacon, rural Auckland

"Fibre is not available for us: we must rely on the creaking copper network. Every month a house in our small cul de sac is without phone or Internet. If and when Chorus comes they leave resolving one problem but knock out communications to another household. They have repeatedly told us the problem is with unsheathed wires on the road but have never fixed this issue.
There is no accountability. As customers we must go through our telephone and Internet service providers and as we all use different companies we are lone voices complaining to organisations who really don't see it as their problem. This month my neighbour was without phone and internet for over 2 weeks. We lost all services for 8 days. My ISP begrudgingly offered $20 compensation for this outage.
Our latest problems started after a Chorus van was working on the street outside our address. When the problem was finally fixed the serviceman left leaving plinths open and wiring exposed to the elements. I believe that Chorus see themselves as untouchable. Consumers must take what they are given and what they are given is shoddy workmanship, underinvestment and a third-world service."

Clive Brumby, Whenuapai

We are constantly plagued with cable faults supplying phone and internet services. This year alone we have had three faults, one lasting over 10 days without service of any type. During winter with the rain comes static noise and poor broadband performance. Chorus contractors on the road all have the same story: 'the copper cables are old and have been damaged several times by continuous road/water works and need replacing'. Here we are, 20 minutes' drive from the Auckland CBD and have third world telecommunications."

Anthony Keesing

"Cabling at our house runs above ground beside the back fence. When I questioned this, I was told the cabling is very strong and I should try hitting it with a spade if I doubted it."


Bronwyn, Mellons Bay

"When consent was sorted to install the cable on a shared driveway we were surprised by their plan to fix it to fences and criss-crossing our cobblestone driveway. When asked to go underground along with the water, telephone and power connections this was immediately rejected by Chorus. We want the ultra-fast cable but it looks like it might cost us in the long run!"

Ultra-fast Broadband in New Zealand

• Government has committed to providing ultra-fast broadband to 80 per cent of New Zealanders by 2020
• Infrastructure cost, $2 billion.
• The network is being built by Chorus, Northpower Fibre, UltraFast Fibre, Enable Networks.
• 68.2 per cent of the roll out is completed
• 40,000 users have connected

Chorus: A history

• Split off from the old Telecom to take part in rolling out UFB.

• Won 70 per cent of the work nationwide, including Auckland.

• Completed half of the roll out in its area as of March


• Owns bulk of the copper network that provides broadband and telephone connections.

Sources: Crown Fibre Holdings, Office of Communications Minister, Chorus