A solution to who pays for connecting difficult-to-reach houses to the new ultra-fast broadband network appears to have been reached, though it may only last three years.
Chorus announced today it would pay up to $20 million to connect houses down long driveways and other hard-to-reach homes.
The question of who would foot the bill for these types of difficult fibre installations threatened to stem the uptake to the Government's billion dollar broadband initiative.
Under its existing contracts 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.
But in an announcement today Chorus said it would provide $20 million to cover the cost of connecting homes that are further from the roadside than this, up to a distance 200 metres.
According to Communications Minister Amy Adams, Enable and Northpower - which are building the network in Christchurch and Northland - have also agreed to make connections free for houses up to 200 metres from the road, until at least the end of 2015.
Ultra-Fast Fibre, which operates in the central North Island, had already said it would provide free residential connections until 2019.
"Today's announcement provides certainty for the next three years while we finalise negotiations for the remainder of the build period," Adams said.
"Given the enormous benefits and the wide range of services UFB will offer, we want switching to fibre to be as simple as possible. While the provision of free connections was already in place for the vast majority of homes, the uncertainty for those classed as non-standard was creating some concern for retail service providers and the public."
The UFB partners have agreed to fund the majority of the additional connection package, Adams said.
According to Adams' statement, three houses sharing a right of way would have up to 600 metres of free installation from the edge of the legal road.
If this amount is exceeded, a customer will need to contribute towards any costs beyond 200 metres, Estimates suggest that only about 0.3 per cent of UFB residential premises fall into the category of having a connection longer than 200 metres.
Under the deal announced today, fibre hook-ups are also free for people who live in a multi-unit complex (like an apartment building) which is three storeys or less.
For multi-unit complexes that are more than three storeys, UFB partners have already agreed to fund the first $1000 of installation costs per tenancy under their existing agreements with retail service providers.
Question and Answers: (from Minister Amy Adams' statement)
Who qualifies for free connections?
The government and Crown Fibre Holdings have reached agreement with UFB partners Chorus, Enable and Northpower that provides an allowance of 200 metres per house until at least the end of 2015.
Ultra-Fast Fibre, which operates in the central North Island, has already undertaken to provide free residential connections until 2019. It is the government's intention to work towards residential connections being free with the other UFB partners until the end of 2019, when the network build finishes.
Estimates suggest that only about 0.3 per cent of UFB residential premises fall into the category of having a connection longer than 200 metres.
What was the previous agreement?
Northpower and Enable were only required to fund installations for residential customers that involved distances of up to 30 metres for buried fibre, 60 metres for aerial and 100 metres for approved conduit or open trench. Chorus was only required to fund up to 15 metres buried fibre, 30 metres aerial, and 100 metres approved conduit or open trench. Any home owner with installations over longer distances could have been required to pay some contribution for the extra distance.
What about people who live in apartments?
Under the package, fibre connections are also free for people who live in a multi-unit complex which is three storeys or less.
For multi-unit complexes that are more than three storeys, the UFB partners have already agreed to fund the first $1000 of installation costs per tenancy under their existing wholesale agreements with retail service providers.
What about private roads or rights of way?
The 200 metre limit for free installation will be applied on a pro rata basis for residences with shared access. For example, three houses sharing a right of way would have up to 600 metres of installation length free.
What level of reinstatement must UFB installers meet when connecting homes?
Partners will reinstate all services on a like to like basis. This means they will use concrete where concrete was used, grass where grass was used, and asphalt where asphalt was used. They do not guarantee to match surface finish, and reinstatement will be limited to where the trench is dug.
What consents are needed for connections to homes in a right of way, or private road, or gated community?
Before UFB can be deployed down a right of way, private road, or within a gated community, all of the property owners must provide written consent.
Will the $20 million from Chorus be enough to last until the end of 2015?
The 31 December 2015 timeframe is based on a 38 per cent uptake rate by residential users. This uptake rate is high for the first few years of the build of a new fibre network. By way of international comparison, uptake for Verizon in the United States is at 37 per cent after six-and-a-half years and in Singapore uptake is 18 per cent after three-and-a-half years.