You want fibre? Shut down the copper network, Ovum advises

You want fibre? Shut down the copper network, Ovum advises

Summary: Analyst firm Ovum is advising the New Zealand government to renew its commitment to fibre to the home by shutting down the legacy copper network.

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Migration to fibre in New Zealand should not be left to chance, says David Kennedy, analyst firm Ovum’s telecoms research director for Asia-Pacific.

If the Government remains committed to its Ultra Fast Broadband (UFB) programme, a migration timetable, including a scheduled shutdown of copper-based fibre to the node (FTTN) is the logical next step.

Kennedy says recent regulated pricing changes, which saw the wholesale cost of copper-based broadband reduced by 23%, not only significantly affected network operator Chorus' revenue base and investment capacity, but will also make fibre “relatively unattractive” to end users.

Ovum's view is the impact of the decision will reach beyond Chorus, affecting take-up of fibre by making copper relatively more attractive to end users and to the retail internet service providers who supply them.

“Chorus and the other UFB investors are structurally separated and so are dependent on these ISPs to promote fibre to end-users,” he says. “The ISPs now have less incentive to do so.”

An Ernst & Young report confirmed an NZ$1b fibre funding gap, Kennedy says, and proposes a range of changes, including price increases on unregulated products and quality reductions to reduce costs.

“It is naive to think that such a large shortfall will be borne by shareholders alone,” Kennedy says. “Much of the shortfall can be addressed, but it is becoming clearer that this will come at a price to users.”

Beyond that, a fundamental problem remains: tensions in the New Zealand telecommunications policy framework will persist as long as New Zealand has two access networks, FTTN and UFB, operating in parallel.

“Apart from the pricing problems, New Zealand telecommunications would operate much more efficiently if demand were consolidated onto one fixed access network. Policy currently envisages a gradual, organic migration to fibre, but at some point the FTTN network must be shut down in the UFB footprint.”

Consumer and user advocate Paul Brislen, one of the leaders of an anti “copper tax” campaign to ensure the copper price cuts were not legislated away, agrees.

Brislen, chief executive of the Telecommunications Users Association, told ZDNet Chorus owns both networks.

“I don't care terribly much what they do with it once they've installed the fibre,” he says. 

“There will be 25% of the population left without access to fibre so they'll need to be considered in the next phase, but once you've got fibre in, I'd pull the copper out.”

Brislen says this is not a forced migration: it’s “carrots, not sticks”.

“It just doesn’t make any sense for homes to be served by both copper and fibre. There’s no point running both in to a house.”

Topics: Broadband, Networking, New Zealand, Next Generation Networks

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