New Zealand fibre uptake rate 10 times OECD average

A 'visionary' national investment in fibre is paying off big-time, says Chorus chief executive Mark Ratcliffe.

A "visionary" investment in fibre networks in New Zealand is propelling the country to the front of the OECD pack, network company Chorus told investors today.

Chorus CEO Mark Ratcliffe.

Chief executive Mark Ratcliffe said the rate of fibre adoption in New Zealand is "comfortably" the fastest in the OECD and more than 10-times the OECD average (see chart below).

"It is clear that 2015 was the year that fibre went mass market in New Zealand, and that change has come upon all of us in the industry remarkably rapidly," he said.

Describing fibre as "the fourth utility", chairman Patrick Strange said, in contrast with New Zealand, Australia's fibre rollout was "awash in cost over-runs and red ink".

British Telecom has been building out a fibre-to-the-cabinet network and Australia was now looking to do likewise, he said.

"We completed our fibre-to-the-cabinet network in 2011, covering around 80 percent of the population."

Fibre use was taking off "massively", Ratcliffe said, outstripping the take-up of copper broadband at the same stage of availability.

After four years of availability, copper broadband was used by about 8 percent of customers who could buy it, he said. Fibre adoption is already pushing 20 percent while availability was now "nudging ahead" of the OECD average.

Ratcliffe said he had just returned from the Broadband World Forum in Europe and concluded they were not likely to catch up for "decades at least". Therefore, New Zealand needed to benchmark itself against the progressive broadband nations of Asia, not Europe and the US.

"We are the envy of many -- they want to do what we are doing but haven't figured out how yet. I firmly believe that the fibre network we are building today will be a visionary investment that future generations will thank us for."

While Chorus is clearly pleased with progress on the fibre rollout, it continues to struggle with regulation that has seen the price it can charge for legacy copper access -- still the bulk of its revenue -- slashed.

"We are waiting on the final copper pricing decision from the Commerce Commission in December," Strange said. "The cost of this uncertainty is a cost to New Zealand.

"That final price will have a significant bearing on our ability to fund ongoing investment in broadband."

Chorus has slashed costs, postponed non-essential maintenance and cancelled dividends while the regulatory issue is being settled.

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