Telecom joins the government's fibre party

Telecom has delivered its submission on how the government can roll fibre to the homes of 75% of New Zealanders -- making a major play for the government's national fibre network rollout business.

Telecom emphasises both the open access nature of its proposal and the need to avoid duplication of existing infrastructure to reduce costs. It also pushes its network arm, Chorus, as the vehicle for the most effective fibre rollout.

Details of TelstraClear's proposal are also emerging.

"If New Zealand is to make the absolute most of the government's $1.5 billion investment, the involvement of Chorus, Telecom's operationally-separated access network unit, will be crucial," Telecom's submission says. "Chorus has an extensive existing network and the experience designing, operating and managing telecommunications infrastructure that is without comparison in New Zealand."

Telecom says the best way for New Zealand to get the most value out of the government's $1.5 billion investment is to use Telecom's existing infrastructure.

"This ensures all the $1.5 billion adds to the New Zealand economy, and is not wasted overbuilding something that we already have," it says.

Chorus will use existing assets to lower the total cost, and accelerate the timeframes of a government supported fibre to the premises deployment.

"Effectively this gives two bangs for the government buck. There is no overbuild, and therefore wasted investment, and the government leverages existing solutions, reducing complexity and cost."

Telecom also appears to allude to the possible structural separation of Chorus.

"We believe our track-record over the last 18 months demonstrates the existing operational separation model for Chorus, in which the Government and Telecom have invested very heavily, offers the speediest and most effective foundation for delivery," its submission says. "However, we remain open to considering alternative partnership models that can be demonstrated to deliver the desired outcomes for New Zealand and that respect Telecom's shareholders' interests."

Telecom has presented two "constructive" options, CEO Paul Reynolds says.

He describes the alternatives are "accelerating the roll-out of fibre infrastructure by co-ordinating both our investments" and "creating a national fibre ducting asset".

"I believe these options give the government, on behalf of the people of New Zealand, the most return for its investment. They ensure we, as a nation, get additional infrastructure for the government's money. Both proposals ensure Telecom's wholesale and retail services will not be advantaged over other service providers. They leave the investment decisions, and returns, clearly with the government," he says.

The two options, Telecom says provide the "fastest possible return to New Zealand...with one option providing fibre to every North and South Island hospital within 2 ½ years and every school within three years of agreeing to proceed".

They provide a national solution, that "focuses on the services people receive", not just the infrastructure or technology, the company says. The company says its plan will "leverage New Zealand's (not just Telecom's) investment in telecommunications to the maximum possible extent".

The government has laid out certain key objectives in its plan, including:

* making a significant contribution to economic growth;

* neither discouraging, nor substituting for, private sector investment;

* avoiding entrenching the position, or "lining the pockets", of existing broadband network providers;

* avoiding excessive infrastructure duplication;

* focussing on building new infrastructure, and not unduly preserving the "legacy assets" of the past; and

* ensuring affordable broadband services

Telecom says under its proposal the 75% coverage area would include places such as Queenstown, Greymouth, Rangiora, Gore and Waiheke Island.

"Telecom's proposals are a combination of building on the 23,500km of fibre optic cable already in the ground and integrating the government's $1.5b investment, with Telecom's existing plans to extend the reach of fibre to more and more New Zealanders," says Reynolds.

Telecom's two proposals are, firstly, coordinating government investment with Telecom's current fibre network and future fibre plans to, it says, deliver the maximum amount of fibre.

Under this scheme, service providers would enter into commercial arrangements with Chorus to purchase an unbundled fibre service in the areas where the government funded network is available, a similar arrangement to the one that exists today for access to Chorus' copper network. Chorus would also provide a co-location service in the local exchanges that serve as fibre aggregation and interconnection nodes.

Alternatively it offers Chorus to create a national network of ducts, owned by a Crown Fibre Network Company (CFNC), which all network and service providers would have open access to.

Under this proposal, service providers would enter into commercial arrangements with the CFNC.

"The service that a service provider purchases from the CFNC is similar in concept to the UCLL sub-loop service that is in the final stages of being determined by the Commerce Commission," Telecom says. "The key product is a sub-loop micro-duct between the customer premises to the duct management point (fibre node). That is also the point where the Service Provider connects with their own feeder fibre or purchases feeder fibre."

It says the proposals provide the fastest possible return to New Zealand.

Reynolds also makes a play for trust in Telecom, pointing to its network arm, Chorus as a key component of the proposals.

"In a relatively short period of time, Chorus has become trusted by the industry. Under operational separation it operates at arm's length from the other parts of our business -- meaning it must offer access to our network on a totally equal basis to all parties. This structure is already in place, proven and working.

TelstraClear, meanwhile, says it supports the government's fibre ambition and has identified four roles it says it can play in achieving that. It says "if the conditions are right TelstraClear will continue to own, operate and invest in our own infrastructure in competition to the Local Fibre Company."

The government has proposed 25 such companies delivering fibre across New Zealand.

TelstraClear says it will also compete hard to supply the LFC's with high quality backbone services and anticipates it will also become a major customer of the LFC's. TelstraClear also says it will continue to be a service partner with infrastructure providers as it has been with Northpower and Network Tasman.

TelstraClear recommends the government adopt common architecture, technical and commercial standards across all 25 LFCs; use existing technologies that can deliver comparable experience as an interim step for LFCs, or as a complimentary solution to FttP over the longer term, and; prioritise those LFCs least well served by existing telecommunications infrastructure (work "outside in").

It also warns, in line with the Milner report, that while the costs to deploy fibre networks are understood, demand for services in the near term is less so.

"Evaluation of any proposal will need to consider both aspects carefully."