Broadband wars: Chorus puts cut-price UFB fibre plan on the table

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Up till now, Chorus' approach versus fixed-wireless competition from Spark and Vodafone has centred largely on outmuscling the mobile competition for raw speed.

In June, it doubled the speed of its top Hyperfibre product from 4 gigabits per second (or 4000Mpbs) to 8Gbps - with Chorus shareholders told at last week's annual meeting that speeds of a head-spinning 26Gbps were on the way.

And in September, Chorus tripled the speed of its entry-level fibre service from 100 megabits per second to 300Mbps, while holding it at the same price.

Now, the network provider is attacking things from the other direction.

Today, Chorus asked retailers for their views on a proposed cut-price, low-speed UFB fibre plan.

Tech commentator Juha Saarinen says the target appears to be the 4G and 5G fixed-wireless incursion from Vodafone and Spark (and, to a lesser degree, 2degrees).

But this time it's not raw speed but a budget price that's the hook.

Chorus asks service providers for their opinions on a fibre plan that would offer so-so speed - 40Mbps down and 10Mpbs up, or not that much faster than VDSL (the fastest type of copper plan), according to testing it quotes from Commerce Commission benchmarks taken by independent tester SamKnows.

Although much slower than other fibre plans, it will still offer enough bandwidth for multiple family members to stream Netflix to different devices at once.

Latency (or lag with two-way connections) would be a crisp 3ms, or an edge over fixed-wireless.

But the wholesale price would be just $39.00 per month - providing ISPs sell plans based on the proposed 40/10 fibre service for $63.00 per month or less.

ISPs who pocked effectively pocketed some of the saving by charging more than $63 would see the wholesale price bumped up to $44.20.

"We heard during consultation that a low-speed plan should cater to the more price sensitive customer segment, and we want to ensure the reduced costs of such an offer are passed through," Chorus told providers.

It added that the proposed plan is "designed for those customers who are not focused on high speeds but value reliable low-latency connectivity."

Chrous spokesman Steve Pettigrew told the Herald, "We believe consulting with broadband providers on our future fibre plans is pragmatic, and good practice. We are keen to hear their thoughts on the proposed plan as it will lead to better decisions and, ultimately, a better product. It is worth noting that with this in mind the new plan may not be released in the form it is discussed in this consultation document."

Carrot and stick

Chorus has shored up its defence of fibre on several funds as the number of customers who have moved to fixed-wireless plans (which cut Chorus and its clip of the ticket out of the loop) has soared above 220,000.

The network provider has used both a carrot - in the form of a bounty for retailers who win back a customer who defected to fixed-wireless - and a taken a few pokes with a stick as it's asked the Commerce Commission to investigate the mobile players' fixed-wireless marketing tactics (which recently resulted in a warning letter to all market participants).

For their part, Vodafone and Spark have both slashed the price of their cheapest unlimited data 4G fixed-wireless plans to below $60 per month (with Spark's budget brand Skinny going as low as $35/month for a plan capped at 60GB), and both are expected to push high-end fixed wireless plans harder as their 5G rollouts progress.

With Chorus able to withdraw copper service in UFB fibre areas*, and just under 500,000 households still on copper lines, the fibre vs fixed-wireless fight for their affection will only intensify over the next few months.

Chorus shares were up 2.37 per cent to $6.47 in late trading on the NZX.

The stock is down 23.64 per cent for the year.

* In legal terms, under the new regulatory regime, Chorus has had the right to rip out copper - or at least disable it - in UFB areas since September 1. But the Delta outbreak and attendant lockdowns saw the network operator delay the first copper withdrawal to this month, then introduce a pause of at least seven weeks. In the meantime, Spark and Vodafone have pushed ahead with their own withdrawal of voice service over copper as Spark sunsets its PSTN technology, which is no longer supported by manufacturers.