Chorus boss to fibre customers: Where the bloody hell are ya?

Chorus has already rolled out fibre to 1.2 million homes.

COMMENT:

With six months under his belt as the new chief executive at Chorus, owner of the country's telecommunications backbone, JB Rousselot is puzzled by one thing.

After a career in the Australian telco sector spanning more than two decades, he says Aussies are dead keen to get broadband connections on fibre-optic cable, despite the country's costly and controversial National Broadband Network rollout.

Yet despite most people having fibre laid past their front gate under the far smoother Ultra-Fast Broadband network rollout implemented by the last government, New Zealanders seem a bit blase about the whole thing.

"It really surprises me that we have put fibre to the door of 1.2 million homes and businesses in New Zealand and at this stage, just 58 per cent have ordered fibre. We celebrate that but, for me, the way I look at it, that's 42 per cent that still haven't.

"It's inventory sitting on the shelves, we've already built it. It's there and all we need is for people to place an order for it. Coming from Australia, where people are really keen to see a lot more fibre, if they knew that 42 per cent of people could tomorrow but still haven't placed an order, they'd probably go crazy."

French-born Rousselot, known as JB to his friends, doesn't actually use the infamous phrase from the 2006 Australian global tourism campaign that ended with a bikini-clad model asking: "So where the bloody hell are you?"

But he might as well have.

However, he believes the lockdown period, with its combination of binge-streaming TV shows and working from home, will have demonstrated to many Kiwis the value of having a fibre rather than a fast copper connection.

Chorus was certainly delighted to point out the Commerce Commission's report released last week that shows fixed wireless broadband speeds dropped away during peak times whereas fibre connections showed no deterioration in quality of service in April, when the country hammered the UFB network harder than had ever happened before (Vodafone and Spark have both touted 5G as a vehicle for fixed-wireless free from data cap limits and other restraints).

No 5G monopoly

Rousselot is also clear that unlike his predecessor, Australian Kate McKenzie, he is not about to rattle the cage of New Zealand's incumbent mobile carriers by reviving the call for a UFB-style monopoly rollout of technology for the coming 5G network - the next generation internet technology that will enable the so-called Internet of Things.

Chorus CFO David Collins and new chief executive JB Rousselot. Photo / Supplied

"I have a slightly different view," he says. "I think coverage and new technology rollout is the way mobile operators have competed in the past and will continue to do so. In areas that are dense and profitable, I totally expect they will continue to roll out their own networks."

There could be opportunities to reduce the cost of rollout to more remote areas and Chorus would be happy to be involved in sharing infrastructure such as cabinets and poles for that kind of deployment.

"We will consider it, but it's not an all-in, all-out option."

While there continued to be speculation about the desirability of a single national mobile network, Chorus was "not someone that's driving it and we don't want to own it," Rousselot said.

No mobile network buy

He also dismisses the potential for Chorus to buy the mobile network assets owned by 2degrees - an idea talked up at times in the last couple of years and which the Chorus board is understood to have seriously considered as the monopoly nationwide network provider considered both how to grow and to manage the competitive impact of its unregulated telco rivals trying to do an end run around its network with mobile technology.

"My first priority is a fibre business and working in that space," he said. "On the mobile front, there are things that we should be able to monetise the assets that we have but the day when we actually purchase or build ourselves a mobile network is not something that's on the (agenda)."

Rousselot makes clear that both ideas are firmly off the table and that when it comes to 5G, there's a lot more talk than action.

5G hype

"There's so much hype around 5G," he said. "It's a great technology. The fact that network operators are going to be able to roll it out is good.

"My perspective on it is that 5G will allow us to do amazing things and more things, when we are mobile."

Note those last four words.

"But I still strongly believe in the fact that the moment you walk into your home or your office, your mobile device will tether itself to a fixed connection. Over 90 per cent of internet traffic goes over a fixed connection and that's because all your devices you have in your home tether back to Wi-Fi, and that's a good thing for everybody."

On-site Wi-Fi takes pressure off the mobile network and reduces investment requirement for mobile operators and creates the ongoing demand for Chorus's fixed-line services, he said.

"I don't think that 5G particularly changes that equation. It will lift what people do outside of the home. In parallel, people will lift what they do in the home. I really don't see 5G arriving in this market as something that radically threatens the commercial model of a wholesale fibre provider."

How to grow

Rousselot sees Chorus's growth prospects, beyond the inevitable growth in online data volumes that the Covid-19 lockdowns have only accelerated, in areas such as localised data centre rack space that is starting to become available in the telephone exchange buildings it owns around the country, and in simple, low-cost Wi-Fi offerings for Chorus customers who don't want to lock into a more expensive plan from one of the retailers.

It also offers a new Hyperfibre product for digital creative businesses such as film, advertising and gaming, or for health services and other sources of demand for very high bandwidth.

That's where he believes the route to some of the 42 per cent of could-be connected Chorus fibre customers may lie.

For example, Chorus includes an Optical Network Terminal with every fibre installation, which is a piece of kit capable of providing a basic, if slightly unexciting, Wi-Fi service. Unlike a retailer telco, that service can be offered without a fixed-term contract or a need to recoup the expense of a new modem.

He sees that appealing, for example, to low-income households and rental properties.

"It won't apply to everyone, but it might apply as an entry plan."

- BusinessDesk