Chorus signs $1b broadband contracts

Contractors laying fibre optic cable as part of the nationwide ultra fast broadband rollout. Photo / supplied by Chorus

Chorus, the telecommunications network operator spun out of Telecom, has signed contracts with Visionstream and Downer worth some $1 billion for those firms to build the nation's ultrafast broadband network, and is still in talks with Transfield Services.

The Wellington-based company inked two contracts each worth some $500 million over the next six years and include extra amounts for Downer and Visionstream to deliver part of the rural broadband initiative, Chorus said in a statement. The contracts are effective immediately and apply to UFB deployment slated for a July start.

Chorus is still negotiating with Transfield, which is responsible for about 10 per cent of the UFB programme.

"One of the key changes is a shift to targeted cost incentives and shared risks that will introduce a sharper focus on financial management and increase coordination of deployment operations in the field," general manage infrastructure build Ed Beattie said.

Chorus lifted its estimates for the total UFB build in February to between $1.7 billion and $1.9 billion, from a range of $1.4 billion to $1.6 billion previously flagged due to unexpected differences in costs across the country. It's trying to rein in those ballooning costs, and is looking at using alternative methods, such as overhead lines, to do so.

Chorus has completed construction work to take fibre past about 116,000 premises by the end of March, having passed 88,590 premises as at Dec. 31. It's aiming to pass 149,000 by July.

The company won a $929 million subsidy from the government to build the UFB network after Telecom agreed to structurally carve out the network operator.

The shares were unchanged at $2.65 yesterday.

Meanwhile, Telecommunications Minister Amy Adams has announced changes to the law governing interception of telecommunications by and behalf of intelligence agencies and the police.

The changes to the Telecommunications (Interception Capability) Act 2004 will create a new formalised network security regime.

"The proposed changes will mean network operators will be obliged to engage with the government through the Government Communications Security Bureau on network security, where it might affect New Zealand's national security and economic well-being," said Adams.

These requirements will be backed by a graduated enforcement regime, with escalating responses available if significant national security risks are raised.

"Updating the legislation will ensure that New Zealand's telecommunications companies have a clearer understanding of how to meet their interception obligations while ensuring network infrastructure remains secure, as we move to an increasingly online world."

Privacy requirements imposed on telecommunications companies will remain unchanged, while protocols involving police, intelligence and security agency interceptions are dealt with under separate legislation and will also be unchanged.