Doubt thrown on broadband plans

A telecommunications industry insider has raised questions over Telecom's broadband investment in light of the Government's billion-dollar broadband rollout.

Colin Goodwin, strategic marketing manager for Swedish technology provider Ericsson, said unless networks had been designed to move from fibre-to-the node to fibre running all the way to consumers' doorsteps, it was not a simple transition.

"Fibre-to-the-node is certainly not a stepping stone to fibre-to-the-premise," said Goodwin. "If one built a fibre-to-the-node network it will in the not too distant future have to be replaced with fibre-to-the premise anyway and very little of the infrastructure could be kept and used for the subsequent fibre-to-the-premise network."

Telecom is part-way through installing the 3000 roadside cabinets - fibre-to-the-node - aimed at cutting the distance broadband connections run over the existing copper network, thereby improving speeds.

Chris Dyhrberg, general manager of product management for Telecom's network arm Chorus, said unless the Government's proposal for a fibre broadband network changed substantially the company was committed to its plans.

He said there was benefit to be had improving the broadband network given fibre-to-the-home would be some years down the track.

Dyhrberg said for the past 15 years the company had been designing the network with fibre-to-the-home in mind and ducting could be reused to run fibre out further.

"Everything is a progression towards fibre-to-the-premises. You can reutilise virtually all of the investment you have made."

The exception would be the physical cabinets and the technology they contain, which Dyhrberg said had a relatively short lifespan.

"I guess the bottom line is, we are not that concerned about the investment we are making today because we have absolute confidence that it will all be useful in terms of the fibre-to-the-premises," said Dyhrberg.

Australian-based Goodwin, who is in New Zealand to brief Government officials and members of the Regional Fibre Group, said overseas governments had been clear the new fibre network would replace the existing copper network.

"No one has said in New Zealand that the fibre network is a replacement for the copper network and there seems to be the assumption that the two might continue together," said Goodwin.

"Yet that seems unlikely because if a substantial number of customers were to churn over from copper on to fibre the viability long-term of the copper network would be put at risk."

He said those shifting to fibre were likely to be the better paying customers, leaving those less well paying customers on an ageing and expensive- to-run network.

Goodwin said as a rule of thumb the top third of customers on a copper network were profitable, the bottom third unprofitable and the middle third breakeven. "If the top third go away on to another access network then you don't have a profitable network and you can't sustain that for all that long."

Dyhrberg said the issue of having to run two networks concurrently was part of what made the economics of fibre-to-the-home challenging.

FIBRE TRAIL

* Fibre-to-the-node: running fibre optic cable to roadside cabinets, aimed at cutting the length of copper line and boosting broadband speeds.

* Fibre-to-the-premise: Running fibre optic cable directly to homes, businesses, schools and hospitals, pumping broadband speeds to 50 times what is available today. Also known as fibre-to-the-home.