UFB demand a double-edged sword

The popularity of video streaming services is putting pressure on existing copper networks. Photo / Getty Images

Chorus says ultra-fast broadband is going "mainstream" as more users sign up.

But there is a risk the rollout may not keep pace with the explosive increase in demand for bandwidth for internet pay TV services such as Lightbox, Netflix and Neon.

The wholesale broadband provider, along with telcos, has been stunned by the rapid uptake of video streaming services, which is putting pressure on existing copper networks that provide the bulk of broadband services. The explosion of video services should boost the uptake of UFB. But with the staggered rollout, chunks of major centres, such as Auckland, are not yet complete, creating problems marketing the service.

Chorus announced yesterday it was working on improving the complex and disjointed processes for connecting to UFB, but there are still major issues ahead over the Resource Management Act and taking cable from footpaths into homes.

"Consumers think the shift to fibre is like going from dial-up to broadband," said Peter Wise, a senior telecommunications consultant with IDC. "The reality was that it was a huge and complex infrastructure project at a time of huge changes in the industry."

Chorus is the cornerstone builder and wholesaler for the UFB fibre optic network. Yesterday - halfway through the rollout - Chorus said UFB was becoming mainstream as demand grew.

Of the Government's first priority list for 75 per cent of the country to have access to UFB, so far around 12.8 per cent have signed up. Auckland has 14.9 per cent signed up and was fourth behind provincial centres Blenheim, Timaru and Palmerston North.

A monthly report by broadband monitoring service TrueNet for April raises the prospects of trouble ahead with congestion for ADSL and VDSL for the second month in a row.

Where once broadband would take video to computers, now, using Wi-Fi, three or more devices such as TVs and tablets could be connected, putting extra demand on services and potentially slowing speeds.

Peter Wise said it was a worldwide phenomenon and the UFB rollout in this country was efficient compared to Australia. But he agreed there was a danger of a bottleneck as demand exceeded the supply of bandwidth.

Twelve months ago some questioned whether there would be demand for UFB because existing services like ADSL were coping well.

Chorus was concerned this would undermine its financial performance.

That concern was reflected in a draft determination by the Commerce Commission which set a high price that Chorus could charge ISPs such as Spark and Vodafone for existing copper wire services such as ADSL and VDSL.

Spark is leading a campaign to stop the commission from finalising that price, arguing it has taken too little account of the cost to consumers.