NZ Government calls for FTTP players

Stuart Corner
Wednesday, 21 October 2009 09:05

Business IT - Networking

The New Zealand Government has kicked off the partner selection process for its $NZ1.5 billion ultra-fast broadband network initiative with the release of an invitation to participate in the provision of partially Government funded FTTP networks that will serve around 75 percent of the population.

In September the government released its final proposal for the ultra-fast broadband initiative . The government expects its investment to be at least matched by private sector funding by way of a co-investment model in open access infrastructure.

Releasing the invitation to participate (ITP), communications minister, Stephen Joyce, said: "[It] provides the terms and conditions of the government's investment, including technical specifications and the government's preferred commercial model for co-investing with partners in a local fibre company (LFC).

"The ITP is based upon an innovative commercial model that will see the government largely fund the deployment of fibre into communities, and the Crown's LFC partner gradually taking a greater share in the LFC as it connects customers. This risk sharing model overcomes the major hurdle of uncertain demand."

The Telecommunications Users Association of New Zealand (TUANZ) welcomed the move saying: "Despite some anxiety about slow progress early on, TUANZ was very pleased to see the Government kicking off its search for partners in its ultra-fast broadband initiative today...To have reached the stage of calling for proposals on such a complex and ambitious project is very encouraging. The timetable for the partner selection process certainly looks achievable, and the launch of this process is a major milestone in itself."

The ITP provides for multiple LFCs, each deploying, owning and operating the open access dark fibre network FTTP network in a specific area. Each LFC will be required to sell access to Layer 1 services and, if the LFC chooses to do so, sell Layer 2 services over its network and must connect any and all customers in its agreed coverage area seeking access

Potential LFCs are required to submit a notice of intention to participate in the partner selection process by 13 November 2009 and if they decide to submit a formal proposal must do so by 29 January 2010. The Government then expects to draw up a short list and negotiate with these but has given no indicative dates for any milestones beyond 29 January 2010. TUANZ, however says it expects initial agreements to be completed by the middle of 2010.

If Telecom NZ wants to participate it will have to set up a separate entity with separate majority shareholding The Government has made it clear that it will only invest money into fibre companies that are not controlled by shareholders who also operate retail telecommunication businesses. (Telecom NZ issued a statement to the NZSX alerting shareholders to the Government's announcement, but making no other comment).

The process of selecting the LFCs and managing the Government's investment in these will be overseen by a government- owned company, Crown Fibre Holdings (CFH). Details of the company are due to be announced in the next couple of weeks, but until CFH is staffed and operational, the ITP process will be managed by the Ministry of Economic Development.."