What if the network is a government monopoly - Telecom to sell Chorus to Crown Fibre Holdings?

Forums › New Zealand Broadband › What if the network is a government monopoly - Telecom to sell Chorus to Crown Fibre Holdings?

freitasm

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#61770 23-May-2010 08:34

According to the ODT, large changes would be coming to Telecom structure:

The Government's Crown Fibre Holdings, set up to manage its $1.5 billion investment in ultrafast broadband over the next decade, is in talks with Telecom.
After a planned sale, Chorus would eventually become a private-public monopoly effectively under government control, able to set the rules about how it will deliver services and for how much. Other investors would also be able to buy in.

Chorus would own Telecom's copper and fibre network, replacing phone lines with fibre optic cable delivering ultrafast broadband.

I don't believe in government owned monopolies but reading through years of comments here everyone seems to hate the fact Telecom owns a large chunk of our copper/network infrastructure.

So, would government buying this solve the problem - or aggravate it? What do you think?

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#333515 23-May-2010 09:05

I think it's inevitable.

I also don't think it will magically fix out issues. Who will set pricing? The same Commerce Commission who have already set wholesale prices ADSL prices higher than many people think is reasonable? What about there absolutely terrible handling of the MTR kissue? A regulator being own3d by telco is not a good look.

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#333516 23-May-2010 09:07

The Government have killed Telecom. I think the way its looking Telecom will be nothing but a retail outlet by Christmas, with Chorus being the primary player in the Telco market in NZ. If the Government get controlling shares in Chorus, then there's no way they are going to award the fibre contract to anyone else when they have their own company to do it.

Is that a good idea? That I don't know. I just wish they would make their minds up and get on with it for all our sakes.

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#333529 23-May-2010 09:54

Personally, I prefer situations where there are multiple cables into a house. I have always found that regulated monopolies are bad for the consumer, with higher prices, and delayed roll outs.

However, the only thing that is worse than a regulated monopoly is uncertain regulation.

What everyone seems to forget is that not all bits are created equal. Sometimes I want to have a generic connection, sometimes I want a very specific link and sometimes I want you to get out of the way and let me use the dark fiber. Sometimes I event want a specific type of fiber so that I can do things like quantum key exchange.

When there are multiple wires into your house, you have the choice of changing providers. For example, if TNZ's local network is overloaded, I can switch to TCL and vice-versa. People using TNZ wholesale'd services don't have that option. The same goes for locations where the DSLAM is full...

My heart's desire would be for Crown Fiber and Chorus to run their own, independent networks, giving the individual consumer a _choice_ between providers, but it looks pretty certain that Chorus will be split and sold to the Crown. That is an interesting direction for a government that is looking to sell state assets after the next election!

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matthemole

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#333534 23-May-2010 10:15

It was always going to happen, the National Government is trying to run CFH as a venture capital company where they want the best return they can in the quickest time they can. The one thing this deal would achieve is the ability move people over to fibre quickly and get rid of the copper network quickly.

If Chorus was not purchased then CFH would have to compete with Telecom and they do not have the appetite to do this.

Is this going to get fibre to the home quickly?
More than likely (well for some areas anyway). Chorus actually have little ability to produce network themselves (despite what the TV Ads say) They do however already have a national outsourcing structure for contracting the design and deployment of a network, and because of their size they have been able to beat up the contractors to deliver it for a reasonable price. The main point to note is the reasonable price bit, I didn't say it would be done well...

Will this deliver a good Network?
I doubt it. Chorus are a Telco. They think like a Telco and they behave like a Telco. They will deploy a network which will not deliver innovation to the Market in my opinion. What they will do however is deliver their shareholders their money back quicker and with a larger margin than any other player.

Will open access really be achieved?
No it won't. The information to date indicates that the proposal will be owned by the government (CFH) and other parties... my guess will be that those other parties will be the other Telcos, Vodafone, TelstraClear and Telecom. This proposal will set a standard price in the market, sure, but it will not lower the barrier of entry to small regional or national players who will innovate and provide competition to the big Telco companies.

I hang my head in despair, New Zealand could have built a world class network that would have let innovation blossom. Instead I fear they will get a legacy network that will return equity to the government quickly and with a high margin, along with the other shareholders.

I guess thats what happens when big business and politics merge together and we the tax payer get shafted one more time.

Cymro

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#333535 23-May-2010 10:21

I'm a little unsure how they would implement this with Telecom's current 3 tier structure, are ISP's going to buy an input product directly from Chorus (which is going to be a fairly expensive setup cost to replace the existing Telecom Wholesale component, think LLU over the whole country) or is it just the price that Wholesale will be paying Chorus per line?

And are you then going to regulate both what Chorus are charging per connection as well as the UBA price they are allowed to charge?

The hairy question looming in the background is, does it then become Chorus/CF's responsibility to migrate the country from PSTN over the old NEAX to a pure IP based telephony system by 2020?

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#333536 23-May-2010 10:22

jpollock: When there are multiple wires into your house, you have the choice of changing providers. For example, if TNZ's local network is overloaded, I can switch to TCL and vice-versa. People using TNZ wholesale'd services don't have that option. The same goes for locations where the DSLAM is full...

My heart's desire would be for Crown Fiber and Chorus to run their own, independent networks, giving the individual consumer a _choice_ between providers, but it looks pretty certain that Chorus will be split and sold to the Crown. That is an interesting direction for a government that is looking to sell state assets after the next election!

You may have a choice but TCL soon lost interest in creating their independant network because of the cost. Heart's desire needs to be tempered by pocket's depth.

To me Vector's involvement in fibre is like an airport company running parking buildings and hotels.

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#333541 23-May-2010 10:43

I like the idea of the split.

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jpollock

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#333599 23-May-2010 14:25

Bung:

You may have a choice but TCL soon lost interest in creating their independant network because of the cost. Heart's desire needs to be tempered by pocket's depth.

To me Vector's involvement in fibre is like an airport company running parking buildings and hotels.

True, but I've always linked TCL's loss of interest with their gaining traction on regulatory changes with the previous government.

Personally, I don't care who puts a second wire into my house, I just want a second wire! :) It could be Vector, TCL, Vodafone + that Canadian crew, or Biddle Corp - I don't really care. :) I just want an incumbent (TNZ) with a newcomer.

The NZ government has a bad habit of overpaying for assets. I wonder what Orcon + Kordia (already crown owned) could do with the funds they would use to buy Chorus.

Jason

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crazed

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#333624 23-May-2010 16:09

Government owned Telecoms network would be an interesting situation. Having all ISP's Comms companies buying access to the network at one set fee.

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maverick

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#333645 23-May-2010 17:15

hellonearthisman: I like the idea of the split.

why ????

Yes I am a employee of WxC (My Profile) ... but I do have my own opinions as well

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old3eyes

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#333676 23-May-2010 19:19

I suspect that this Gov line company would very soon end up like the Gov owned power companies. Only interested in upping the prices to pay the Gov a good dividend with little infrastructure upgrade. It may start with good intentions but after 10 years + power company deregulation we've all seen what happened.....

Regards,

Old3eyes

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#333680 23-May-2010 19:46

Cymro:
The hairy question looming in the background is, does it then become Chorus/CF's responsibility to migrate the country from PSTN over the old NEAX to a pure IP based telephony system by 2020?

I think in many ways it's a moot question. Delivering a voice solution bemomes a solution for the ISP/telco who is providing the retail product to the end user, not necessarily a solution that is handled by the network provider. I see an ISP deloying their own softswitch being no different to an ISP providing many other aspects of their network such as a billing system.

Already Telecom's NGN voice offering has become a very confused project with all 3 arms having to be involved with the process.

richms

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#333697 23-May-2010 20:13

With them pulling crap like this, is there any doubt why NZ infrastructure is in the under-invested state that it is now?

Worst Idea Ever IMO

If it must be socailized it should be local government that has a share in it, not central. But I would prefer no taxpayer input into it so that there can actually be competition to have multiple providers of service in urban areas, not a single point of failure common network like we have at the moment.

Richard rich.ms

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#333735 23-May-2010 21:00

I have two comments to make on this

Governments are inefficient. This is widely known.
Before telecom was sold off in the late 80's, the average waiting time was 7 weeks for a new telephone line to be installed.
Soon around 1992, i think this was down to something like 2 or 3 weeks.
Telecom also had the goal of making the most money they could out of the network. This ment they did everything a government wouldnt to make it more economically efficient.

If the government were to buy back the chorus network, it would have to be NOT FOR PROFIT. Unlike TVNZ or the power companies, i dont believe that they should be drawing an income for the government after the initial investment is made by CFH plus 0% interest. I believe there should be a mandate that all wholesale lines are sold at a rate that meets the cost of running the network labour and maintanence, plus no more than 10% for reinvestment.

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richms

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#333742 23-May-2010 21:04

And with things being sold that cheap, it means there is no viability of investment by anyone else in an alternate network for when the govt supplied one is not available, or doesnt meet the needs or simply to provide redundant services to people.

No, if it is operating it should be at a commercial return.

Richard rich.ms

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