Chorus has published a document showing how it will approach fibre unbundling.
The network company says that while its offer to the market will comply with all legal requirements, it aims to ensure the overall integrity of its fibre network infrastructure.
In practice that means other companies cannot install their own hardware or otherwise touch the fibre. Chorus will do any substantial work on the network infrastructure on behalf of unbundling customers. Chorus will provide splitters, devices that split a single beam of light into two beams.
Chorus says this is important because it makes it clear where responsibilty for the network lies. It will also reduce faults, maintain consistency and ensure proper records of any changes are made.
The company went on to say its open to further discussion with interested parties.
The plan only allows for Layer 1 unbundling. That’s the physical part of a network.
Unbundling means that from 2020 all four fibre companies; Chorus, NorthPower, UltraFast Fibre and Enable must allow other service providers access to their fibre networks in the first set of UFB areas. Those areas covered by UFB2 are due to be unbundled in 2026.
Unbundling was a success in the copper era when the Commerce Commission intervened to regulate the market and fix access prices. This meant ISPs could install their own network hardware in Telecom NZ’s exchanges and cabinets. Those who did often made considerable cost savings, much of which they passed on to their customers as lower prices.
Copper unbundling became economically viable once an ISP passed a certain threshold of customers in an area. ISPs would only do so as it made commercial sense. In many cases it did.
With around 22,000 sites potentially needing splitters, the economics of fibre unbundling are different. It requires a substantial captial investment. For now, there are no regulations governing the amount wholesale fibre companies can charge for unbundled access. However, the Commerce Commission has said it will step in if it feels the market is not working.
In June Vodafone and Vocus formed a joint venture to work together on fibre unbundling. They say this may allow them to offer a different range of products and services to those on offer at the moment and thereby introduce more competition to the market.
Chorus says it is ‘ambivalent’ about the idea of fibre unbundling. That’s because prices, regulated or otherwise, are likely to be based on input costs.
The fibre companies, including Chorus, have contractual performance requirements that guarantee customer experience. Any unbundled service provider will not be subject to the same legal requirement.