Vocus Group and Vodafone say they will form a joint venture to unbundle UFB fibre services. There were few specifics, but at a press conference CEOs Mark Callander and Russell Stanners said the two companies plan to invest “tens of millions” of dollars in the project.
At present retail service providers like Vocus and Vodafone buy wholesale bitstream fibre services from the four companies building the UFB fibre network. Prices are regulated by the Commerce Commission and have been set at a level allowing the builders to get a return on their investment.
The government select committee inquiry into post–2020 telecommunications regulations has recommended that fibre services can be unbundled.
If that goes ahead, and it looks likely, companies will be able to install their own hardware at network nodes and their own customer premises equipment. It’s a considerable investment, one only the largest telcos will be able to afford. The fact that New Zealand’s second and third largest telcos feel the need to do this as a joint venture underlines the high bar.
Unbundlers will be able to offer their own set of services and not be restricted to the fibre companies’ wholesale tariffs. They will also be able to sell these to other service providers creating a secondary wholesale market.
Vocus Group and Vodafone say the joint venture will unbundle all four fibre networks: Chorus, Enable, NorthPower and Ultrafast Fibre. They have asked the companies to respond to a request for proposal on prices. Under the existing regulations the fibre companies have until the end of 2018 to provide this information.
At the press conference the two companies said the price for an unbundled connection should be set at $24. This compares with the $40 or so regulated price for a UFB connection. The current rules allow the fibre companies to set their own commercial prices for such a service between 2020 and 2023. After that date the price will be regulated. The Commerce Commission may step in if an interim price cannot be agreed.
The pair say unbundling could mean 10GB retail plans and low latency options, although it’s not clear how latency can be lower than on the existing network.
CallPlus, now part of Vocus, was a pioneer of copper unbundling more than a decade ago when it placed its own hardware in Telecom NZ exchanges.
InternetNZ CEO Jordan Carter offered his support. He says his organisation has advocated unbundling and that it has the potential to lead to increased choice and competition.