Scoop BlogWatch: Puzzling questions on broadband

Monday, 24 May 2010, 12:36 pm
Column: Scoop Blogwatch

Scoop BlogWatch: Important and puzzling questions on broadband

The Budget didn’t appear to have any surprises in it around broadband, which was one of the National Govt’s big election promises to deliver a new network, core infrastructure to NZ. A further $248 million announced as part of the pre-election commitment to spend $1.5 billion to deliver ultrafast broadband to 75% of NZ homes largely within six to 10 years. Adding to last year’s $240+ million, of which not much has been spent. So that’s close to $500m in the bank.

We all know broadband wont actually get delivered to homes. Only to the street. Would take a much bigger investment to take it to the home. So there will be costs to the consumer to do that. It’s now been 18 months and there’s no fibre laid. So they’re behind schedule.

And no decision yet on who will get to lay out the fibre. There’s a big decision ahead for Crown Fibre Holdings (CFH), the Govt entity charged with making the decision. They’re under considerable pressure and ostensibly there’s a three horse race for the $1.5 b.

So…. interesting to read the weekend “exclusive” by Tom Pullar-Strecker in the DomPost, that a majority stake in Chorus, Telecom’s physical network, will “apparently” be sold to the Government and other investors. Currently valued at $1.35 billion, according to Pullar-Strecker, Chorus will form the core infrastruture deliverer of broadband to the nation.

Now excuse me for scratching my head, but I don’t see the Govt writing a cheque for $700 million+ anytime soon to underwrite the purchase of Chorus to bail out Telecom, which is looking a bit fragile right now.

And even if the Govt was to do that, how would it stand up to public scrutiny? Given the XT debacle, the fact that Telecom has a copper network that they remain committed to and have publicly said they think the $1.5b investment in fibre is misjudged.

Is there, as Pullar-Strecker alludes to, some sort of secret negotiation going on with Telecom involving Treasury which undermines the whole tendering process being conducted by Crown Fibre Holdings?

Is it a done deal that Chorus will get a major stake and that NZers will fork out for it?

If so, what does this mean to the other bidders in the process? Particularly the Regional Fibre Group of electricity lines companies led by Vector, which must have spent mega dollars developing its bid?

I have heard that one of the key regional bidders has spent $600,000 developing its bid for its share of the broadband pie. Surely the Govt wouldn’t be conducting a secret process behind closed doors to deliver a fait accompli. Would it?

And what does this mean for the $248 million allocated in the Budget? And the unspent money sitting in the bank? Are NZ taxpayer dollars being dealt with transparently?

See the full blog post at: http://blog.labour.org.nz/index.php/2010/05/24/important-and-puzzling-questions-on-broadband/

ENDS

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