The hotly contested Ultra Fast broadband (UFB) project took another positive turn on Tuesday when the government agency Crown Fibre Holdings announced that local lines company Counties Power, was back in the running for a share of the $1.5Bn project.  This follows last month’s announcement that Vector was similarly selected for prioritised UFB negotiations covering the Auckland City area.

The announcement was welcomed by the Minister of Communications and Information Technology, Steven Joyce, because it ensures that the Crown “has competitive options that will deliver the best overall solution for taxpayers and consumers.”

Many will see this announcement as simply a negotiating tactic to force Telecom to sharpen their pencil.  Certainly there is a need for the government to ensure that they commit a minimum of taxpayers’ funds to this project.  But there is a greater need to ensure real competition in this important area of infrastructure provisioning.  Having just the one bidder does not achieve that.

Counties Power is part of the Central Fibre Consortium, a collection of electricity lines companies covering central North Island areas from Napier-Hastings and Palmerston North, to Pukekohe.  They join Telecom as preferred bidders for UFB funding in their defined regions.

Neil Simmons, Chief Executive of Counties Power, emphasises that this announcement has come out of long-term discussions with Crown Fibre Holdings and that no binding decisions have been made yet.  He expects that if the consortium does win the UFB contract, then Counties Power will very quickly roll out new fibre cable to homes and businesses in Pukekohe, Tuakau and Waiuku. 

Under the terms of a UFB contract, the winner must not also be an Internet Service Provider (ISP) offering retail services and has to provide open access to all broadband retailers.  This opens the possibility of wireless providers offering services to rural users who are close to the urban fibre network.

The UFB project will lay fibre cables past 75% of the country’s population, offering speeds of up to 100Mbps to business and households, as well as serving schools and medical centres.  The entry-level service is expected to retail at around $60 per month for a 30Mbps service hopefully with no data caps.  This is around 30 times faster than what the average urban user is presently experiencing at a price materially below existing high speed services.

Counties Power has a focus on “their patch” and has committed to open access.  This will ensure that local people receive the advantages of early access to new and innovative services that require high speed broadband. Not only will households be able to download multiple music tracks and high definition video, but businesses will be able to achieve productivity gains.  This enables the Franklin and Waikato economies to grow, thus retaining workers in the area with consequent social and environment gains.