Ratcliffe heading Telecom fibre response

20 April 2009

Telecom has set up a "think tank" headed by Chorus boss Mark Ratcliffe to formulate its response to the Government's $1.5 billion fibre plan.

Telcos, lines companies and other interested parties have till Monday to comment on the fibre plan, announced late last month by Communications Minister Steven Joyce.

State-owned Kordia had sought an extension of a couple of weeks for its submission, but strategic development manager Susie Stone says it withdrew the request after other telcos signalled they could live with the deadline.

Sources suggested there was still internal debate within Telecom about the implications of the government plan.

It would see up to $1.35b allocated to up to 25 "local fibre companies" (LFCs) to build fibre networks, that the Government hopes will connect businesses, schools and - within 10 years - three-quarters of homes.

While the Government's proposal does not set out a minimum contribution from private sector investors in each LFC, Mr Joyce told The Dominion Post he expected they would at least match the government contribution.

Some commentators have questioned whether that level of investment would be forthcoming - one of several risks acknowledged in a Cabinet paper outlining the plan.

Submissions from some telcos and lobby groups are expected to draw attention to the risk that administrative and consultancy costs could eat up a significant chunk of the government funding, and seek ways to streamline the initiative.

Forsyth Barr analyst Guy Hallwright says the implications of the fibre plan remain unclear.

"How Telecom responds depends in part on what the other potential investors in this are thinking. There are a range of things they could do from trying to work with it, to competing against it head-on to make a difficult investment case for anyone investing in it."

Source: Business Day, Author: Tom Pullar-Strecker