Silly Don Brash is opposed to broadband especially UFB. His opposition was a key recommendation of his taskforce since wound up for being clueless and overspending it’s budget.
He therefore very stupid for criticising Labour for saying we reserve the right to review and amend the arrangements that flow from Joyce’s flawed arrangements.
We think that allowing Telecom monoploy wholesale powers, a 24% ROI and an underwrite of any loss to the Comcom needs review. And it will get it. And after that review there may be changes. And they will be legislated. And Telecom knows that. They therefore go into this deal with their eyes open.
Brash is reported as saying:-
A future Labour government could rewrite Telecom’s ultrafast broadband (UFB) contract, without paying compensation, Act leader Don Brash said today.
Mr Mallard , and Labour communications spokeswoman Clare Curran, both vehemently opposed the Telecommunications Amendment Bill during its committee-stage debate last week – a session most notable for last-minute changes that allowed for the foreign sale of Telecom’s retail business.
During the committee-stage debate on the new UFB legislation, Labour also tabled an amendment that would have increased the fines that Telecom might have to pay for breaching separation or “line of business” requirements in the bill from $10 million to $100 million.
“Anyone entering into an arrangement based on this legislation has got to know that it may not last,” Mr Mallard added.
Agreed Trev!
!
The only way to get an efficient telecommunications system is renationalisation. Anything else is fooling yourself as “competition” is adding more costs and complexity onto something that should be simple.
From whence has the 24% ROI come from? Please show is the evidence to support the claim.
$2500 per connection cost $50 month average charge. Maths not difficult.
@ Trevor
“We think that allowing Telecom monoploy wholesale powers”
1. Wrong company. UFB will be built and managed by Chorus, not Telecom.
2. Any provider can compete at the Wholesale level if they choose to invest or alternatively they can consume Layer 2 bitstream (Broadband data) services provided by Chorus, ergo no monopoly.
Also your comment re 24% ROI.
Not sure where you got the $2500 connection fee from, maybe something I haven’t seen.
From the CFH website Q&A: “Local Fibre Companies are not expected to charge RSPs any up-front fee to connect Residential customers to UFB, except in exceptional circumstances.”
Interesting to hear business up in arms over the uncertainty they say this puts on businesses, the not knowing and therefore how to plan argument. The same business leaders who thought nothing of ramming employment changes through under urgency which have left many employees under a great deal of uncertainty in very uncertain times.
@ Trevor
Any update in addressing the inaccuracies?
Trevor: The maths is simple yes, but your choice of the investment amount is not. This is not about ROCC – return on Connection Cost. It is about return on Investment which is considerably more than $1.5Bn.
If the total urban fibre investment is $3Bn, then the ROI will be around 18% using your simple maths. Which is still too high for an infrastructure investment.
Some estimates have put the UFB cost at up to $6Bn which would represent an ROI of around 9%. If that spend is closer to the mark, then the government have negotiated a very good deal with a public company that normally seeks ROIs at the level you quote.
I suspect that the actual figure will be somewhere in between.
In focusing on sham figures, you do your argument a grave disservice.
The real point was that the UFB appears to have been achievable without the need for taxpayer subsidy and still returned an ROI commensurate with a utility company’s expectations (9%-18%). What the government have done is to artificially shore up Telecom’s actual ROI as well as removing demand-side risk. Had the UFB gone to the Lines Companies, then not only would the ROI have been more reasonable, but we would also have had real competition at the infrastructure level (DSL via copper from Telecom versus fibre from Lines Companies).
But of course there would have been a much larger capital cost in overlaying Telecom’s existing fibre cables. And the actual ROI to the investors would have been much reduced because of that competition.
You are barking down the wrong manhole to promote a Labour Government undoing the UFB’s contractual mechanisms now in place. To do so, will not only expose the country to litigation costs but would also require a significant capital contribution to complete the necessary fibre infrastructure.
What you really need to do is to develop a digital use policy to ensure that the promised economic, social and environmental gains of a high speed broadband network are actually achieved. Where is that policy Trevor?