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UFB faces higher costs, lower demand

26 February 2013

Despite the fact that most people are doing "very nicely thank you" with their ADSL broadband connections, the government has told us that we need an ultra-fast fibre-based broadband system to retain our international competitiveness.

Perhaps that's true. After all, we wouldn't want to fall behind the rest of the world in our ability to illegally download movies, watch porn and browse millions of mindless YouTube videos -- would we?

Great minds (no doubt similar to the ones who have been running Solid Energy) were put to work costing this new UFB system and work is now well underway.

Oh dear.

According to reports in the media, the wheels are already starting to wobble on this high-speed trolley to nowhere.

First up, there's the cost overruns.

According to this story the first of those overruns could add an extra $300m to the total price of this network.

Surely that's not good.

However, the bigger problem appears to be that those behind this scheme were watching too many US-made movies about baseball diamonds hewn out of corn-fields and are only now discovering that "if you build it, they might not come".

You'd think that if the UFB was going to deliver such massive benefits to users, they'd be lined up to connect -- as soon as that was possible. Unfortunately, that's exactly what's not happening.

Apparently, only 2.8% of those who are already able to get a UFB connection have bothered. The rest are seemingly more than happy with their old ADSL connection, at least for the time being.

Why is this?

Well perhaps it's in part because ADSL prices have dropped significantly of late. My total telco spend has fallen from $140/month to just $100 a month -- thanks mainly to a noticeable reduction in the rate I pay for my broadband data.

Then there's the issue of "getting connected" to the UFB. Even if the fibre runs right past your door there may well still be some digging and extra cost associated with hooking you up -- and who's going to pay that if their ADSL delivers all that's needed for the time being?

Also, given that a fairly sizable chunk of NZ's population are now renting rather than owning their own homes, it's quite likely that someone who is merely a tenant will find it difficult to get the landlord's permission for any earthworks. What's more, given the month-to-month nature of most tenancies, who's going to fork out a fist-full of money to get UFB in a rented property when they might find themselves "down the road" whenever the house is sold or the landlord decides to take possession for whatever reason?

Perhaps the only time the UFB will really become sought-after is when we have an abundance of IP-based TV channels, which I'm sure will happen eventually -- but not for a while.

In the meantime the UFB is looking like the solution to a problem that does not (yet) exist.

Is UFB available in your street?

When it is available, will you be hooking up straight away?

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