Building owners to pay for Chorus UFB installations

GUEST COMMENT

The subject matter here is this; when installing connections into office buildings, Chorus [NZX: CNU] have a term where they require building owners to contribute to the cost of UFB installations where the cost exceeds "the standard external lead in and building cabling, up to contribution cap."

The standard external lead in includes:

• a maximum of 15m trenching, or
• 100m conduit into supplied trench or haul through existing suitable conduit or
• 1 span aerial lead-in.

What the standard internal work includes isn't clear to me.

This isn't a new term that Chorus has enacted, but they have only recently started to enforce it to help plug the $140 million hole in their installation budget.

It moves away from a long standing industry norm where an ISP orders a service such as HSNS, and if the installation is non-standard, the carrier will advise the ISP of the additional non-recurring charge. It will then be up to the ISP to either take the charge on the nose or pass on some portion to the end user. This latest move by Chorus will mean that an ISP places the order with Chorus, Chorus identifies additional non-recurring costs and approaches the building owner directly to get confirmation that the building owner will pay those costs. At no point will the ISP know what the cost is that the building owner is being asked to contribute unless the building owner comes to the ISP directly. In fact, the only way an ISP will know if the building owner has rejected the service order from Chorus based on the cost will be when the order is cancelled and the ISP then gets an update.

This removes any ability for the ISP to keep its client informed, and leaves the uptake of UFB services for an entire office building up to the building owner. Chorus has always required consent, and that has rarely been an issue, but payment on a service the owner will see no immediate return on is likely to get past only the most forward thinking of landlords.

Some other issues are:

• This measure wasn't meant to be enacted on services ordered before April 1st, but we have found orders lodged in August 2013 now coming back to us with notes from Chorus stating building owner contributions are required, but of course we get no further detail.
• To date, when a single tenant has ordered a UFB service within an office building, the whole building has been fitted out to ensure future installations are able to be easily provisioned. That practice now stops and services will be provisioned one at a time, leading to inefficiencies and a higher cost per additional install.
• We are told that it will take 3-4 weeks from date of order lodgement for Australian company Universal Communications Group (recently contracted by Chorus specifically to connect UFB for multi-dwelling units) to provide costs to a building owner. Based on this, it is clear to me that UFB service lead times are going to continue to be awful.
• There is still no SLA for service installation lead times within multi-dwelling units.

I don't understand why Chorus have moved away from an established and successful provisioning model. Sure, ask the building owner for consent, as flawed as that process is I accept that it is a necessary step, but come to the ISP who placed the order to discuss any additional install costs that are not covered by the standard installation charge.

Brendan Ritchie is the CEO of DTS Ltd