$20 million for free fibre hook-ups

Chorus is singing a happy tune as it will be able to offer some customers a free optical-fibre internet connections. Photo supplied.

Ultrafast broadband just got 200m closer to most of the homes that will have fibre passing their doors within the next three years after Chorus agreed to provide $20 million for free residential installations.

Chorus marketing and sales general manager Victoria Crone said that with more than 72,000 customers now within reach of the Chorus UFB network, the company had agreed to provide $20 million for retail service providers to offer free installation to residential customers.

Chorus already funded the first 15m of new trenching to connect a home, or up to 10m of fibre where there was an available duct or a single overhead aerial span.

The additional funding would be used to cover the cost of connecting residences that were beyond those, up to 200m.

"New Zealanders are still discovering the benefits of fibre and we want to help make it as easy as possible for our customers and their customers to make the switch to a fibre world," she said.

Craigs Investment Partners broker Chris Timms said he still expected Chorus to be a cash generator in the longer-term.

"But, in the near-term, there is a high degree of uncertainty and execution risk associated with the capital-intensive UFB initiative and the pricing of both existing copper products and the fibre products being built now."

Chorus' UFB capital expenditure was substantially greater than forecast and it might not be able to recoup that expense, he said.

"We remain cautious and will be watching the share price and regulatory developments closely," Mr Timms said.

The Communications and Information Technology Minister, Amy Adams, said the Government and Crown Fibre Holdings had reached agreement with Chorus, Enable and Northpower that provided for free residential connections for up to 200m per house from the road, until at least 2015.

Estimates suggested that only 0.3% of UFB residential premises might need a connection longer than 200m.

The 2015 timeframe was based on a 38% uptake rate by residential users.

Mrs Adams said the uptake rate was high for the first few years of a new fibre network.