Tail extensions and shrinking networks

By 2017-09-14Blog
Tail extensions

There is a sneaky rumour doing the rounds that Ultra-Fast Fibre is readying itself to follow in the footsteps of Chorus and introduce tail extensions for UFB services in the coming months, so I think it is worth checking in on the topic of tail extensions.

What are tail extensions?

Tail extensions are an industry term used to describe the charge applied to retail service providers (RSPs) by copper/fibre carriers for handing a tail circuit off to an RSP when that RSP doesn’t have a presence in the town/city where the end user is located.

For example: A RSP has a client in Taupo, but has no infrastructure or handover in Taupo, and the nearest handover that RSP has with Chorus is in Auckland. Chorus will carry the circuit data 400km or so back to that Auckland handover and charge the RSP an additional cost on top of the standard circuit cost.

Copper services have had this model applied for a long time, enabling RSP’s to have a single handover nationally (or more if they like) with services brought back to it from various locations.

In April this year Chorus introduced UFB tail extensions as I discussed in this post.

The immediate response by a number of RSPs was to shut down expensive and underutilised PoPs (racks in exchanges/data centres housing routers/switches), and this is a reasonable move where sales volumes in a town, let’s say Greymouth, don’t cover the cost of the required local infrastructure. By applying a small increase in cost to each tail, the handoff can be moved to Christchurch, tail extensions added, and significant savings gained.

That’s the positive. The negative aspect of such a move is essentially exiting the dark fibre and/or premium fibre market in any such town/city.

Sure, an RSP can order HSNS in a small town and have it handed off in a major centre, but the cost makes it impossible to compete on price.

Additionally, any RSP with a client requiring diverse access in such a town will find it hard to present a compelling offer.

In the smaller end of the market I think we are seeing/will see networks consolidate and service offerings in remote towns being cutback and simplified to UFB and copper variants only.

What is Lightwire doing?

We are in the process of rolling out additional PoPs in Auckland and Australia in order to increase the diversity of our service paths, and are planning to progressively roll out additional PoPs throughout NZ in 2018 in order to access non UFB carriers where available.

Brendan Ritchie

Brendan Ritchie

Author Brendan Ritchie

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