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When are HSNS tail extensions going to be a thing?

26 Sep 2017

Chorus HSNS (high speed network services) pricing makes no sense and makes the product harder to buy.

I recently wrote about UFB tail extensions, following on from that I want to explain how Chorus makes a higher value service harder to buy.

HSNS is the 100% committed (speeds are guaranteed to the ISP handover) service that was around before UFB and is now also sometimes referred to as BS4.

Chorus should be doing all they can to get RSPs (retail service providers) to buy HSNS, the revenue gained per sales in that category is far higher than UFB, so why haven’t they introduced cost effective tail extensions for HSNS Lite fibre and HSNS Premium?

A single 100Mbps HSNS service generates the equivalent revenue of eight UFB bs2a 100/100 services, yet Chorus has focused on making the less profitable, albeit mass market, products available.

HSNS is not of interest to everyone, but where diversity or guaranteed speeds are required, or where UFB has not/will not get to, it is still very much a required part of any ISPs arsenal of products.

Next to non-regulated revenue from services such as CRT (Chorus’ inter metro backhaul service which 2degrees recently moved to for national backhaul) HSNS represents one of the most profitable regulated services they have.

Let’s use Greymouth as an example to see how crazy the disparity is between Chorus’ approach to the two services.

Taking a 100Mbps BS2a UFB service from Greymouth back to Christchurch generates an additional charge to an RSP of $2.89 p/month.

Doing the same with a 100Mbps HSNS premium service costs an additional $6,000 p/month.

We could assume that the additional cost is because the HSNS service is committed, with a 1:1 ratio, but even so, Chorus’ uncontended CRT product costs $2,697 for 1000Mbps between Greymouth and Christchurch.

That’s 10 x the speed of the HSNS 100Mbps tail extensions, and less than half the price.

By making HSNS tail extensions cheaper Chorus could drive uptake of a high value product and be seen to have a coherent and logical pricing formula across their service portfolio.

The only reason I can think of for Chorus to leave the tail extensions at ridiculously high price points would be to drive ISPs to buy co-lo space at regional exchanges and their regional backhaul service (CRT).

But this doesn’t stack up.

There isn’t big money for them in co-lo space and tail extensions are a nice pathway for ISPs looking to establish scale in a region as a precursor to building a point of presence there and then buying CRT.

Chorus’ HSNS pricing doesn’t appear to make any sense.

Brendan Ritchie (@bcarmody on Twitter) is the CEO for Lightwire Business (@Lightwirebus on Twitter) which provides internet, IP voice and WAN services across New Zealand and Australia.

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