Copper Tax Might Reach $1 Billion: New Report

Copper Tax Might Reach $1 Billion: New Report

The Government’s proposed copper tax would cost Kiwi households and businesses about $1 billion if demands by monopolist Chorus are accepted, the Coalition for Fair Internet Pricing said today.

The cost to Kiwi households and businesses of the Government’s existing proposals is now estimated to be between $390 million and $449 million between 1 January 2015 and 31 December 2019, but demands by Chorus in its submission to the review of the Telecommunications Act would take the total to $979 million.

There are no benefits to Kiwi households and businesses from the additional copper tax, which would simply flow to Chorus shareholders. The extra costs would not, for example, speed up the roll out of the Government’s ultra-fast broadband (UFB) initiative, which the highly profitable and financially secure Chorus is legally obliged to carry out under a $1 billion contract.

The coalition was releasing an updated analysis by economists Covec on the transfers to Chorus that would eventuate if proposals under the current Telecommunications Act Review were accepted.

The updated analysis, which is deliberately conservative, was commissioned following feedback on the initial Covec report.

The Coalition’s spokeswoman, Sue Chetwin, also chief executive of Consumer NZ, said any government-imposed copper tax – whether $390 million or $979 million – was unfair to Kiwi households and businesses.

“The Commerce Commission is the appropriate price-setter for monopolies and it is wrong and dangerous for politicians to take over that role from an independent regulator,” she said.

“We urge the Government to rethink its discussion document process – which appears to have been launched following lobbying by Chorus – and allow the proper Commerce Commission process to run.

“It is quite clear from the absence of any market disclosures – comments by the Prime Minister notwithstanding – that there is absolutely no threat to Chorus’ financial viability from either the UFB rollout or the Commerce Commission process so we see no reason why both should not be allowed to run without interference.”

Ms Chetwin also welcomed public commitments by coalition member CallPlus/Slingshot to pass on all price reductions from the Commerce Commission process to their customers. CallPlus chief executive Mark Callander has gone on record saying: “If the government doesn’t proceed with the proposed copper tax and Chorus doesn’t find other ways to increase wholesale prices, CallPlus and Slingshot will pass on the full benefits to our customers.”

Orcon has made a similar commitment to passing on cheaper inputs and Ms Chetwin challenged other telecommunications companies to make similar public commitments.

“Our campaign is not about increasing anyone’s profits but it is simply about giving Kiwi households and businesses a fair go when it comes to their internet pricing.”

The Coalition also said it was working on a Request for Proposal for Kiwi advertising agencies to develop creative ideas for a long-term advertising campaign against the copper tax.

The Coalition for Fair Internet Pricing was founded by Consumer NZ, InternetNZ, and the Telecommunication Users Association of New Zealand (TUANZ) and is supported by CallPlus and Slingshot, the Federation of Maori Authorities, Greypower, Hautaki Trust, KiwiBlog, KLR Holdings, National Urban Maori Authorities, New Zealand Union of Students’ Associations, Orcon, Rural Women, Te Huarahi Tika Trust and the Unite Union.

ENDS

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