Review of Chorus “Very Positive Step in Right Direction”

7 NOVEMBER 2013

Review of Chorus “Very Positive Step in Right Direction”

The Coalition for Fair Internet Pricing says this morning’s announcement by Communications and IT Minister Amy Adams of an independent assessment of Chorus Ltd’s financial position is “a very positive step in the right direction”.

The coalition has been campaigning for the government to respect the role of the independent regular, the Commerce Commission, in setting the fair price for broadband and voice services on Chorus’s monopoly copper network.

Chorus, which is also contractually obligated to build much of the government’s new ultra-fast broadband (UFB) fibre network, claims the new copper prices might put it at risk of defaulting on its debt, raising the question of whether it is still a credible UFB partner for the Crown.

A spokesman for the coalition, Paul Brislen, also chief executive of the Telecommunications Users Association of New Zealand (TUANZ), said the coalition remained sceptical of Chorus’s claims about its financial position.

“We think it is exaggerating its financial issues for political reasons, to pressure the government to take the extraordinary step of legislating to override the independent regulator, in order to boost its revenues at the expense of Kiwi households and businesses. The minister’s initiative to get to the bottom of this matter will be a very positive step in the right direction if it leads to an independent assessment that everyone in the industry has confidence in.”

Mr Brislen said the coalition was further encouraged by evidence the government was thinking innovatively about ways to address any financial problems at Chorus the minister’s independent review may reveal.

“Steven Joyce, for example, has suggested that if Chorus is in financial difficulty then the government could adjust the terms of its loan repayments to the Crown. Other innovative ideas that maintain the independence of the Commerce Commission and don’t involve a government-imposed copper tax on Kiwi households and businesses should be considered if there is in fact a problem with Chorus’s solvency under the fair copper price.”

Mr Brislen said the coalition hoped the government would take note of top law firm Russell McVeagh’s most recent Regulatory Update, which outlined why it is so important that it preserve the integrity of the regulatory framework and the independence of the commission.

The coalition also noted CallPlus’s application to the High Court for a declaratory judgment on whether the minister’s review of the Telecommunications Act was lawful under section 157AA of the Act.

“Getting a good clear steer from the courts on their interpretation of section 157AA will be useful for the minister and everyone else involved in the industry,” he said.

ENDS

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