Minister wants to have her cake and eat it too

TUANZ (the Telecommunication Users Association of New Zealand) warns users that the government’s Telecommunications Review discussion document allows Chorus to pocket price its copper broadband services in areas where it isn’t building the Ultra Fast Broadband (UFB) fibre network.

Chorus has won 70% of the UFB project and is working alongside local fibre companies (LFCs) Northpower (in Northland), Ultra Fast Fibre (in the Waikato, Bay of Plenty region) and Enable (in Christchurch) to roll out the fibre to the home project.

However, in those areas where Chorus isn’t rolling out fibre, the Minister of Communications Amy Adams has expressly allowed Chorus to price its copper lines below the regulated price.

“Chorus can set wholesale prices below the regulated price cap to match competition from fibre in those areas, if necessary to compete effectively with the LFCs,” says the discussion document.

This flies in the face of the government’s stated aim of ensuring users move from copper to fibre, says TUANZ CEO Paul Brislen.

“The minister has usurped the role of the regulator in order to keep Chorus’s copper prices artificially high, ostensibly in order to smooth the transition from copper to fibre, yet in these specific areas the Minister is encouraging Chorus to fight to keep customers on copper. If it’s OK for Chorus to drop its prices in order to compete with the LFCs, why isn’t it OK for Chorus to drop its prices for everyone?”

Brislen says the three LFCs are doing a tremendous job of rolling out the UFB and are ahead of schedule.

“I’m told not only are they going to finish before Chorus, they’ll beat the government deadline of the end of 2019 as well. In addition to that, uptake of UFB services by customers in the areas controlled by the three LFCs is well ahead of the average, something that should be encouraged, yet here we have a Minister allowing Chorus to try to stem that tide. You can’t have it both ways – either we want customers on fibre or we don’t.”

TUANZ is calling on the Minister to allow the Commerce Commission to continue with its pricing determination rather than this knee-jerk reaction to protect Chorus’s shareholders.

“Chorus said if the price of copper broadband drops to the Commission’s draft price it wouldn’t derail the rollout of UFB, yet the Minister has stepped in to give Chorus a bonus payment running to hundreds of millions of dollars. That is money that should be going to the customers who have paid too much for broadband for too many years.”

ENDS

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