Review key to keeping UFB partnership on track

Media Statemen

8 November 2013

"The Government has made the right decision in commissioning an independent assessment of Chorus’ financial capability to deliver its contractual obligations under the UFB public private partnership," says Stephen Selwood, chief executive of the New Zealand Council for Infrastructure Development.

"The essential issue here is whether or not Chorus will be able to absorb a $10 per month reduction in copper wholesale pricing, as required by the Commerce Commission, and still deliver ultra-fast broadband to most New Zealanders.

"There are two conflicting views on this. On the one hand the Coalition for Fair Internet Pricing say that Chorus can and should absorb the cost. On the other hand, the Government’s partner Chorus says that the lost revenue will have a very significant impact on their capacity to deliver ultra-fast broadband to most of New Zealand as they are contracted to do.

"If Chorus is right, the cost to all New Zealanders of the loss of social and economic benefits that a delay in UFB roll out would inevitably cause needs to be carefully considered.

"Also to be weighed in the balance is further write off of shareholder value for over 30,000 kiwi investors and consequential loss of investor and financial market confidence.

"When the impact of the pricing reduction is clear, significant questions over whether the Commerce Commission pricing determination is reasonable still remain, as does Chorus’s right to require a full cost review.

"The Government represents all New Zealanders as a partner with Chorus in the roll out of UFB.

"The independent review provides Government the opportunity to determine the financial impact on Chorus of the Commerce Commission's decision and inform whether or not and how it might intervene in a way that is in the best long term interests of consumers.

"At the end of the day, the sooner this issue is resolved, the sooner we can focus on the real opportunity – how NZ levers the return from this investment in ultra-fast broadband infrastructure - the better it will be for everyone."

ENDS

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