InternetNZ (Internet New Zealand Inc) today calls for a wider discussion on how to secure the Ultra Fast Broadband (UFB) rollout given recent controversy around copper broadband pricing issues.
Late last year, the Commerce Commission issued a draft determination that would reduce the price that wholesaler Chorus could charge for copper. Subsequently, the Prime Minister made comments linking the cuts to price with the implications it might have on the financial viability of the UFB rollout.
Fibre broadband is more expensive than copper and the Government and Chorus are concerned that reducing the copper price could stymie the uptake of fibre.
InternetNZ Spokesperson Susan Chalmers says the copper / fibre conundrum is one of the most challenging telecommunications regulatory issues ever to face the country.
“The problem lies in rolling out a $5bn fibre network with only $1.5bn available. In addition, that fibre network must compete with a legacy copper network that is already cheaper than its faster counterpart. The December 2012 decisions would make copper even cheaper” she says.
“The reason for the price drop is the legislative requirement to base copper broadband prices on their costs. This was passed into law in 2011 as part of the deal separating Telecom and Chorus. It always pointed to lower copper prices.
“An open acknowledgement of the challenge that low copper prices causes for UFB has now happened: Chorus could not have been clearer. The question now is what comes next? Given the alleged contradiction between low copper prices and successful UFB rollout, what is to be done?
“InternetNZ has always supported open policy processes. When the UFB deal was put together, of necessity it had to be under conditions of commercial secrecy and confidentiality. This, inevitably, meant a lack of consultation and industry engagement. Now we are beyond that period. It is time for an open debate. The UFB is a critical investment in New Zealand’s future. The Government, industry and consumers need to test the truth of Chorus’s claims that cost-based copper prices put the UFB at risk. All parties need to share their ideas about how to make the UFB work,” says Chalmers.
“InternetNZ is willing to assist with convening a roundtable discussion that takes a fresh look at the issues, if that would be helpful. We will write to ICT Minister Amy Adams today proposing such a discussion,” she says.
“InternetNZ appreciates the complexity of the problem. Chorus’ desire to retain a high copper price is one possible solution, but only 75 percent of the country will benefit from fibre. The remaining 25 percent will be left paying higher copper prices than they otherwise would have.
“InternetNZ wants the UFB rollout to succeed. We are not convinced that basing copper prices on cost precludes that outcome. Chorus obviously takes a different view. A discussion is therefore required.
“Whatever comes next, New Zealand needs to protect the independence of the Commerce Commission as independent regulator of the industry. The Commission didn’t create this problem – it is simply applying the law. The debate about how to make UFB work has to be had, and the evidence behind Chorus’s claims that cost-based copper prices undermine the UFB needs to be aired – and tested – in public,” says Chalmers.