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Vodafone: Moves by Chorus will lead to broadband price hike

NZ Herald,
Publish Date
Thursday, 28 March 2019, 7:21PM
A proposal to unbundle the Chorus network has caused concern. (Photo / NZ Herald)
A proposal to unbundle the Chorus network has caused concern. (Photo / NZ Herald)

Telecommunications bosses are fuming at Chorus' proposed price to unbundle its network - or open it up so internet retailers can get more control over the services they offer, and how they're priced to the public.

Vodafone says it could mean the average customer pays $40 more for broadband per month than they do today.

Chorus is pitching a $28.70 monthly charge covering access to the fibre between the premise and the splitter - a key point where shared fibres are split into individual fibres that go into each customers' home or office. It would also charge retailers $200 a month to access feeder fibre from each splitter, which can connect up to 16 customers.

The network operator's regulated prices for the transition period between December 2019 and January 2022 range from $25 a month for a monthly voice connection up to $65 for a 1 gigabit per second connection.

"The proposed pricing is ridiculous," says Mark Callander, the head of Vocus NZ, which includes Orcon and Slingshot in its stable.

Last month, Vodafone NZ boss Jason Paris said he wanted the "low $20s" as a starting point for what is likely to be an extended period of horse-trading, and claim and counter-claim until the two sides agree on a price - or the Commerce Commission steps in.

This morning, Paris said: "The proposed pricing by Chorus would obstruct fibre unbundling from becoming a reality in New Zealand.

"Our estimates are the average customer would pay up to $40 more per month for unbundled fibre compared to what they pay today.

"This behaviour is reminiscent of the old Telecom at the time of copper unbundling, and will leave New Zealanders worse off. We're prepared to work with Chorus on this, but if this is any indication of their planned approach, we believe the government and Commission should step in now."

Unbundling is when retail ISPs, like Spark, Vodafone, 2degrees and Vocus, can put their own electronics on Chorus's network, giving them more freedom over what services they offer and how much they charge for them.

An update to the Telecommunications Act, which kicks in next year, forces Chorus to unbundle or open up its network - but does not specify pricing.

If horsetrading between retail ISPs and Chorus doesn't result in them agreeing on a price before Christmas, the legislation allows the Commerce Commission to intervene and referee.

During an interview as Vocus and Vodafone NZ announced an unbundling partnership, Paris said he expected Chorus to be "in the low 20s."

Earlier, Paris blamed accumulated increases to Chorus's regulated wholesale pricing for a $3 increase to the cost of all Vodafone broadband plans from March, following earlier copper plan price rises by Spark and Vocus.

Last month, Callander thought Chorus would probably leave it until later in the year before it showed its hand.

This morning, he said, "Chorus have played their hand early and the Commerce Commission will now need to intervene, it's as simple as that."

"The UFB network was designed to be unbundled, and ultimately is an asset that the government has helped fund. What Chorus has done is propose a monthly fee that when all costs are taken into account they get their desired outcome. It prevents unbundling and innovation. It's cynical at best."

Spark spokesman Andrew Pirie said his company was still accessing Chorus' offer but, "our initial assessment is that the pricing proposed today will make fibre unbundling an uneconomic proposition."

2degrees declined to comment

Chorus flatly rejected Vodafone and Vocus' take on its proposed pricing, which it called misleading.

"From Chorus' perspective, Vodafone are of course welcome to put their feedback on the proposed pricing, it's part of the consultation process," spokesman Steve Pettigrew said.

"That said it is misleading to say, that wholesale prices for broadband would increase for consumers as there is no impact on the wholesale layer 2 services Chorus provides all retailers on equivalent terms."


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