7 Feb 2013

TUANZ supports commission over Chorus charges

8:44 am on 7 February 2013

The Telecommunications Users Association (TUANZ) says putting the earnings of one company ahead of the reduction in price will disadvantage consumers.

In its submission to the regulator, the association also says it is gravely concerned that any political interference in the process will undermine the regulator's work and impact on future investment.

Chorus, the Government's major broadband partner and network provider, wants to stop the Commerce Commission's proposal to cut the price, saying it will cost it $160 million a year.

The company split from Telecom in 2011 and is taking a leading role in building the $1.5 billion Ultra Fast Broadband (UFB) network in towns and cities, and the $300 million broadband upgrade in rural areas.

Chorus also argues that customers will be less likely to make the transition from existing copper-based network to ultra-fast broadband on the new fibre network if copper prices are low.

However Chris O'Connell, a director on the association's board, says it is inevitable that the price of the copper-based network will drop, because it is in its final phase.

"What we need is an ordinary market transition to fibre. We need to realise that it's been placed in the position of having to actually manage both the sunset of copper and the sunrise of fibre - and that does mean that these two things are going to have to be balanced off.

"People will move because the performance of fibre is markedly beyond anything that copper can do ... it's not a like-for-like product."

Mr O'Connell says he does not agree with Chorus that the regulatory framework for telecommunications needs to be updated.

"They had their opportunity to talk about market structures and market frameworks when the very comprehensive process around the Telecommunications Amendment Act was underway.

"They were happy to leverage their position in the marketplace as the dominant copper incumbent player to make sure that they won the UFB.

"Now that they've won the UFB and they've got the $950 million, they're now trying to rewrite the rules back further in their own favour. And I think that after being outdated, the structure separation model put in place by that act, which was passed by this Government, needs time to work."