14 Aug 2013

Commission pressing ahead on Chorus review

6:57 am on 14 August 2013

The Commerce Commission plans to press ahead with its review of the wholesale price Chorus can charge for copper broadband connections, despite the Government stepping in with its own price plan.

The commission issued an update on Tuesday but it has made no changes to the proposed price carried in its draft report in December.

Analysts say the commission was gazumped last week by the Government releasing its own discussion document on pricing.

Under the Government plan, Chorus would have to cut charges for access to its copper network by up to $7.50 per connection, compared with the Commerce Commission's proposed cut of up to $12.

Telecommunications Commissioner Stephen Gale said the commission is still working on the pricing for the so-called unbundled bitstream access, or UBA, which will be one option for consideration in the Government's review.

"We're going to complete our process to set a UBA benchmark price and then it remains to be seen what will happen out of the review process," Mr Gales said.

"Our process is set down in the legislation as it currently stands, so until the legislation changes we'll just complete our process as soon as possible."

Mr Gale does not believe the commission has been gazumped by the Government.

"Our job is just to implement the legislation, and the review that the Government's announced .... last week is a review of the actual legislation. That's their prerogative to change the legislation."

But Orcon chief executive Greg McAlister said the commission should be left to determine costs during the transition from the old copper-based network to ultra fast broadband.

He said the Government's pricing proposal will kill innovation for smaller telecommunications companies and cost consumers more.

"It's a tax on New Zealand homes. Effectively they're paying for the fibre bill twice - they're paying for it through their taxes ... but they're also paying for it indirectly in that Chorus is extracting monopoly rent, or higher prices, from the copper-based services until the end of this build programme."