UPDATED: It's no longer an option for the govt to change the law to over-ride the Commerce Commission on Chorus pricing | Shares hit all-time low | Will ISPs pocket the wholesale price cut? | What next for Chorus?
"COPPER TAX" NUMBERS
For
National: 59 MPs
Total: 59
Against
Labour: 34 MPs
Greens: 14 MPs
NZ First: 7 MPs
Maori Party: 3 MPs
United Future: 1 MP
Mana: 1 MP
ACT: 1 MP
Brendan Horan (Independent)
Total: 62
UPDATE: It's no longer an option for the government to change the law to over-ride the Commerce Commission on Chorus pricing.
John Banks' press secretary Chris Diack tells NBR the sole ACT MP will vote against any government move to over-rule the regulator's decision to slash Chorus' copper pricing - sealing an anti-government majority against such a move.
Mr Diack said ACT would not participate in the orchestrated series of press releases sent by other parties at 15 minute intervals from 3pm yesterdaty afternoon.
But he revealed that on October 31, as the Commerce Commission made its final determination to slash Chorus' copper line wholesale pricing by 23%, Mr Banks told the Prime Minister he would not support any legislation that would over-rule the independent regulator.
The revelation that Mr Banks opposed legislative help for Chorus weeks ago helps to explain recent events.
After the Commission's final price determination on October 31, Chorus supports expected the government to act immediately on its promise to over-rule the regulator.
Instead, Prime Minister John Key and ICT Minister Amy Adams made unexpectedly ambivalent statements, and Ms Adams called in EY Australia to to run an independent review.
The parade of anti "copper tax" press releases this afternoon included one from Peter Dunne - a signature loss for the government given the UnitedFuture leader supported National on recent contentious telecommunications legislation.
Cheaper broadband?
On paper, today's developments should ensure the Commission's cuts go through - but it's still an open question whether ISPs pocket some or all of the 23% wholesale price cut.
After some nudging by NBR, Coalition for Fair Internet Pricing members Orcon and CallPlus have pledged to pass on the savings, due to kick in December next year - and if two mainstream players, do, others will have to follow.
But Orcon boss Greg McAlister has also emphasised retail ISP margins are extremely tight, and that a home or small business user's monthly broadband bill is made up of several elements.
NBR's guess: some or all ISPs will offer you more on the service front (such as more data each month) rather than shaving your monthly bill - echoing what happened in the mobile market after 2degrees prevailed in the spat over network interconnection costs at the wholesale level.
What next?
The Crown has already committed $1.35 billion to the 10-year Ultrafast Broadband (UFB) rollout, investing $929 million of that total in Chorus (in the form of the Crown buying non-voting shares and interest-free debt securities).
The government has to now decide whether to inject more money or loan more funds to Chorus (whose estimated UFB costs were already running $300 million over budget before the "copper tax" imbrolio) - although there are other alternatives. Across the Tasman, the incoming Abbott government has scaled back the National Broadband Network from fibre-to-the-premise to fibre-to-the-node (or neighbourhood level, with copper retained for the last leg).
Telecommunications Users Association CEO Paul Brislen has raised another option: re-tendering Chorus' leg of the UFB (Chorus is responsible for around 70% of the rollout). Vector was among those who missed out on the original tender. Earlier, Sydney-based telecommunications analyst Paul Budde told NBR that Chorus was the only option for the bulk of the project, as no other company had the necessary scale.
Late Thursday afternoon, Ms Adams said the government would wait for EY Australia to complete its review of Chorus (expected by year's end) before deciding on its next move.
Investors react
Chorus shares [NZX:CNU], which have trough from above $3 in August, were up 2.19% to $1.87 as the first political party announcements were made this afternoon.
In late trading, they were down 1.91% to a new low of $1.79.
By First NZ Capital's reckoning, the stock may be close to bottom, regardless of Thursday's news.
First NZ Analyst Greg Main says Chorus is worth $1.84 even under the worst-case scenario (for Chorus) of the full copper price cut going through, and 20% UFB fibre uptake by 2020 (see more analyst opinion here).
EARLER: NZ First says it would not vote for legislation in support of the so-called "copper tax" - or the government over-ruling the Commerce Commission's October 31 decision to slice Chorus' wholesale copper broadband pricing by 23%.
National, which has 59 MPs in the 121-member Parliament, will need the support of minor parties to alter the Telecommunications Act to over-ride the regulator.
NZ First's 3pm announcement was followed by another at 3.15 by United Future, which also said it would oppose such legislation.
Minutes later came a release from the Maori Party saying it would also refuse to support such a bill. Then came a release from Mana, plus a tweet from independent MP Brendan Horan indicating he was opposed.
With Labour and the Greens already firmly opposed to the "copper tax", al eyes are on ACT. NBR understands the news will be bad for the government.
NZ First says the government would be surrendering to foreign shareholder pressure if passed such regulation - a possible reference to comments made by an Australian fund manager to NBR earlier this week.
Prime Minister John Key says the Commission's reading of the Act was too narrow; that Chorus "could go broke" if the 23% copper price chop goes through, and the UFB fibre roll-out put in jeopardy.
The Coalition for Fair Internet Pricing - which includes Orcon, CallPlus, InternetNZ, Tuanz and Consumer - says the Commerce Commission's decision should be allowed to stand. It calls the difference between the regulator's 23% price cut and the government's much more modest price cut proposal "the copper tax." It maintains the revenue that would otherwise have been lost to Chorus will go into shareholders pockets rather than subsidise the UFB rollout.
NZ First picked up on this theme in a press release today, saying it would not support any legislation that helped foreign shareholders.
