PLUS: Tuanz boss says, "In the bad old days we used to see MPs debating the price of butter in the House. This is a return to that and worse." | InternetNZ says Chorus shareholders winners, consumers losers.
Vodafone NZ CEO Russell Stanners says the scope of the goverment's Telecommunications Act (2001) review is loo narrow.
A discussion document released by ICT Minister Amy Adams this morning idicates the government will chip down the wholesale pricing of copper lines, but not nearly as much as Vodafone and other retail service providers had hoped.
Vodafone says it’s an opportunity missed if the scope of the review remains as it was outlined today (interested parties have until September 13 to make submissions).
“We need to open up a broader conversation and look at all aspects of the fibre market to ensure a strong, competitive, consumer-focused market evolves. Limiting the review to simple supply side fibre and copper costs misses the point,” says Mr Stanners.
The UFB initiative was premised on improving New Zealand’s international competitiveness, Mr Stanners says, yet we risk falling behind the speeds and services available in other countries such as Singapore (ironically, Vodafone is the only major telecommunications provider yet to launch a UFB plan).
“New Zealanders deserve faster speeds and better products than are currently offered by Local Fibre Companies (LFCs). Singapore’s Next Gen NBN offers speeds from 200Mbps at a price point that is really driving uptake.”
Mr Stanners says that Kiwis will get excited by fibre when there is a more attractive entry level speed – much faster than the current product offered by Chorus and other UFB wholesalers – at a reasonable price.
“Many New Zealanders are now enjoying faster speeds on their mobile devices than their fixed line broadband – thanks to 4G – which is setting the benchmark for many consumers in terms of their speed expectations. Yet fibre can and should deliver much much more.”
Return to bad old days - Tuanz
The discussion document also drew flak from Telecommunications Users Association CEO Paul Brislen.
The Telco Act requires the Commission review the price Chorus charges for broadband on its copper network and the expectation is that it would greatly reduce the price for customers. What the government is doing now is removing that regulated process and replacing it with one where the price drops very little or increases substantially for internet service providers."
Such government intervention in a regulatory process is unprecedented in New Zealand political history, the Tuanz boss says.
"In the bad old days we used to see MPs debating the price of butter in the House. This is a return to that and worse - instead, we won't have the debate, the price will simply be set by the Beehive."
Chorus shareholders the winners - InternetNZ
"Chorus shareholders will be the winners from the proposals outlined in today’s discussion paper. Consumers will be the losers," says InternetNZ CEO Jordan Carter.
“The underlying policy tension is concern about the prospects for the Ultra-fast Broadband Initiative’s success. The UFB was designed with a simple policy framework in mind: a fibre network overbuilding and competing with the existing copper network,” Mr Carter says.
"The UFB rollout of fibre broadband is guaranteed by the contracts signed in setting it up. Relative prices between fibre and copper don't affect the obligations on Chorus and others to roll out the UFB on time and to schedule. Nothing in the discussion document says why any of the fibre network providers need more money to complete the UFB, yet the effect of today's discussion paper is to deliver money out of consumers' pockets and into Chorus's bottom line.
"Options for copper pricing in the discussion document would all boost prices higher than what is likely under today's regulatory regime. The argument for doing so - that copper prices should match fibre prices - simply does not stand up to scrutiny. The argument would only apply if the government's policy changed so that the fibre network was replacing the copper network rather than competing with it.
“If that fundamental policy has changed, the discussion document doesn’t acknowledge it.
Attempting to give the illusion of competition while effectively cross-subsidising fibre from copper is a recipe for disaster that will only benefit Chorus shareholders at the expense of copper customers," the InternetNZ CEO says.
"Further, the document suggests prices for fibre broadband were set by commercial negotiation between the Crown and providers in return for a $1.35bn investment. The prices don't reflect the cost of fibre broadband services. They reflect a commercial deal.
"To match copper pricing - a totally different technology which is already built - with those fibre prices beggars belief. Logic says the cost of copper broadband should be based on what *copper* costs - not what a different technology costs."
A wide range of matters are canvassed in the 77 page discussion document, but the main focus is on copper pricing matters, InternetNZ says.
"We will be analysing the detail of the proposals set out in the discussion document and commenting further in the coming days. A wider debate needs to kick off about whether the focus is right; the principles set out are carried through into the options; whether there are other items that should be dealt with in phase one.
"InternetNZ will convene forums for all those interested to discuss the options set out. A well-informed set of submissions will help the Government design the best possible legislation.
"For now, the story is that the proposals the document sets out will see most broadband users paying higher prices than they need to," Mr Carter says.
