Final copper pricing decision a travesty

InternetNZ is deeply disappointed in the final prices released today by the Commerce Commission for wholesale access to copper broadband Internet technologies.

The Commission has today announced final prices of $29.75 for the Unbundled Copper Local Loop (UCLL) service (up $7.11 against current in effect prices) and $11.44 for the Unbundled Bitstream Access (UBA) service (up ($0.14 against current in effect prices). These two services underpin the provision of the Internet to the majority of New Zealand households that still use copper telephony technology, as opposed to newer fibre services.

“These prices have a direct impact on what New Zealanders pay to get online, and as it has in its earlier draft, the Commission has set them too high. Today’s announcement means higher prices for everyone, and a direct flow of money from broadband users to Chorus,” says Jordan Carter, InternetNZ Chief Executive.

Recent research from the International Telecommunications Union shows that the price for New Zealand fixed line broadband compares poorly with the rest of the world, at 60th in their index.

“This decision puts New Zealand further out of step on fair pricing for Internet access. Our impression is that throughout the price setting process, the Commission has failed to put consumer interests first.

InternetNZ is however very relieved that the Commission has not approved “backdating” of any of these price changes (which would apply the new prices onto past use of the services), as backdating is highly distortionary to the market and results in more negative price pressure on the public.

“The people of New Zealand lose every way where backdating is concerned. We are pleased that the Commission has not required it,” says Carter.

InternetNZ respects the fact that the Commission has had to apply the legislation in setting these prices, and balance a complicated set of interests and arguments.

“The Commission has to ensure that they have delivered to “the long term benefit of end users”. We are not sure that that test has been met today,” says Carter.

“We are the only country that InternetNZ is aware of that is putting prices up for legacy copper-based broadband services.”

“The extreme nature of these price rises will likely mean that some parties will be contemplating court action.”

“Asuming today’s decision doesn’t end up in court, it will be up to the review of the Telecommunications Act to make sure that the post-2020 regulatory framework doesn’t allow the same poor outcomes for New Zealand broadband users.

“We must ensure that we don’t make these mistakes again when it comes to regulating fibre broadband services delivered through the UltraFast Broadband Initiative (UFB),” says Carter.

“Ensuring that the Telecommunications Act works fairly for New Zealand broadband users in the future will now be our focus.”

ENDS

For more information please contact InternetNZ's Work Programme Director, Andrew Cushen, on 021 346 408 or email andrew@internetnz.net.nz

Issues: 
UCLL and UBA Final Pricing Principle