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Chorus' U-turn surprises InternetNZ

InternetNZ, the non-profit that administers the .nz domain and lobbies for an open and uncapturable internet, says it is surprised by Chorus' [NZX: CNU] submission on the Commerce Commission's process for determining the price of copper broadband.

The submission represents a huge departure from the company's original position when it lobbied Government and the public to impose a copper tax on Kiwi broadband users, IntenetNZ says.

"This is a U-turn by Chorus without any explanation why," says InternetNZ CEO, Jordan Carter.

Last year, Chorus strongly lobbied Government and the public arguing that the price it can charge for copper-based services should be calculated by reference to a new fibre-based network similar to UFB.

Yet in its submission to the Commission, made public yesterday, Chorus made an about-face on its earlier position. The company now says it wants the Commerce Commission to use its existing copper network as the reference point for calculation of the price, instead of a fibre-based network.

Mr Carter says that any time a company makes a major about-face like this, the reasons why must be looked into, something he said InternetNZ was now doing.

"We have seen Chorus' submission and we are surprised at the abrupt reversal in their position, compared with their arguments only a few months ago, with no reason given.

"We don't understand why they would rely on the fibre-based network to try and persuade Government and taxpayers to allow increase in their prices, and then rely on a different reference point for the same thing before the Commission.

"We are looking into Chorus's proposals with a fine-toothed comb, and will have further comments in the next few days," says Mr Carter.

Separately, Economic Development Minister Steven Joyce told NBR he had no indication when talks between Chorus and Crown Fibre Holdings over cutting UFB costs would wrap up. Late last year, the government billed the talks as wrapping up "early in the New Year."

Comments and questions

Does anyone trust Chorus or believe anything they say?

No more than any of the other self-interested groups in the ISP and telco space, and that includes InternetNZ!

they probably changed tune because it is better for them and worse for you

Leopard attempts to change spots, film at 11.

Chorus have confounded InternetNZ. Surely InternetNZ should now be supporting Chorus's submission.

Yes, it seems that InternetNZ are now very worried that Chorus agrees with them!

Stability for investors shouldn't be underestimated. I am surprised InternetNZ doesn't understand that another couple of years of turmoil and threats of market intervention is potentially worse for Chorus. Rip the bandaid off. Get on with it. I commend Chorus for being pragmatic.

Chorus's suggestion comes with a caveat. Yes, it would be much quicker to take its existing infrastructure as the model to work with, but the flipside is that this existing model is not an efficient model.

The Commerce Commission is required to work out which costs should have been avoided so as to not pass that inefficiency on to the rest of the industry.

Accepting Chorus's network as the model would not involve working out what costs should have been avoided and will tend to inflate the costs the ISPs and, ultimately, the end users pay for the service.

Internationally, the price set for access to Chorus copper is at the high end of the scale. Following the FPP process TUANZ would expect to see the price for wholesale access fall further than the price determined by the Commerce Commission late last year.

Not many of us promoting an "open and uncapturable Internet". I think all telcos are in the process of re-inventing themselves, including Chorus, as commodity telco services provided over copper are superseded.