Cheaper internet - but at what cost?

The Government says Chorus is not playing "games" and imposing cheaper prices on the internet provider may mean a compromise in technology.

Speaking on TV3's The Nation this weekend, Communications Minister Amy Adams said she ordered the inquiry into Chorus' finances to bring "clarity" around the debate surrounding Chorus' UFB pricing.

"The first threshold question is if we were to leave things as they are would New Zealand still be able to get access to ultra fast broadband? If they can, well that's great, if they can't we have to look at what we do next," says Ms Adams.

The inquiry will determine, in part, whether the proposed price by the Commerce Commission is too low for the internet provider to remain viable.

"We think its important that we get some real clarity around that so we can move the debate. Look we all want the prices to be as low as they can, but are we will to trade off world leading technology just to have slightly lower prices on what is a legacy and will increasingly be an outdated network.

"It's a difficult discussion, but I think its one we need to have, and remember that this is about the whole sale price."

 Ms Adams dismissed claims that a lower price imposed on Chorus would mean savings onto consumers, and would not rule out the Government over ruling the Commerce Commission's decision.

"I think its a live question whether consumers will see any of this drop. But certainly my view is that I think it would be unlikely they would want to take a $10 if it meant no broadband, no fibre, if a $5 drop could conceivably achieve that."

Critics of Chorus say the internet provider can afford to price it lower, but the Government says there is truth in the company's concerns.

"Certainly all the advice we've had to date indicates if the copper price takes a hit at this level then there is a real threat that ultra fast broadband simply wont get built either to as many people or within the time that we want, or possibly even at all.

"Now if that happens that is a real threat to New Zealand consumers. So what we want to do is satisfy ourselves, and satisfy the wider public as to whether that is actually the case," says the Minister.

Ms Adams praised Chorus as "an excellent partner over the three years of the build to date". She says there remained the option to retender the network, but the process would delay the project and delivery of ultra fast broadband substantially.

The Minister wasn't concerned about the three per cent uptake of available broadband - and said as the technology became more prevalent there would be an increase in uptake