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Current as of 18/09/14 12:40PM NZST

Hamish Fletcher

Business reporter for the NZ Herald

Telecom backs intervention on copper prices

Telecom says the overarching priority is to ensure the ultra-fast broadband rollout is completed.
Telecom says the overarching priority is to ensure the ultra-fast broadband rollout is completed.

Telecom, the country's biggest internet and phone company, says it supports intervention on copper prices if the Government believes there is evidence the rollout of its $1.5 billion ultra-fast broadband network is in danger.

This is poles apart from rival Vodafone, which says Government intervention in the copper market is corporate welfare for lines company Chorus.

Telecom, in its submission to the Government on the issue, said the debate over copper pricing was distracting the industry and customers from how to best take advantage of fibre, which is being deployed under the UFB scheme.

Telecom said that there was uncertainty over how the Commerce Commission's regulation of copper prices would impact Chorus's ability to complete the UFB rollout.

Chorus - which split from Telecom in 2011 - is responsible for about 70 per cent of the UFB deployment.

Chorus said last year that a commission proposal to cut the wholesale copper prices the company charges could shave $150 million to $160 million a year off its pre-tax earnings.

Chorus complained if copper pricing was pitched too low, it would kill customer appetite for fibre.

The Government then signalled it would intervene, fast-tracked a review of telecommunications law and proposed a copper price in line with entry-level fibre prices that was higher than what the commission suggested.

Telecom in its submission on this review, released yesterday, said the "overarching priority" is to ensure the UFB rollout is completed.

"If the Government considers there is sufficient evidence to suggest this may not occur, then we support pre-emptive action to address that concern," Telecom said.

The company said copper prices should be set, if not at cost, then at least in close proximity to it.

"Any policy changes must result in a fibre/copper product mix that is, on the whole, just as good for broadband customers as the existing mix is.

"If copper prices are to be adjusted upwards from the prices set by the Commerce Commission, the consumer loss created by this could be compensated for in a number of ways - a better performing entry-level fibre service; a corresponding downward adjustment to the future price path for the entry-level fibre price," Telecom said in its submission.

- NZ Herald

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