Vocus CEO Mark Callander and Vodafone CEO Jason Paris talk to Chris Keall about fibre unbundling.
The Commerce Commission is interceding in a bid to resolve a pricing spat between retailers Vodafone and Vocus on one hand, and UFB fibre network provider Chorus on the other.
Vodafone NZ CEO Jason Paris and Vocus boss Mark Callander both screamed blue murder in April when Chorus proposed newUFB fibre wholesale pricing - labelling the proposed rate (around $62 a month) a "cynical" move to undermine a law change that aims to give retail ISPs more control over the broadband service they offer.
Callander called Chorus' proposed price "ridiculous". Paris said, "Our estimates are the average customer would pay up to $40 more per month for unbundled fibre compared to what they pay today." A spokesman for Spark called it an "uneconomic proposition."
Now, Chorus has come back with a new offer. But it's just 15 cents a month lower than before - a move that Vodafone and Vocus see as a wind-up.
The ComCom will now step in to outline its view on the rules that Chorus should use to come up with its unbundled UFB pricing.
"Our guidance is intended to help avoid litigation," a spokesman for the watchdog tells the Herald.
"We can offer our interpretation of the rules but only the High Court can really provide clarity, and the parties can take that action if they choose to."
Chorus is due to make its final pricing offer before year's end.
The stoush has evolved since Parliament passed an updated version of the Telecommunications Act, which will allow for "unbundled Ultrafast Broadband (UFB) fibre" from January 1 next year check date - or the ability for retail internet service providers like Spark, Vodafone, Vocus and 2degrees to put their own electronics into Chorus exchanges (or "layer 1", giving them more control over the pricing and features of their broadband plans.
But although the new law says Chorus (and smaller UFB fibre wholesalers) must open access to its network, it does not specify a price - although it does give the ComCom some ability to referee - as it's attempting to do now.
Cue the current bunfight.
If Chorus ignores whatever guidelines the ComCom releases over the coming months - or the regulator perceives it has ignored them, then the Commission could take the network operator to the High Court.
Orcon and Slingshot boss Mark Callander calls Chorus' proposed pricing 'cynical' and 'ridiculous.' Photo / Leon Menzies.
Callander and Paris' April letter to the regulator included the line, "If Chorus finalises the layer 1 price as it currently stands the Commission will have an obligation to apply to the High Court to take enforcement action, including fines of up to $10m."
The pair commissioned an independent report from Network Strategies that finds Chorus could and should weigh in with a lower price.
Bunding together for unbundling
Vodafone and Vocus (owner of Orcon, Slingshot and Flip) are jointly agitating because the pair plan a joint venture UFB unbundling initiative (which they say could ultimately include other ISPs).. The pair say they are willing to cooperatively spend tens of millions to unbundle Chorus exchanges in a move that would mirror how copper broadband was successfully unbundled in the 2000s.
They see themselves launching new plans specialised to high rotate Netflix streamers or hardcore games - and, more broadly, a landscape where ISPs have a big range of different options rather than everyone reselling the same narrow set of Chorus plans.
Spark did not immediately reply to a request for comment on Chorus' latest pricing. 2degrees had no comment.
Vodafone NZ boss Jason Paris says Chorus proposed wholesale unbundled fibre pricing would push up broadband costs by $40 per month for the average punter. Photo / Michael Craig.
A spokesman for Chorus confirmed its latest pricing offer and said, "Chorus looks forward to the engaging with Commerce Commission and the industry in the proposed consultation planned for the third quarter of the year."
Earlier, Chorus said there would it was misleading for Vodafone and Vocus to say UFB fibre price increases were on the way.
That is true, but only if an ISP forgoes the extra control over pricing that would come with unbundling, and decides to continue taking the same wholesale product Chorus offers today.
The wholesale price of Chorus' top UFB product, a gigabit per sec (1000Mbit/s) line, currently costs $65 a month but is due to drop from $60/month from July then $56/month from July 2020.
The wholesale price of Chorus' cheapest UFB product, a 100Mbit line, is $45/month, rising to $46/month from July.
