Broadband blow-up: Six burning questions

How will the pace of the Ultra Fast Broadband rollout be affected by today's decision by the Commerce Commission? Photo / Thinkstock

What has the Commerce Commission decided today?

The price of what telco lines company Chorus charges internet companies like Vodafone or Orcon each month to access lines on the old copper phone network, which most of New Zealanders use for their broadband.
The commission today announced price cuts of 23 per cent, which would apply from December next year.

How does it affect consumers?

The commission's decision is about wholesale prices but at least some internet companies, like Slingshot, say they will pass "savings onto consumers" - which would mean cheaper broadband prices for you at home.

How has Chorus reacted to the decision?

Chorus says this will hit earnings by $142 million a year. Its shares plunged this morning. The company says it will have much less cash and won't be able to borrow the money it needs to invest $3 billion in building the Ultra Fast Broadband (UFB) network.

What will happen next?

The Government has proposed to intervene in how prices are set and override the commission but hasn't confirmed that it will. Chorus is pushing for the Government to intervene but also has the ability to appeal the Commission's decision.

Will it impact the timeline for the ultra-fast broadband network rollout?

If the Government doesn't intervene and Chorus can't borrow enough money to build the network then the whole project could come to a halt.

Why is this hard for the Government?

The Government has to juggle the interests of consumers and Chorus, its investors and the national interest of getting the UFB network built by 2020. Whether or not to intervene is a big call and they can't please everyone. It also has to weigh how this will play with voters as the opposition looks to make capital.