Juha Saarinen: Copper broadband price hike coming

Given that Chorus is effectively an access monopoly for both copper and fibre broadband nationwide, the decision to hike prices is concerning.

Tis the season to be jolly, if you're Chorus at least, because the Commerce Commission just gave the company a huge Christmas present.

The regulator issued a final decision on what other telcos and internet providers should pay Chorus for access to that sweated asset, the last-millennium tech copper line network.

Unbundled copper lines where the provider puts its own equipment into the exchange or roadside cabinet to connect to customers will cost $7.11 more a month. Unbundled Bitstream Access or UBA will cost 14 cents more a month, the Commission has decided after a long and tortuous process that involved taking into account 240 submissions spanning over 6,000 pages.

According to Chorus, the price hike means another $120 million a year flowing into the company's coffers, or $600 million over the five years the decision stands.

That money will come from New Zealand broadband users.

Spark, which has worked hard to shed the Telecom past it shares with Chorus, warned that it will be forced to increase retail voice and broadband prices - how much is not known, but the telco said the new access pricing is $6.80 plus GST more per month than what providers currently pay.

Vodafone said it will increase prices too.

Merry Christmas then, Chorus. You did well to swing this one your way. For New Zealand internet users, it's the sad trombone. At least the price hikes weren't backdated as Chorus wanted originally.

Internet NZ, which called the decision a travesty, pointed out that we are the only country in the world putting up copper pricing. We pay more for fixed broadband than most developed countries - research from the International Telecommunications Union (ITU) put us in the 60th place in the world.

Australia, hardly a poster boy for great, affordable internet access, is twenty places ahead of us, and New Zealand will drop even further down the rankings as pricing here goes up.

Given that Chorus is effectively an access monopoly for both copper and fibre broadband nationwide, the decision is concerning. The number of copper digital subscriber line (DSL) connections actually increased since December last year when I last looked into regulatory pricing for broadband.

There are now 1.33 million copper internet connections in New Zealand, up one per cent from last year, Stats NZ said in its latest survey of internet providers.

Fibre connections have more than doubled from 46,000 in 2014 to 105,000 this year, but they still only make up just five per cent of all broadband connections.

Spark says providers will now pay more for access to the copper network than they do for entry-level plans on Ultrafast Broadband (UFB) fibre.

While the taxpayer has chipped in a good wedge to help pay for the UFB network, you have to wonder how much incentive there is for Chorus to hurry up with the fibre rollout in the big cities over the next five years.

Selling access to the copper network is a much bigger business for Chorus than fibre, the above figures tell us, one that'll become more lucrative now too.

Why wouldn't Chorus attempt to cling onto copper further then?

Although broadband over copper will never be as fast and have the same reach as fibre-optic connections can deliver, there is clever technology being developed that can provide around 100 megabit per second speeds over phone lines.

Achieving such speeds over copper requires abandoning physical unbundling so that all the wires are controlled by Chorus managed electronics to ensure the noise in the cable is kept low, and it requires more electrical power too.

It's a difficult to do, limited reach (just a hundred meters or so), not well tested, and not terribly green, but I wouldn't be surprised if Chorus announces new DSL copper broadband products next year, if the regulation's tweaked by the government.

Watch this space, and your copper internet connection's speed. My one's jumped from 40 Mbps downloads to 60 Mbps, which is great as Chorus won't deploy UFB in my area until sometime after 2019.

It's almost as good as when the connection was first installed, and a speed that Chorus told me was impossible to maintain due to line interference and which therefore had to be throttled back. Interesting times.