Government intervention in the copper broadband market is a quick fix to rushed policy introduced in 2011, says former Telecommunications Commissioner Ross Patterson.
Patterson, who left the Commerce Commission last year, emerged yesterday as a supporter of the Government adjusting what lines company Chorus charges internet retailers for copper services.
Under the existing regime the commission has proposed cutting wholesale copper prices to around $32 a month, less than the entry-level price of much faster fibre services.
The Government's response was to step in and fast-track a review of telecommunications law, effectively sidelining the regulator. As part of this review, Information and Communications Minister Amy Adams proposed setting copper prices between $37.50 and $42.50 - roughly equivalent to fibre prices.
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Patterson said setting copper and fibre prices on par would encourage consumers to migrate to the fibre internet services being made available as Chorus and the Government's other private partners roll-out the $1.5 billion ultra-fast broadband (UFB) network.
While the Government's UFB programme ensured a fibre network was built, there was not enough attention given to the demand side and ensuring customers had an incentive to migrate to fibre, he said.
"The policy they [the Government] implemented in 2011 didn't really adequately deal with the demand side issue and the response of the Government then was, 'We'll let the market take care of that'. They are now reconsidering that issue," he said.
"If you encourage someone to build a wonderful network and there's no incentive for customers to use it because it's priced so high compared to other services ... you've achieved nothing," said Patterson, who issued a report for Chorus' submission supporting Government intervention. "The greatest barrier to uptake [of fibre] is price and the report the commission did last year showed there isn't a willingness to pay currently for fibre services because there aren't any applications that would drive that demand. So actually you've got to get pricing parity and the applications will follow as the network is rolled out and people use it."
However, Vodafone also weighed into the debate yesterday and said the Government's intervention was "ill-conceived" and would raise copper prices. "This intervention is quite simply a stealth copper tax on all consumers with no justification," Vodafone said in its submissions on the Government's proposal.
"This proposal acts on a whim to deliver unnecessary corporate welfare to Chorus, at expense of all consumers who will pay more for telecommunications services."
Vodafone's arguments broadly align with the Coalition for Fair Internet Pricing, a lobby group which launched last week arguing against Government intervention.