Prime Minister John Key is refusing to rule out dramatic intervention such as injecting taxpayer cash into network company Chorus and even partially nationalising it to keep his Government's flagship ultrafast broadband rollout on track.
The Commerce Commission's ruling that would slash the revenue Chorus receives for selling access to its copper network to rivals prompted the company to warn its ability to build large chunks of the new fibre network could be undermined.
It called on the Government to intervene. Despite receiving millions of dollars in taxpayer funding to build much of the network, Chorus says it also relies on revenue from its copper network to fund the project.
Mr Key said the impact of the price cut claimed by Chorus "could have very significant implications in their capacity to fulfil their obligations under the ultrafast broadband contract with the Government".
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"Our primary concern is to ensure that ultrafast broadband is built and can be rolled out to New Zealanders but we'll just need to work our way through all of these ... issues."
He said the Government was considering how it would respond but would not rule out legislating over the top of the Commerce Commission's decision, lending money to Chorus or even taking an equity stake in the company.
Labour leader David Cunliffe suggested the Government was considering "nationalising what was left of Telecom because of the extraordinary failure of its broadband policy".