Minister blasts telco's silence despite offer of financial backing for price campaign and says internet won't cost less `any time soon'.

Communications Minister Amy Adams has opened fire on Vodafone, saying the telecommunications giant silently backed the so-called "copper tax" coalition but left consumer groups and smaller New Zealand firms to front the campaign.

Vodafone, which publicly distanced itself from the Coalition for Fair Internet Pricing following pressure from the Beehive, has confirmed it undertook to give financial support to the campaign.

The coalition claimed a victory last week when the Government accepted it did not have parliamentary support for legislation to overrule a Commerce Commission ruling to cut wholesale copper-based broadband charges by $10 per month per consumer.

The charges are paid by retail internet companies to copper network owner Chorus which is using the cash to partly fund the roll out of a new ultrafast broadband (UFB) network under a contract with the Government.


News of the cuts fuelled expectations that consumers should see cheaper internet prices when they take effect in December next year.

But Ms Adams told the Herald consumers "shouldn't be getting too excited about the prospect of prices falling as a consequence of this any time soon".

She noted big telecommunications companies (telcos) had given no more than vague indications of savings for consumers.

Between them Telecom and Vodafone have about 80 per cent of the broadband market.

The coalition's media strategy is overseen by public relations adviser Matthew Hooton and fronted by Consumer NZ chief executive Sue Chetwin and Telecommunications Users Association chief executive Paul Brislen. Its members include smaller retail internet companies. One of those, Orcon, has promised to pass on $7.50 of the commission's $10 cut to consumers.

"If the coalition had come out saying 'keep the copper price low so that Vodafone and others can make bigger margins' I doubt the media would have had quite the same attraction to running their lines," Ms Adams said.

"But the reality is that if you follow the money trail, those are the parties that stand to do well from it."

Vodafone external affairs general manager Tom Chignell said he had "no expectation" his company would use the cut to boost its profit margins.

He initially confirmed Vodafone had provided financial support to the coalition, paying for a report by economic consultancy Covec.

However late yesterday, after Ms Chetwin told the Herald Vodafone "had not paid a cent" to the coalition, Mr Chignell said while Vodafone expected to pay for the report, it had not been invoiced and had not paid. "We do want to pay it so it's certainly my intention to make sure we pay because that's what we undertook to do."

He said Vodafone had been "reasonably open" about its support for the coalition.

What was said

Vodafone on the Coalition for Fair Internet Pricing:

September 13: "We decided a few days ago that (the coalition) probably wasn't the best thing for Vodafone at this stage.''
Yesterday: Did you give financial support to the coalition?: "Yes we did ... I think we've been reasonably open about that.''

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