Telecommunications operators Vocus and Vodafone are labeling a proposed Chorus price drop of 15c a month for access to unbundled fibre "pathetic".
The pair are accusing Chorus of torpedoing broadband innovation with predatory pricing and welcoming action from the Commerce Commission.
Unbundling gives Chorus competitors direct access to fibre on which they can create their own services -- as long as the price is right.
However, the telcos today described Chorus as a monopoly and its proposed pricing as "outrageous, pathetic and quite frankly insulting”.
They said unbundling offered opportunities for innovation including the creation of new and faster services rather than a "one size fits all" approach.
The Commerce Commission is now aiming to clarify legal interpretations of Chorus’ obligation to provide commercially viable unbundled access to the Ultra-Fast Broadband network.
Vocus and Vodafone demonstrated an unbundled 10 Gbit/s UFB connection in February and then sought commercial pricing from Chorus in preparation for a service launch in 2020.
Chorus announced proposed wholesale pricing for unbundled connections in March of this year setting off protests that the pricing was "cynical and protectionist", and noting that it exceeded the price of bundled connections.
Vocus and Vodafone complained to the Commerce Commission, backed by an independent assessment by Network Strategies which demonstrated the cost to third parties should have been less than 50 per cent of that proposed by Chorus.
For its part Chorus warned the industry not to expect the level of savings from unbundled fibre that were achieved on the legacy copper network. The ultrafast broadband network was harder to unbundle than the old copper lines, it said.
"While I’m sure some retail service providers will argue for even lower input costs, the economic and technical reality of unbundling a newly-built, world-class fibre network is much more challenging than unbundling much older, often fully depreciated, copper network assets that have a fundamentally different architecture," Chorus' chief customer officer Ed Hyde said.
Yesterday, Chorus released a new proposed pricing model that was just 15 cents a month lower than its original pricing.
The Commerce Commission has noted that it has the authority to assess whether offers made by Chorus and the LFCs comply with their respective obligations under the Telecommunications Act of 2001.
It has advised Vocus and Vodafone that If it considers a breach of the Fibre Deeds is likely to occur or has occurred, it will decide whether to bring enforcement action.
“This is a step in the right direction, and we welcome the attention that the Commerce Commission is giving to the issue,” said Vocus group chief executive Mark Callander.
“We have to remember that Chorus benefited from a billion-dollar interest free loan from the government. That means every New Zealander should get the best possible benefit from the UFB network, and unbundling is the key to unlocking innovation that drives those benefits."
"Pricing makes or breaks the business case for unbundled access,” said Vodafone chief executive Jason Paris.
“The proposed numbers make unbundling impossible. And that restricts innovation, denying New Zealanders their right to the best value from the investment of their tax dollars in the UFB network.”