Reseller News

Government strikes deal with Chorus on proposed UFB price hike

Protracted negotiations result in a price path for the UFB "anchor product"
  • Rob O'Neill (New Zealand Reseller News)
  • 24 October, 2018 08:45
Kris Faafoi (Minister of broadcasting, communications and digital media)

Kris Faafoi (Minister of broadcasting, communications and digital media)

A new reduced price cap for Chorus’ most commonly purchased wholesale fibre product protects New Zealanders from future price shocks, the government has said.

The negotiated deal comes after Chorus announced in March it was increasing wholesale fibre prices beyond earlier forecasts.

The cap also provides a "fair price" for the NZX-listed telco infrastructure company and certainty for retail service providers, broadcasting, communications and digital media minister Kris Faafoi outlined.

“The Government sought a contractual solution with Chorus on the price of its 100/20 Mbps service, and I’m pleased to announce Crown Infrastructure Partners and Chorus have agreed on a better price path," he said.

"This represents a fairer deal for everyone: a good price for New Zealand broadband consumers, and a reasonable price for Chorus.

“The new price cap also provides stability to retail service providers who will acquire the anchor product from Chorus when the new regulatory framework is implemented.”

The previous price cap of $49.65 a month will be reduced to $45 from 1 July 2018 to 30 June 2019 and then $46 from 1 July 2019 until 31 December 2019.

The $46 price cap in December 2019 will then form the starting price cap for the new "anchor" UFB wholesale service price under the new regulatory regime from 1 January 2020.

Chorus’ 100/20 Mbit/s Ultra-Fast Broadband wholesale product is likely to become the basic fibre wholesale service, often referred to as the "anchor service", from 2020 under the Telecommunications (New Regulatory Framework) Amendment Bill.

Chorus will be required to supply UFB retailers with the wholesale anchor services, including basic broadband and voice services.

Chorus welcomed the regulatory changes, with CEO Kate McKenzie describing them as a "step towards a new regulatory framework for New Zealand’s key communications infrastructure".

Other changes to the bill include: clarification of the select committee’s recommendations on the treatment of Crown Infrastructure Financing and oversight by the Commerce Commission of exemptions from the business line restrictions from the date of implementation.

Further changes cover the requirement for the Commission to set specified fibre areas to de-regulate copper by 1 January 2020; and the requirement for a 111 code to ensure that vulnerable end users can have an ability to call 111 in the event of a power failure.