31 Oct 2013

Chorus calls on Govt to solve copper price issue

7:35 am on 31 October 2013

Chorus is calling on the Government to resolve the pricing of broadband over copper wires as fast as possible.

The telephone lines company has repeatedly argued the price should not be much cheaper than the new ultra-fast broadband network because, it argues, that would discourage take-up of the UFB services.

The Government has contracted Chorus to build 70% of the UFB network. It has brought forward a review of the Telecommunications Act and plans to override the Commerce Commission's lower proposed charges.

This has been met with outrage from businesses, community groups and some politicians, from which a coalition opposing Government intervention has been formed.

Chorus chair Sue Sheldon told the annual shareholders' meeting the regulatory framework the Commerce Commission is operating under is out of date.

Ms Sheldon said the pricing and regulatory uncertainty is discouraging investment in Chorus and in New Zealand infrastructure generally.

She said New Zealand is a small country with limited amounts of capital and Chorus has been told that some are now thinking more broadly about the risk of investing in any infrastructure in New Zealand.

Ms Sheldon said to attract investment it is essential to be able to offer a reasonable prospect on a reasonable return, particularly with large scale infrastructure investments with long pay-back periods.

"Investors now attach a regulatory risk premium to Chorus and this has implications for our cost of capital, we do not have the luxury of being able to have bad regulation that undermines investment and leaves our country hamstrung."

Ms Sheldon said the application of the regulatory framework to date has left investors saying that it is essentially not possible to invest in New Zealand's telecommunications industry.