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Calls for Chorus - Put forward constructive pricing proposal

Media Release

15 December 2013

Telecom calls on Chorus to put forward constructive pricing proposal that does not erode current telco network and service levels

Chorus should put forward a constructive proposal to resolve its funding issues and achieve industry pricing certainty that does not involve eroding the current network and service levels across its monopoly copper network.

Telecom is concerned that the Ernst & Young report into Chorus' financial position, released yesterday, indicates Chorus' funding gap could be partially closed by $400-450 million of "cash flow savings initiatives" suggested by Chorus management.

Although the EY report does not detail these initiatives, it indicates they may have adverse effects on Chorus customers and consumers, including:  a reduction in current service levels, which others have speculated could mean artificially reducing copper broadband speed; an increase in network fault rates as Chorus moves to a reactive rather than proactive approach to network maintenance; longer lead times to repair faults; and an increase in the number of businesses and consumers who can't get a telco connection, with Chorus only agreeing to new connections on a 'full cost recovery basis'.
Actions such as these will penalise many consumers and businesses and represent a degrading of the high-quality telecommunications infrastructure enjoyed today by New Zealanders.  Eroding the quality of the current telco network and service levels is not an appropriate way for Chorus to resolve its current financial difficulties.
Telecom has consistently taken the view that a collective industry solution, which appropriately balances the needs of Chorus, its customers (the retail service providers), consumers and taxpayers is the best way to resolve the current uncertainty affecting Chorus' UFB fibre rollout and the wholesale pricing of telecommunications services over the existing copper network. 

Telecom played a lead role in industry discussions earlier this year that sought to put a collective proposal before Government. Although these discussions did not reach a consensus, Telecom remains willing to engage with Chorus, other RSPs and other interested parties in reaching a solution that ensures the country will reap the significant economic benefits from the new fibre network whilst maintaining the integrity of the existing copper network, upon which the vast majority of New Zealanders still rely.


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