COALITION FOR FAIR INTERNET PRICING

MEDIA RELEASE

WEDNESDAY 25 SEPTEMBER 2013

Minister Appears to Prejudge Copper Pricing Decision

Communications & IT Minister Amy Adams may have prejudged her own consultation process, the Coalition for Fair Internet Pricing said today.

The coalition was responding to the minister’s strongly negative comments about submissions opposing proposals for government ministers to set prices for copper broadband and voice services above the level the independent Commerce Commission believes is fair.

Yesterday, the coalition issued an updated analysis by economists Covec which estimated the government’s existing proposals would cost Kiwi households and businesses between $390 million and $449 million between 1 January 2015 and 31 December 2019. The analysis went on to report that the latest demands by monopolist Chorus, which owns the copper network, would take the total cost to Kiwi households and businesses to $979 million.

In its analysis, Covec was deliberately conservative and has made all its work available for peer review.

In a media release this morning, Ms Adams slammed the analysis saying it involved “hyperbole and scare tactics based on fiction”.

A spokeswoman for the Coalition, Sue Chetwin, also chief executive of Consumer NZ, said the minister’s comments were unfortunate.

“Our position has always been that prices in monopoly industries should be set by an independent regulator, such as the Commerce Commission, and not by politicians who may have other interests,” Ms Chetwin said.

“We oppose the government launching a separate consultation process to override the Commission on this point.

“However, if Ms Adams feels she has to run a separate consultation process we would at least expect her to keep an open mind and consider our submissions in good faith. These and previous comments by the minister make us doubt she is doing so.”

Ms Chetwin said the minister’s disappointing comments suggested the government was concerned that light had been shone on their proposals for a new copper tax.

“Our arguments are very simple and clear. Kiwis don’t want to pay money out of their back pockets to shore up a private monopoly that is highly profitable and paid out a dividend of $95 million in the last year. Were the government to accept Chorus' latest demands, the transfer to Chorus from Kiwi households and businesses would be nearly $1 billion.”

Ms Chetwin said it was surprising Ms Adams continues to allege that it is unlikely price reductions will be passed through to consumers.

“Already, CallPlus has gone on the record promising savings will be passed on to Kiwi households and businesses, Orcon has made a similar comment and we challenge all telecommunications companies to do the same.”

The Coalition for Fair Internet Pricing was founded by Consumer NZ, InternetNZ, and the Telecommunication Users Association of New Zealand (TUANZ) and is supported by CallPlus and Slingshot, the Federation of Maori Authorities, Greypower, Hautaki Trust, KiwiBlog, KLR Holdings, National Urban Maori Authorities, New Zealand Union of Students’ Associations, Orcon, Rural Women, Te Huarahi Tika Trust and the Unite Union.

ENDS

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