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Kiwis will benefit provided the Government don’t intervene

Media Release
November 5, 2013

Kiwis will benefit provided the Government don’t intervene

A Commerce Commission decision about the price ISPs pay Chorus for using its network has been welcomed by CallPlus and Slingshot CEO Mark Callander – and he is now calling for the government to step back from the “Copper Tax”.

“As far as CallPlus and Slingshot is concerned the Commerce Commission has done its job and now the Government should not intervene any further. Kiwis will benefit from these savings, Slingshot has already made a commitment that it will pass through savings to consumers,” says Mr Callander.

The Commission’s determination on the price Chorus charge retailers such as Slingshot on its copper phone line network will be $34.44 – a figure made up of two price components of $23.52 for Unbundled Copper Local Loop (UCLL) and $10.92 for Unbundled Bitstream Access (UBA)

The UBA price of $10.92 is higher than the Commission’s initial draft price of $8.93 proposed in December last year.

While Mr Callander is pleased with the new UBA price he is very concerned that this still won't satisfy Communications Minister Amy Adams, and that she will push ahead with a levy on copper broadband pricing. 

The final figure of $34.44 is still $3.06 below the low end of Adams target of between $37.50 and $42.50.

The controversial proposed levy, which has been widely criticised by ISP’s including Slingshot, Orcon and Vodafone because of the impact it would have on consumers, has been viewed as a “tax” on broadband customers with an estimated $979 million cash windfall for Chorus, based on the initial price.

The levy has also been touted by the government as a way of supporting Chorus’ expensive rollout of the fibre network.

Mr Callander says CallPlus and Slingshot are strong supporters of UFB and the fibre network but research shows the copper-based system will be the key delivery method of broadband through to 2020 and beyond.

“Even the more optimistic commentators forecast that at the end of 2019 the majority of kiwis will still be on copper not fibre,” he says.

Mr Callander says the notion of Chorus going broke if the levy is not put in place to safeguard the company during the expensive fibre roll out is unfounded.

“The ‘Axe the Tax’ campaign, of which CallPlus and Slingshot are supporters, has shown claims that Chorus will be insolvent are not supported by any evidence. Chorus is a very profitable company that paid $95 million in dividends to its shareholders last year. The company will remain profitable with or without the copper tax.”

“The government have said it wants to remove uncertainty so now it’s time to move on. We hope that the minister will not intervene and will undertake a review of the Telecommunications Act in 2016 in line with the current timeframe when the real issues with respect to the UFB rollout should be clearer.”

ENDS

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