Chorus unbundled UFB access pricing branded ‘pathetic’ and ‘predatory’

Back move by Commerce Commission to clarify legal interpretations of Chorus’ obligations

Vocus and Vodafone have branded Chorus’ proposed pricing for unbundled access to UFB fibre services as predatory and its proposed reduction of just $0.15 per month as pathetic.

They have welcomed the Commerce Commission’s announcement last week that it will clarify legal interpretations of Chorus’ obligations to provide commercially viable unbundled access to the UFB network.

Unbundling allows third parties to use their own equipment at the end of a Chorus or local fibre company owned fibre line and provide services other than those available from Chorus or the LFC. Vocus and Vodafone say: “Innovation including the creation of new and faster services is possible.”

In June 2018 Vocus and Vodafone announced their intention to unbundle the fibre network saying it would be key to unlocking the future potential of New Zealand’s fibre network. In February they demonstrated an unbundled UFB connection and sought commercial pricing from Chorus in preparation for a launch in 2020.

After what they say were multiple delays, and despite a deadline of December 2018, Chorus announced wholesale pricing for unbundled connections in April of this year.  Vocus and Vodafone protested the pricing as ‘cynical and protectionist’, noting that it exceeded that of bundled connections.

On 20 June Chorus released a new proposed pricing model that was just 15 cents a month lower than its original pricing. It reduced the cost of fibre from the splitter to the end customer from $28.70 per month to $28.55 per month.

In April this year Vocus and Vodafone wrote to telecommunications commissioner Stephen Gale saying their plans and been stymied a “cynical and protectionist” unbundling price from Chorus.

“The proposed price is constructed in a complex way, but the end result is a charge of around $62 per connection. This makes it more expensive than most bitstream products,” they said.

They submitted a report commissioned from Network Strategies, which they had asked to provide an independent view on price based on its experience advising industry and regulators across Asia-Pacific, Europe and North America.

Network strategies concluded the total price would sit between $27.22 and $30.03 in 2020, less than half of that offered by Chorus.”

In response the commission announced earlier this month that it would develop guidance on Chorus’ obligations to provide access under its Deeds of Open Access Undertakings given under the Telecommunications Act 2001

“We believe there is clear public benefit in the commission developing, in a transparent way, our views on what the equivalence and non-discrimination obligations in the Fibre Deeds (and other deeds) involve,” it said.

It has told Vocus and Vodafone: “If we consider that a breach of the Fibre Deeds is likely to occur or has occurred, we will decide whether to bring enforcement action.”

Vodafone chief executive Jason Paris said: “pricing makes or breaks the business case for unbundled access. The proposed numbers make unbundling impossible. And that restricts innovation, denying New Zealanders their right to the best value from the investment of their tax dollars in the UFB network.”

However Vocus Group chief executive Mark Callander said both companies had made clear their intention of introducing an unbundled service by January 2020. “Right now, the country’s investment in UFB is stranded in the hands of the Chorus monopoly. We’re confident that the Commerce Commission will find that Chorus is expected to act in the best interests of customers.”


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Tags VodafoneVocusChorus

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