MP calls for Chorus to 'come clean' on copper cuts

Summary:Fears are rising that a "nuclear option" could be used to degrade copper broadband services in New Zealand and drive users to fibre.

New Zealand network operator Chorus plans to spend less on its legacy copper network under cost cutting plans announced today , raising fears it will degrade the service and effectively force users to migrate to more expensive fibre services.

Opposition MP and associate ICT spokesperson Clare Curran has called on Chorus and Crown Fibre Holdings, which manages the government's investment in the nationwide Ultrafast Broadband (UFB) rollout, to "come clean" on negotiations to cut the cost of the UFB project. 

Curran says Crown Fibre Holdings must not let Chorus degrade copper services to cover the cost of the UFB roll out.

Earlier today at Chorus' half yearly results announcement the company said it would move its business towards "full cost recovery and utility-style operation".

Curran said that means it’s either going to charge retailers more or run down its copper broadband service so people have to switch to ultra-fast broadband.

“Crown Fibre Holdings has been negotiating in secret with Chorus since December," she said. "It must come clean on its strategy and what concessions have been made to Chorus to change the way it delivers broadband over copper."

Cutting copper investment was one option presented to Chorus in an Ernst & Young report delivered in December in response to copper access pricing cuts proposed by regulator the Commerce Commission. Chorus says those cuts could slash its revenue by NZ$142 million a year.

“Crown Fibre Holdings has no mandate on copper pricing," Curran said today. "It is up to the Commerce Commission to decide the final pricing process. Today’s announcement is a worrying indication that the Crown agency is pushing a parallel process which will benefit Chorus and not consumers."

Curran said today's announcement appears to be proposing a variation on what has been called the "nuclear option" of degraded copper services.

“If this is the strategy proposed by the Crown agency acting on behalf of the Government, then they’re again choosing to put the corporate bottom line above the consumer," she said.

“The Minister, Amy Adams, must rule it out and Chorus should explain what efficiencies it will make to achieve full cost recovery of its fibre rollout. Kiwis on the copper network should not have to pay more or suffer slower speeds."

Capital expenditure savings of up to $350 million through to 2020 are expected as part of a range of cost cutting measures to be implemented from mid-year. These are expected to limit network spending outside the UFB initiative and to include reduced maintenance costs.

Topics: New Zealand, Broadband, Fiber, Networking

About

Rob O'Neill is a writer for CBS Interactive based in Auckland, New Zealand covering business and enterprise technology for ZDNet. He has previously worked for IDG, The Sydney Morning Herald and Melbourne's The Age as well as various business titles, most recently editing the Business Sunday section of New Zealand's weekly national news... Full Bio

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