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Chorus, UFB: The real worst case scenario
Posted on 9-Dec-2013 13:27 by Bill Bennett | Tags Filed under: Articles



Last week Tuanz CEO Paul Brislen asked Will Chorus go for the nuclear option?

His story says if Chorus sticks to the letter of the law, copper internet connections could slow to a crawl.

He has a point. Yet this is not the worst thing that could happen.

Chorus is the private owner of the most important parts of the national telecommunications infrastructure. It owns and runs the copper network, cabinets and some, not all, telephone exchanges. Chorus also owns some national transport fibre.

The company is ultimately responsible for around 1.8 million phone lines. Or, as Chorus’s 2012 annual report points out, it supplies about 90 percent of New Zealand fixed line connections.

These networks are national, strategic assets. They are as important to our economy as our roads and our water supply.

Ask yourself: “What would happen if Chorus went bust tomorrow?”

Suppose the power companies stopped supplying electricity to the company’s networks, repair crews stopped fixing faults, Chorus stopped managing traffic and so on.

It wouldn’t take long for the economy to grind to a halt.

Is this a ridiculous idea? Last year it was unthinkable. A few months ago it seemed highly unlikely.

In September Prime Minister John Key entered the debate and told us otherwise.

While Key may have been scaremongering or just being a drama queen, subsequent events have done little to repair investor confidence in the company.

Last week’s report from Ernst & Young suggests the company is at risk of not meeting its contractual commitments.

Of course, there’s a long way to go before anyone turns off the lights at Chorus. No-one is panicking yet. But keep in mind just how bad things could get if everything goes pear-shaped at Chorus.

[digitl 2013]

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