Commerce commission may increase what chorus can charge

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sidefx

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#1309106 21-May-2015 09:38

richms: 6% ROI is embarrasingly low. But I think before they look at regulating the price up, they should look at chorus inefficiancies etc first because im sure that would help more than a price increase on the copper.

Agree with this. Granted it's mostly anecdotal, but you only have to look at the stories around here to see the almost comical inefficiencies in the whole process. Yes chorus will say "It's our sub-contractors fault, they have to wear the cost of it" but when you look at the sheer number of these stories you start to realize that the sub-contractors must be passing these costs on to chorus in some way. I also have an acquaintance who set himself up as a sub-contractor to chorus and he seems to be absolutely raking in the money, to the point he only has to work every second week. I'm all for people earning a decent living, and being rewarded for hard work, but something just doesn't seem right with the whole picture.

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deadlyllama

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#1309112 21-May-2015 09:53

sbiddle:
deadlyllama:
Aredwood: This all comes down to. Do we all want cheap and crappy internet. Or faster / better internet that costs a little more? As more money to Chorus will mean more to spend on better rural internet. And more to spend on backhaul upgrades.

ISPs pay Chorus for backhaul for DSL, and buy backhaul themselves for UFB. So backhaul is a red herring.

With DSL an ISP can choose to use Chorus or their own backhaul. Most big ISPs would use their own backhaul rather than Chorus tail extensions.

Yes, that's correct. I should have said what I really meant -- which is that there would be some scope for backhaul improvements between interconnect points and cabinets when e.g. conklins get upgraded, but that overall load on Chorus-provided backhaul would drop as customers moved off the old network onto UFB.

sbiddle

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#1309137 21-May-2015 09:56

cyberhub: I understand that Chorus want people to move to UFB services, but raising the price of it seems odd.

Perhaps they have decided that maintaining two sets of infrastructure is not ideal and want to just have a fibre network. So as people move off copper they will eventually decommission the fibre network. Kinda like how CDMA went with Telecom.

You mean raising the price of copper seems odd? Why I might ask?

A forward looking price model will (and should) see the price of copper increase - it's basic economics. As demand for copper reduces, the Commerce Commission (inline with their intended outcome) have to increase the price of copper with a forward looking model so that adequate return on that asset occurs, and with the number of users decreasing that means the cost has to increase. A forward looking pricing model was called by last year by many(including Spark), and if they weren't happy with this, maybe they couldn't have called for a review.

It's worth remembering that there are also yearly price increases for many UFB plans scheduled to occur until 2020 as well.

The issue about whether copper and fibre pricing should be related in any way, and whether steps should be taken to increase a move to fibre is a very different debate.

I assume you also mean Chorus decommissioning the copper network, not the fibre network?

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