Commerce Commission final UBA Pricing

Forums › New Zealand Broadband › Commerce Commission final UBA Pricing

1 | 2 | 3 | 4 | 5 | 6

3181 posts

Uber Geek

Lifetime subscriber

#928122 6-Nov-2013 13:33

Im curious as to how much chorus were expecting the commerce commision to change prices. It doesnt seem surprising to me that the CC has look at the situation and decided to change the prices.

Is Chorus's issue that its more than they were expecting or that it occured at all.

I've heard one commentator suggesting that maybe Chorus underbid for the true costs vrs the other unsuccessful companies who saw this comming so had higher bids.

Maybe Chorus should be nationalised as a state owned interprise analogous to Transpower (except the link goes to the end user - so no electricity distribution companies) or the roads all being owned by the state/council. ie basic core infrastructure owned by the state and run at minimal profit to encourage the greater good of nationwide high quality broadband. As a government/state owned organisation they would be able to borrow money at very low rates as the risk of default with government ownership ould be very low. (sounds very socialist I know) and free from the need to return market yield to shareholders. - like hospitals, and the road outside my house.

A.

Still waiting for announcement the government to move services out of Auckland becuade of the benefits of broadband. How about call centres in Southland.

A.

ubergeeknz

3344 posts

Uber Geek

Trusted

Vocus

#928124 6-Nov-2013 13:39

afe66: Maybe Chorus should be nationalised as a state owned interprise analogous to Transpower (except the link goes to the end user - so no electricity distribution companies) or the roads all being owned by the state/council. ie basic core infrastructure owned by the state and run at minimal profit to encourage the greater good of nationwide high quality broadband. As a government/state owned organisation they would be able to borrow money at very low rates as the risk of default with government ownership ould be very low. (sounds very socialist I know) and free from the need to return market yield to shareholders. - like hospitals, and the road outside my house.

I agree, this is how NBN works in Australia, it's a Government owned company that is doing the rollout of and will own their UFB fibre network. Great idea.

Still waiting for announcement the government to move services out of Auckland becuade of the benefits of broadband. How about call centres in Southland.

The main limiting factor for contact centres in a regional sense is not infrastructure but staff. There are only so many people in any one place suited for contact centre work, and often only for a limited time, most smaller cities and towns just don't have enough staff available for more large call centres.

afe66

3181 posts

Uber Geek

Lifetime subscriber

#928131 6-Nov-2013 13:57

True about staffing but it also becomes a bit of chicken and egg situation. If you dont move some industries out of Auckland everyone will continue to move so less people live outside Auckland so there are less jobs so every moves to Auckland. Sooner or later someone has to take a bunt in moving jobs in the opposite direction.

I do worry slightly that by the time the fibre network is finished all the service jobs which could use the network to cancel the effect of distance will all have moved to auckland negating the benefit of expending fibre to non auckland parts of nz. ie there might be a benefit in telemeeting from auckalnd to wellington using the fibre but is there a benefit to using it to tele meet accross auckland ?

If we could move some of these jobs out of auckland, would that help deflate/affect some of the drive/competition for house prices.

Whats going to happen when the wellington earthquake happens.... all those companies/ head offices will move to Auckland "in the short term - just until the rebuild is finished" but then forget to move back.

A.

ubergeeknz

3344 posts

Uber Geek

Trusted

Vocus

#928137 6-Nov-2013 13:59

afe66: True about staffing but it also becomes a bit of chicken and egg situation. If you dont move some industries out of Auckland everyone will continue to move so less people live outside Auckland so there are less jobs so every moves to Auckland. Sooner or later someone has to take a bunt in moving jobs in the opposite direction.

I do worry slightly that by the time the fibre network is finished all the service jobs which could use the network to cancel the effect of distance will all have moved to auckland negating the benefit of expending fibre to non auckland parts of nz. ie there might be a benefit in telemeeting from auckalnd to wellington using the fibre but is there a benefit to using it to tele meet accross auckland ?

If we could move some of these jobs out of auckland, would that help deflate/affect some of the drive/competition for house prices.

Whats going to happen when the wellington earthquake happens.... all those companies/ head offices will move to Auckland "in the short term - just until the rebuild is finished" but then forget to move back.
A.

I think we might be getting a bit off topic here :/

k1wi

484 posts

Ultimate Geek

#928139 6-Nov-2013 14:03

ubergeeknz:
afe66: Maybe Chorus should be nationalised as a state owned interprise analogous to Transpower (except the link goes to the end user - so no electricity distribution companies) or the roads all being owned by the state/council. ie basic core infrastructure owned by the state and run at minimal profit to encourage the greater good of nationwide high quality broadband. As a government/state owned organisation they would be able to borrow money at very low rates as the risk of default with government ownership ould be very low. (sounds very socialist I know) and free from the need to return market yield to shareholders. - like hospitals, and the road outside my house.

I agree, this is how NBN works in Australia, it's a Government owned company that is doing the rollout of and will own their UFB fibre network. Great idea.

I don't think the neutered NBN is a good great example of anything tbh.

ubergeeknz

3344 posts

Uber Geek

Trusted

Vocus

#928218 6-Nov-2013 15:41

Here we go:

Chorus at no risk of financial distress - Coalition, quoting Auckland prof's research (source: NBR)

tldr (or no NBR access:)

Chorus might have misled Prime Minister John Key, the public and the financial markets when it said yesterday it was at risk of defaulting on its debt, the Coalition for Fair Internet Pricing, claims.

The Coalition this afternoon released new analysis of Chorus’s accounts by Professor Jerry Bowman, a former chair in finance and now emeritus professor of finance at the University of Auckland.

"In my judgement, there is no reason to conclude that a decision from the Government’s regulatory review that reduces the EBITDA of Chorus by $100 million should put the company in financial distress or destabilise the company."

This aligns with Chorus’s market disclosure on 3 December 2012, which made no mention of a debt-default or insolvency risk, and subsequent media comments in September by Chorus chief executive Mark Ratcliffe, including to TV3’s The Nation, the Coalition says.

Yesterday, the Commerce Commission determined that copper prices should be cut by only 23%, to $34.44, nearly $2 in Chorus’s favour compared with the assumption on which Professor Bowman based his analysis. In response, Chorus claimed, for the first time, that this would cost it $1 billion and put it at risk of defaulting on its debt, statements which the Prime Minister has relied upon in his public comments.

The market, however, appears not to believe there is any risk of a debt default, with Chorus shares currently trading at the same price as mid October and higher than in June.

A spokesman for the coalition, Paul Brislen, also chief executive of the Telecommunications Users Association of New Zealand (TUANZ) said Chorus owed the Prime Minister an apology. “Bluntly, we don’t believe Chorus’s so-called disclosure yesterday and it appears nor does the market,” he said.

surfisup1000

5288 posts

Uber Geek

#928225 6-Nov-2013 15:45

hellonearthisman: It's still a win for Chorus, they will be getting more than what was originally where told before the ministers intervention. Chorus needs to stop moaning about the short term costs and look at their long term win that the UFB will give them.

I'm not sure this is correct.

With these price cuts UFB is a dead duck.

My feeling is most people will not bother with UFB now that copper is so cheap.

This causes downstream problems for UFB. Next gen web services will not be developed due to metcalfes law and the lack of interconnections ...

http://en.wikipedia.org/wiki/Metcalfe's_law

Quic Broadband

Move to New Zealand's best fibre broadband service (affiliate link). Free setup code: R587125ERQ6VE. Note that to use Quic Broadband you must be comfortable with configuring your own router.

crackrdbycracku

1168 posts

Uber Geek

#928243 6-Nov-2013 15:57

surfisup1000:

With these price cuts UFB is a dead duck.

My feeling is most people will not bother with UFB now that copper is so cheap.

This is totally the problem.

However, the way I see it is this:

The UFB should be valuable intrinsically, because of it's speed.

Shouldn't matter that copper is cheaper because the UFB should be able to do useful things the copper network can't. It should be an apples vs oranges comparison, not a cheap not so flash apples vs expensive very flash apples.

I have a fair idea of what it would take for me to buy that as a consumer but I'm really interested to hear the communities view.

Didn't anybody tell you I was a hacker?

k1wi

484 posts

Ultimate Geek

#928252 6-Nov-2013 16:10

UFB needs a killer app to be intrinsically valuable - for my parent's that is Skype, for some it will be publishing to social media and for others it'll be uploading video.

Though in most cases people won't realise its value until they try it and then can't go back.

ubergeeknz

3344 posts

Uber Geek

Trusted

Vocus

#928283 6-Nov-2013 16:33

Here's another relevant read... very one sided obviously but it does point out some facts which a few people seem to be forgetting...

http://thestandard.org.nz/everything-you-wanted-to-know-about-the-chorus-deal/

ubergeeknz

3344 posts

Uber Geek

Trusted

Vocus

#928302 6-Nov-2013 17:14

Smaller telcos promise to pass on broadband price cuts to users

TLDR:

Some internet companies are promising to pass on a big chunk of a price cut announced yesterday, with Orcon saying its customers could save around $7.50 a month on their broadband bill.

The commission announced the new wholesale prices for copper broadband services of $34.44, which is more than $10 less than today's charges.

Orcon and Slingshot have promised to pass on the savings to consumers.

Because some of the company's other wholesale charges were due to go up around the time when this price cut was due to happen, Orcon said it would "average this all out and pass on any savings"

Slingshot chief executive Mark Callander said competitive pressure would force other internet retailers to bring their prices down.

"Given the intense retail competition in the broadband market, we expect that to continue with reduced costs flowing through to customers. How and when is too early to say," a Vodafone spokeswoman said.

A Telecom spokesman said it didn't plan "on letting competitors in on our pricing plans" until after the price cut was implemented.

DarthKermit

5346 posts

Uber Geek

Trusted

#928335 6-Nov-2013 18:21

k1wi: UFB needs a killer app to be intrinsically valuable - for my parent's that is Skype, for some it will be publishing to social media and for others it'll be uploading video.

Though in most cases people won't realise its value until they try it and then can't go back.

For me personally, I don't use skype nor do I upload any video. So that's two reasons I have no real need for UFB. My partner here uses social media (facebook), but I don't.

Whatifthespacekeyhadneverbeeninvented?

mattwnz

20164 posts

Uber Geek

#928338 6-Nov-2013 18:30

ubergeeknz: Smaller telcos promise to pass on broadband price cuts to users

TLDR:

Some internet companies are promising to pass on a big chunk of a price cut announced yesterday, with Orcon saying its customers could save around $7.50 a month on their broadband bill.

The commission announced the new wholesale prices for copper broadband services of $34.44, which is more than $10 less than today's charges.
.

Why wouldn't they pass on 100% of the savings, otherwise it looks like the telcos are increasing their margin as a result of this ruling.
Also if the government end up paying chorus for the shortfall on installing UFB, aren't the taxpayers just subsdising telcos, by allowing them to make some extra money off the wholesale price drop. Sure the customers also get a cheaper rate too (depending on how much of the price drop that an ISP chooses to pass on), but they are paying for that when more of their tax goes to pay for UFB. Someone has to make up the 1 billion shortfall from somewhere, so something has to give.

crackrdbycracku

1168 posts

Uber Geek

#928375 6-Nov-2013 19:52

Personally the only thing I can think of to justify paying for UFB as a consumer is streaming HD video. I literally can't think of another file type which I would need UFB speed for. Maybe for some people HD gaming but anything other than that I would call a niece market.

If anybody can think of another application I'd like to hear it. But nobody needs UFB speed to email or use social media.

For business it's a different story completely different story, but I'm not in business.

Didn't anybody tell you I was a hacker?

Lazarui

136 posts

Master Geek

#928378 6-Nov-2013 20:02

crackrdbycracku:
surfisup1000:

With these price cuts UFB is a dead duck.

My feeling is most people will not bother with UFB now that copper is so cheap.

This is totally the problem.

However, the way I see it is this:

The UFB should be valuable intrinsically, because of it's speed.

Shouldn't matter that copper is cheaper because the UFB should be able to do useful things the copper network can't. It should be an apples vs oranges comparison, not a cheap not so flash apples vs expensive very flash apples.

I have a fair idea of what it would take for me to buy that as a consumer but I'm really interested to hear the communities view.

In reality its a Flash Car vs. A Non Flash Car comparison not apples/oranges for 80% of consumers at this point.

My Volvo(xDSL) does the job gets me from A-B at a reasonable speed and price not too bad.
But my Ferrari (neXgen) is great its comfortable gets me upto speed quicker its awesome and a great status symbol of how rich i am.

Also the belief that tying down what chorus can make from copper is not going to have any affect on them in the market is just plain stupid, it's going to adversely effect their share price/credit standings etc. if they are too aggressive with it and go for the make voter happy damn the conseqences movement.

1 | 2 | 3 | 4 | 5 | 6