Significant error in Telco review

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myfullflavour

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#127346 7-Aug-2013 14:22

https://internetnz.net.nz/news/media-releases/2013/Significant-error-Telco-review-InternetNZ-Consumer-TUANZ

Copper already is significantly cheaper at a wholesale level than fibre. While I don't see the Govt meddling with the current wholesale prices further is a positive move, I can see how some will be upset they appear to be taking a cost pricing model based on something completely different.

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#873236 7-Aug-2013 14:43

Given that broadband Internet access is now considered a basic human right, the government should be doing everything in it's power to ensure that prices are as low as possible, even if that causes Chorus execs to cry in their weetbix and jump off tall buildings.

The right of the masses to have cheap broadband outweighs the rights of companies to make large profits.

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#873244 7-Aug-2013 14:57

"Human right" in some countries. Not sure this is established in New Zealand doctrine though.

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#873258 7-Aug-2013 15:03

Lias: Given that broadband Internet access is now considered a basic human right, the government should be doing everything in it's power to ensure that prices are as low as possible, even if that causes Chorus execs to cry in their weetbix and jump off tall buildings.

The right of the masses to have cheap broadband outweighs the rights of companies to make large profits.

Where are the large profits?

With current costs of UFB exceeding $3000 to run ducting down the street and still over $3000 for the install (which needs to drop to under this for the project to realistically meet costs) I don't see how you can slash prices.

People also need to factor in that low end UFB prices will increase year on year until 2019, and high end plans will drop year on year until 2019. This remains unchanged.

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#873281 7-Aug-2013 15:27

freitasm: "Human right" in some countries. Not sure this is established in New Zealand doctrine though.

It's not a specific law in NZ that I am aware of, but in 2011 the UN Human Rights Council declared it a basic human right, and we generally acknowledge UN declared rights as rights here.

Sbiddle:

I expect Chorus to run at a huge loss until after the rollout, and to recover its investment gradually over time. Given that the government granted them an effective monopoly I think it's only reasonable that the eventual profits should be small. As in "slightly more than if they'd put their money in a bank the entire time and made some interest" small.

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#873289 7-Aug-2013 15:41

Lias:
freitasm: "Human right" in some countries. Not sure this is established in New Zealand doctrine though.

It's not a specific law in NZ that I am aware of, but in 2011 the UN Human Rights Council declared it a basic human right, and we generally acknowledge UN declared rights as rights here.

Sbiddle:

I expect Chorus to run at a huge loss until after the rollout, and to recover its investment gradually over time. Given that the government granted them an effective monopoly I think it's only reasonable that the eventual profits should be small. As in "slightly more than if they'd put their money in a bank the entire time and made some interest" small.

In all seriousness do you understand the structure of the CFH / LFC model?

Chorus are actually on being funded approximately $1100 per CPP and at this stage in the project with deployment costs being much higher than projected I think any regulation of Chorus or pricing needs to be very carefully managed at this stage of the project. This isn't to say copper pricing shouldn't fall, but Chorus are in effect taking a huge financial gamble on UFB. In a few years time we'll have a much clearer picture of how things are going to end up. It's then that we should be looking at pricing moving forward. If Chorus can't fund the project it's going to have to be the Government who bail them out...

myfullflavour

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#873292 7-Aug-2013 15:43

Lias: Given that broadband Internet access is now considered a basic human right, the government should be doing everything in it's power to ensure that prices are as low as possible, even if that causes Chorus execs to cry in their weetbix and jump off tall buildings.

Copper wholesale pricing should be regulated to the same approx price as entry level UFB.

It's in New Zealand's best interests to move onto fibre as soon as possible and a cheap as chips copper product potentially stands in the way.

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#873296 7-Aug-2013 15:48

myfullflavour:
Copper wholesale pricing should be regulated to the same approx price as entry level UFB.

It's in New Zealand's best interests to move onto fibre as soon as possible and a cheap as chips copper product potentially stands in the way.

No, copper pricing should be regulated at a fair price based on simular overseas markets.

Making copper expensive to boost fibre is just hurting customer choice. They shouldn't have fibre rammed down them when their DSL speeds fit their needs.

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#873297 7-Aug-2013 15:49

Full nationwide deployment of fibre is not expected to be completed until 2018 at the earliest and not in locations deemed uneconomic.

myfullflavour

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#873302 7-Aug-2013 15:56

Sounddude:
myfullflavour:
Copper wholesale pricing should be regulated to the same approx price as entry level UFB.

It's in New Zealand's best interests to move onto fibre as soon as possible and a cheap as chips copper product potentially stands in the way.

No, copper pricing should be regulated at a fair price based on simular overseas markets.

Making copper expensive to boost fibre is just hurting customer choice. They shouldn't have fibre rammed down them when their DSL speeds fit their needs.

There is plenty of customer choice - it's called pick & choose one of many ISPs.

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#873315 7-Aug-2013 16:20

Perhaps a low copper price where there is no fibre; then where there is fibre it becomes unregulated, so Chorus can charge what the like (within reason) in these areas.

The issue I see with across the board pricing is many areas are not getting fibre in this 10 year rollout.

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#873617 8-Aug-2013 05:46

myfullflavour:
Sounddude:
myfullflavour:
Copper wholesale pricing should be regulated to the same approx price as entry level UFB.

It's in New Zealand's best interests to move onto fibre as soon as possible and a cheap as chips copper product potentially stands in the way.

No, copper pricing should be regulated at a fair price based on simular overseas markets.

Making copper expensive to boost fibre is just hurting customer choice. They shouldn't have fibre rammed down them when their DSL speeds fit their needs.

There is plenty of customer choice - it's called pick & choose one of many ISPs.

I'm all for fibre and would likely get it if I could. I don't however believe prices should be artificially inflated and Kiwis continue to be screwed over and pay inflated prices compared to the rest of the world so the government can force people to move to it to prove the worth of their investment. A sound investment doesn't need unresonable protection from competition.

The sad thing is this is likely to be more damaging to fibre than it helps and the government should know this. By keeping prices of copper connections artificially high, Kiwis many of who are not going to get fibre for years due to the rollout schedule, are kept away from using their slower connections to the full potential (and let's not forget VDSL isn't bad compared to entry level fibre) which likewise limits ISP investment, and fibre wholesalers and retailers likewise have little incentive to compete on price and speeds. If fibre isn't able to compete on its merits, this just proves the government fouled up on their plans.

Of course this has been obvious for a long time, the idea was suspect from early on (which is not to say fibre isn't a sound investment, but the timings and prices we questionable) and ever since they gave Chorus (still part of Telecom at the time) such a dominant roll in the UFB rollout including giving them Auckland effectively guaranteeing them continuation of their monopoly through a lot of NZ. And this was after Telecom/Chorus basically threw their toys of the pram and said they'd refuse to work with the government if they weren't given Auckland. And as stuff post decision as shown, the government appeared to bend of backwards for Telecom/Chorus over other tenders.

This was unlike in Australia were the government told Telstra where they could shove it when they tried to mess around and in doing so used their fibre rollout as an opportunity to ensure a better marketplace.

If they'd done so, a leaner but meaner Chorus would want to compete, the UFB participants may complain but presuming the government had been clear in their tenders that they would continue to let the copper pricing regime stand, they should have known what to expect. If the government had needed to pay more so be it, although I don't think it's clear this would have been the case as opposed to different timetables or simply investors having more realistic expectations on their invesments. (But I guess socialising risks while privatising profits is one area where the government believes we should follow the rest of the world as much as possible.)

It would be far better for a competitive market in NZ where people get the fastest speeds and the cheapest prices as soon as possible whatever technology they use and are actually able to use their connections because they have realistic data caps than an uncompetitive marketplace where neither wholesalers nor retailers are competing to offer the best service to customers but a small number of people have fibre sooner (but barely use it).

At the very least, if they want to do this, they should be honest about it. Set copper at a fair and resonable price and charge a 'fibre tax' to let people know what they're actually paying for.

P.S. Just read another good point from a blog predecision, keeping the coppers prices artifically high also means people may be pushed over to wireless.

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#873663 8-Aug-2013 08:30

myfullflavour:
Sounddude:
myfullflavour:
Copper wholesale pricing should be regulated to the same approx price as entry level UFB.

It's in New Zealand's best interests to move onto fibre as soon as possible and a cheap as chips copper product potentially stands in the way.

No, copper pricing should be regulated at a fair price based on simular overseas markets.

Making copper expensive to boost fibre is just hurting customer choice. They shouldn't have fibre rammed down them when their DSL speeds fit their needs.

There is plenty of customer choice - it's called pick & choose one of many ISPs.

ISP's in NZ can only compete on a small number of factors when dealing with fibre, as the pricing is all fixed.

In the copper world, there are many more options as unbundling is is a very valid option.

If the Copper pricing is artificially inflated to pay for fibre, then consumer loses out as their pricing is much higher than it has to be.

I agree that fibre is king and copper is the poor cousin. But alot of consumers don't need the power of fibre. They just want to check their email and browse a few website. Why should they pay a higher fee so their next door neighbour can have fibre?

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#873742 8-Aug-2013 11:16

Nil Einne:
I'm all for fibre and would likely get it if I could. I don't however believe prices should be artificially inflated and Kiwis continue to be screwed over and pay inflated prices compared to the rest of the world so the government can force people to move to it to prove the worth of their investment. A sound investment doesn't need unresonable protection from competition.

Fibre isn't a sound investment. There is absolutely no business case for fibre that will deliver a ROI - that's why the government had to fund the expansion. Right now it's over $6k to run fibre past a house and connect that. Ultimately somebody has to pay that cost.

P.S. Just read another good point from a blog predecision, keeping the coppers prices artifically high also means people may be pushed over to wireless.

Wireless is not, and never will be a replacement for any fixed services whether that be in the home or workplace as a replacement for Ethernet, or as a last mile physical layer. It's a complimentary solution.

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#873747 8-Aug-2013 11:24

Lias:
freitasm: "Human right" in some countries. Not sure this is established in New Zealand doctrine though.

It's not a specific law in NZ that I am aware of, but in 2011 the UN Human Rights Council declared it a basic human right, and we generally acknowledge UN declared rights as rights here.

Citation needed.

The only references I find to this claim are articles in blogs and small publications. There's a report but its common trend is to declare the right of expression on the Internet and that cutting access based on censorship may be a violation of civil rights. There's no reference that I can find at all about this being actually added to The Universal Declaration of Human Rights.

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#873787 8-Aug-2013 12:07

sbiddle:
Fibre isn't a sound investment. There is absolutely no business case for fibre that will deliver a ROI - that's why the government had to fund the expansion. Right now it's over $6k to run fibre past a house and connect that. Ultimately somebody has to pay that cost.

It can make sense for the government finance major infrastructure projects as govt may be an indirect but significant beneficiary in the way of new tax streams.

There is a chicken and egg thing -- if private industry financed the entire network they would sign few customers due to the high connection cost and then go bankrupt - such a project would never proceed past cost/benefit analysis. The government would get nothing but they paid nothing either.

It is a total leap of faith in the economic opportunities that could be enabled by UFB.

Government has been trying to encourage our economy to diversify for decades, but here we are today, still relying on dirty old cows. UFB is a good initiative in that respect.

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