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Topic # 189042 15-Dec-2015 09:34
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REceived from the Commerce Commission:


The Commerce Commission has today released its final decision setting the prices that Chorus can charge for use of its local copper lines and broadband service over the next five years. These are wholesale prices that Chorus charges retail telecommunications companies.

From tomorrow, the maximum monthly rental prices that Chorus can charge for its unbundled copper local loop (UCLL) and unbundled bitstream access (UBA) service for the first year are $29.75 and $11.44 per month respectively – a total of $41.19. This is an increase from the July draft decision, which proposed a UCLL price of $26.74 and UBA price of $11.15, with the total being $37.89 for the first year.

The maximum monthly prices increase slightly each year for the next five years, but average a total of $41.69 over that period. Tables detailing the UCLL and UBA price components for the next five years and set during this process are included in the background below.

The current price of $34.44 per month was established by international benchmarking at the end of 2013 and came into effect on 1 December 2014. Prior to 1 December 2014, Chorus was able to charge $44.98 per month for its wholesale broadband service.

The Commission has confirmed in a split decision it will not backdate the final UCLL and UBA prices, meaning Chorus cannot recoup the difference from the current price over the past year from retail telecommunications companies.

Telecommunications Commissioner Dr Stephen Gale said modelling the UCLL and UBA prices, as set out under the Telecommunications Act, had been a complicated and lengthy process and the Commission appreciated the expertise of stakeholders who had engaged with it throughout the project.

“This is the most complex and extensive economic model the Commission has ever been tasked with creating, evidenced by the 240 submissions – totalling more than 6000 pages – we have received during our consultation process,” Dr Gale said.

“After considering submissions and reviewing our July draft decision we have made several changes to correct technical errors and account for updated or additional costs in our model. Significant changes, such as the need to increase the amount of trenching required to physically lay the network and adjusting the make-up of fibre and fixed wireless connections, led to the final price rising. This has been partially offset by other changes, including a decrease in the allowed rate of return for Chorus due to the fall in interest rates since July, and the removal of vacant properties from the model.”

The final determinations can be found on the Commission’s website.




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  Reply # 1450598 15-Dec-2015 09:47
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From Vodafone:


“We’re extremely disappointed with the copper pricing announced by the Commerce Commission.

“The pricing set today is even higher than the in the Commission’s draft decisions, and is well out of step with international benchmarking.

“Today’s decision to increase prices means that it will be necessary for us to thoroughly review our pricing for fixed line services. It is likely that the increased charges will get passed through to the customer.

“It is unfortunate that New Zealanders will continue to be charged much more for copper access than friends and family around the world.”

Russell Stanners, CEO Vodafone New Zealand






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  Reply # 1450603 15-Dec-2015 09:51
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From Spark:


Consumers lose out as Commerce Commission hikes Chorus copper line charges

Today’s decision by the Commerce Commission to significantly hike regulated Chorus line charges for copper broadband and landline services is the worst possible Christmas present for New Zealand consumers and businesses, Spark New Zealand said today.

The new charges are almost $8 per month (including GST) per connection higher than what all New Zealand retail broadband providers currently pay, and almost $4 a month higher than the Commerce Commission proposed in its second draft decision just a few months ago in July.

As the Chorus line charges represent about half the typical retail price for broadband and landline voice services delivered over the Chorus copper network, this decision has a substantial impact on what most New Zealanders will pay for their internet or landline phones.

Spark New Zealand Managing Director, Simon Moutter, said, “We had been hoping that the Commerce Commission decision would allow us to pass on some savings to customers from retail price increases earlier this year, if the Commission had stuck to its decision not to backdate when the new higher charges would take effect. However, while the Commission has confirmed no backdating, given the significant and unexpected cost increase we will have to assess the impact of this decision on our ability to return savings to customers as previously indicated.

“We are now also forced to increase our retail voice and broadband pricing to take into account the significantly increased costs now faced from higher regulated Chorus line charges. While the Commerce Commission decision is effective from tomorrow, it will take months before the higher charges flow through completely into pricing for our customers. We will be advising customers of pricing impacts as soon as possible.

“The massive swings in successive Commerce Commission decisions within a matter of months makes it extremely hard for any business to invest, plan and price its services effectively. We have now had two years of market disarray, with significant fluctuations at every stage of the process. The losers out of this are New Zealand consumers and businesses.”

The Commerce Commission decision means that New Zealanders will pay almost double the median regulated lines charges in other comparable countries. It also means that the regulated charges for access to the aging, decades old Chorus copper network will now significantly exceed access charges for entry-level plans on the new state-of-the-art UFB fibre network.

This decision is doubly frustrating given the efforts taken with customers to help keep broadband and landline prices down. This decision is a slap in the face for the 50,000 customers who joined Spark earlier this year to send submissions to the Commerce Commission asking it to keep Chorus charges down, as part of Spark’s Be Counted campaign.






 
 
 
 




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  Reply # 1450643 15-Dec-2015 10:33
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From TUANZ:


TUANZ warns that the Commerce Commission draft decision on wholesale copper charges this morning will likely lead to higher prices for users which puts New Zealand further out of step with the rest of the world. Recent research by organisations such as the ITU already have New Zealand pricing comparing poorly.

The final price announced today adds a further $3.30 to the previous draft meaning that there’s been a steady increase from the Initial Pricing decision of $34.44 to this final wholesale price of $41.69. Users had seen the benefit of initial lower prices flowing through as a result of the process and improved competition but now will likely face further increases in their monthly charges given this final price applies from tomorrow (16th December 2015).

“These prices will have a direct impact on users, and especially those users who are unable to take up UFB services. These include the 20% of the population who live rurally, and who have no other fixed line options and will continue to rely on copper phone lines for the foreseeable future.” said Craig Young, CEO of TUANZ.

“This decision also lends weight to ensuring that we as a country get the current review of the Telecommunications Act right so that post 2020 we establish an internationally competitive business environment when it comes to the cost of connectivity” Mr Young stated.

TUANZ recognises that the Commerce Commission is an independent arbiter who must apply the law around these pricing processes as it stands, but are disappointed that the end users look to have lost out in this latest decision. “We are though happy that the Commission has decided (in a split decision) to not apply any backdating to the pricing which is a positive outcome for users.” said Mr Young.

Mr Young is concerned that this may not be the end to the more than 2 years of uncertainty as there is the possibility that one of the telecommunications providers may choose to challenge the process in court given the material size of the latest price rise.

“TUANZ has a vision of helping New Zealand move into the top 10 for business usage of digital technology (using the World Economic Forum Network Readiness Index) and while this decision makes this task a little harder, it is one we are still fully committed to”








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  Reply # 1450753 15-Dec-2015 13:20
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So this is great news for the consumer as the price has actually dropped from original $44.98 to final pricing of $41.19. A great result!
Not sure where all this price hiking FUD comes from??




Chorus has spent $1.4 billion on making their xDSL broadband network faster. If your still stuck on ADSL or VDSL, why not spend from $150 on a master filter install to make sure you are getting the most out of your connection?
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  Reply # 1450758 15-Dec-2015 13:24
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coffeebaron: So this is great news for the consumer as the price has actually dropped from original $44.98 to final pricing of $41.19. A great result!
Not sure where all this price hiking FUD comes from??


Note that I am speaking outside of my employer when I say this (been working with other ventures for a while now and haven't been working on any telco projects since last year so definitely not representing Bigpipe or Spark), but I'd hazard a guess and say that some ISPs have probably changed their pricing at some point this year or based some of their marketing campaigns off the pricing that's been quoted in the past. This puts their proposed numbers and forecasting out with increased prices.




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  Reply # 1450772 15-Dec-2015 13:34
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Flickky: Note that I am speaking outside of my employer when I say this (been working with other ventures for a while now and haven't been working on any telco projects since last year so definitely not representing Bigpipe or Spark), but I'd hazard a guess and say that some ISPs have probably changed their pricing at some point this year or based some of their marketing campaigns off the pricing that's been quoted in the past. This puts their proposed numbers and forecasting out with increased prices.


They gambled and it didn't work out for them. Boo hoo.

I really wish they would split the pricing to fiber and non fiber areas to let them push uptake of fiber.




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  Reply # 1450793 15-Dec-2015 14:00
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To be atleast a little bit fair the wholesale price has been dropped for a little while and you'd all be screaming murder if they didn't drop the price when their price was dropped. It just means if wholesale prices go up so do consumer prices




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  Reply # 1451385 16-Dec-2015 10:54
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coffeebaron: So this is great news for the consumer as the price has actually dropped from original $44.98 to final pricing of $41.19. A great result!
Not sure where all this price hiking FUD comes from??


eh? the current price is $34.44 - it's a hike.

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  Reply # 1451389 16-Dec-2015 10:59
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Watch vodafone hike the prices on cable and try and blame Chorus for the increase.

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  Reply # 1451410 16-Dec-2015 11:17
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Flickky:
Note that I am speaking outside of my employer when I say this (been working with other ventures for a while now and haven't been working on any telco projects since last year so definitely not representing Bigpipe or Spark), but I'd hazard a guess and say that some ISPs have probably changed their pricing at some point this year or based some of their marketing campaigns off the pricing that's been quoted in the past. This puts their proposed numbers and forecasting out with increased prices.


Some also pushed for a forward looking cost model, seemingly without actually fully realising what that would entail. That's what people told the Commerce Commission they wanted, and it's what they've got.

A forward looking cost model in a copper + fibre world means that as people move away from copper the cost of providing that network increase, which means those costs have to be recouped by higher costs.



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  Reply # 1451528 16-Dec-2015 12:42
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sorceror:
coffeebaron: So this is great news for the consumer as the price has actually dropped from original $44.98 to final pricing of $41.19. A great result!
Not sure where all this price hiking FUD comes from??


eh? the current price is $34.44 - it's a hike.


That was an interim price, The price prior to review was $44.98 and now it looks like the post review price will be $41.19




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  Reply # 1451536 16-Dec-2015 13:02
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As mobile pricing is still dropping and the warehouse now in the mobile space as a MVNO for those people who hardly use their copper landline for voice only should give serious consideration to cutting the cord.

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  Reply # 1451542 16-Dec-2015 13:14
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The issue with that is when people still using a landline want to call you it costs, and to old people they find the idea of people having to pay to call you a problem. Friends keep a $50 landline just so the grandparents can call the kids.




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  Reply # 1451562 16-Dec-2015 13:35
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We cut the cord last Feb (though plan to get VDSL when the house is complete as its a no fibre area) and have had all sets of grandparents calling without worry as most (under 80?) now have mobiles too.

We also arranged a "scotched call" system with some of the kids friends who have technofobic parents, whereby we just return call their number which rings twice and hangs up. With the 2D rollover minutes I have over 1000 balance consistently, there's just no case (but internet access) for a copper connection to my new build at all... The NZMCA are due to announce a broadband offering "compatible to your at home access" for their mobile home members soon, so I'm awaiting that pricing before even getting the copper line installed...

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