Chorus defends internet price change

Contractors laying out fibre optic cable in Napier. Lines company Chorus has defended claims that changes to internet pricing equate to a $600m 'tax'. Photo / Glenn Taylor

Lines company Chorus has hit back at a campaign to oppose proposed changes to internet pricing, calling it "misleading".

A consumer and industry group yesterday launched the campaign against the change, saying it was effectively a $600 million tax on broadband customers.

Last month, Communications and IT Minister Amy Adams proposed setting Chorus' wholesale charge for copper line services at between $37.50 and $42.50 a month - the same price as faster fibre services, and up to $10 higher than the Commerce Commission's proposal last year.

The move followed complaints from Chorus that setting copper prices too low could dampen the uptake of fibre being rolled out as part of the Government's $1.5 billion ultra-fast broadband scheme.

A new group opposed to the changes, the Coalition for Fair internet Pricing, says the proposal is effectively a new tax on broadband consumers.

The coalition of smaller telco companies, industry groups and consumer advocates - led by Consumer NZ, internet NZ and the Telecommunications Users Association - commissioned an independent analysis on the changes by economists Covec.

Covec's report, released yesterday, said the policy would transfer about $600 million from firms and households to one company, Chorus.

Coalition spokeswoman Sue Chetwin, the head of Consumer NZ, said it was wrong for consumers to be forced to pay the same amount for older technology as new technology.

"It's like the Government saying people should pay the same for dial-up as for broadband, when broadband isn't even available to them."

She said it was also wrong for the Cabinet to set prices for monopoly services, rather than an independent body like the Commerce Commission.

"We haven't seen this sort of thing since the 1970s and we are worried that is an attempt to tax consumers to subsidise Chorus. We call upon Ms Adams to indicate that she plans to reconsider her proposal."

Chetwin said the coalition's members supported ultra-fast broadband. "However, under this funding proposal, there would be only one winner: shareholders of an already profitable monopoly. The losers would be every household, every small business, every big business, every farmer, every school and every student with broadband."

But in a statement yesterday Chorus said: "The estimates used [by the coalition] are based on a draft price issued at the start of a long regulatory process. That price has never been implemented and describing this as a 'new tax' is clearly misleading and incorrect."

The coalition said it would focus on submissions on the proposal this week before launching a "comprehensive public campaign" against it.

Submissions on the proposal close today.

The coalition is supported by CallPlus and Slingshot, the Federation of Maori Authorities, Grey Power, Hautaki Trust, KiwiBlog, KLR Holdings, National Urban Maori Authorities, New Zealand Union of Students' Associations, Orcon, Rural Women, Te Huarahi Tika Trust and the Unite Union.