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Students and schools could be affected by ‘copper tax’

16 Sep 2013

Schools, businesses and households could have to pay $600 million more than recommended by the Commerce Commission for existing internet services, according to the Coalition for Fair Internet Pricing.

The coalition, which was formed last week and comprises of New Zealand companies, industry associations and consumer advocate groups, disputes government proposals to introduce what economists Covec say is a new tax of at least $600 million on broadband customers.

It says that in a discussion document issued last month, Communications & IT Minister Amy Adams proposed transferring decisions for the price of existing internet connections from the independent Commerce Commission to politicians in the Cabinet – and to charge users of the existing copper technology the same as those with access to the faster fibre technology.

According to a conservative analysis by Covec, the effect of the policy would be to transfer around $600 million from firms, schools and households to one company, Chorus.

Sue Chetwin, spokesperson for the coalition and chief executive of Consumer NZ, says the coalition is making two simple points.

“First, it is wrong for consumers to be forced to pay the same amount for older technology as for 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 says.

“Second, it is wrong for politicians around a Cabinet table to set prices for monopoly services rather than an independent body like the Commerce Commission.”

The New Zealand Union of Students’ Associations (NZUSA) joined the coalition on behalf of tertiary students around the country.

Dr Alistair Shaw, executive director of NZUSA, says the union absolutely supports Ultra-Fast Broadband.

“It is essential for modern learning which increasingly has digital, on-line and distance elements, and reports suggesting that Minister Amy Adam’s proposal will in any way delay the roll-out of UFB are of grave concern,” he says.

“Some of the students who arguably need UFB the most, such as distance students, are likely to never see it, but under this proposal will be charged for their copper-wires as if they were getting fibre. It is simply not fair.”

The union also has concerns about the transfer of money from consumers, including tens of thousands of students, to Chorus, when they will see no benefit from it whatsoever.

However, a statement from Chorus says the estimates being used are based on a draft price issued at the start of the regulatory process, and that price has never been implemented.

Mark Ratcliffe, Chorus CEO, says New Zealand is about 20% through a once-in-many-generation upgrade to the national broadband infrastructure, which will deliver significant social and economic benefits.

“At the same time, the entry level fibre broadband wholesale price is significantly lower than the current copper broadband price, meaning that this initiative will also deliver savings for consumers,” he says.

“Given the many benefits of this initiative, it is important that the economics of the project remain in place for the government’s partners, that investment is supported throughout the duration of the build and the transition to fibre is supported so consumers get savings and wider benefits.”

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