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Vodafone, Vocus welcome Com Com scrutiny on unbundled broadband

The Commerce Commission's scrutiny on unbundled broadband pricing is a step in the right direction, according to Vocus Group and Vodafone. 

The telcos have made clear their belief that Chorus is 'torpedoing broadband innovation with predatory pricing', and labelled a proposed Chorus price drop of 15c a month ''pathetic''.

The companies have welcomed action from the Commerce Commission announced last week, which will clarify legal interpretations of Chorus' obligations to provide commercially viable unbundled access to the Ultra-Fast Broadband network.

Vocus and Vodafone demonstrated an unbundled UFB connection in February and then sought commercial pricing from Chorus in preparation for a launch in 2020.

After multiple delays, and despite a deadline of December 2018, Chorus announced wholesale pricing for unbundled connections in April of this year. Vocus and Vodafone protested the pricing as ''cynical and protectionist'', noting that it exceeded that of bundled connections.

The companies approached the Commerce Commission with their views, backed by an independent assessment by Network Strategies, which demonstrated the cost to third parties should have been less than 50% of that proposed by Chorus.

Chorus has since released a new proposed pricing model that was 15 cents a month lower than its original pricing.

 This month, the Commerce Commission noted that it has the authority to assess whether offers (pricing) made by Chorus and the LFCs comply with their respective obligations under the Telecommunications Act of 2001. 

It has advised Vocus and Vodafone that "if we consider that a breach of the Fibre Deeds is likely to occur or has occurred, we will decide whether to bring enforcement action".

Vocus Group chief executive Mark Callander says this is a step in the right direction,

"We welcome the attention that the Commerce Commission is giving to the issue," he says.

"We have to remember that Chorus benefited from a billion-dollar interest free loan from the government. That means every New Zealander should get the best possible benefit from the UFB network, and unbundling is the key to unlocking innovation that drives those benefits," he explains.

"Today Chorus proposed a new price that was merely 15 cents a month lower. That's outrageous, pathetic and quite frankly insulting."

Unbundling allows third parties like Vocus and Vodafone to use their own equipment at the end of a Chorus or LFC owned fibre line. Innovation including the creation of new and faster services is possible, rather than a ''one size fits all'' approach to market.

Vodafone chief executive Jason Paris says pricing makes or breaks the business case for unbundled access.

"The proposed numbers make unbundling impossible. And that restricts innovation, denying New Zealanders their right to the best value from the investment of their tax dollars in the UFB network," he says.

The Commerce Commission has committed to look into the matter in the coming months.

Callander says he has welcomed the Commission's work, but notes that the Vocus and Vodafone have made clear their intention of introducing an unbundled service by January 2020, and that a suitable price needs to be determined quickly. 

"Right now, the country''s investment in UFB is stranded in the hands of the Chorus monopoly," he says.

"We're confident that the Commerce Commission will find that Chorus is expected to act in the best interests of customers, and pricing is something we're all sensitive to."