Govt 'free to decide' on Comcom's Chorus call

Last updated 17:53 11/12/2012

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Prime Minister John Key reiterated in Parliament that he could overrule a Commerce Commission decision on the price Chorus should be allowed to charge for wholesale broadband connections.

During questioning by Labour communications spokeswoman Clare Curran, Key said he had "definitely not" ruled out legislation if the commission came up with a final recommendation that the Government disagreed with.

Key said the commission was free to go about its work, but the Government was "then free to decide whether it wants to adopt that".

The commission issued a draft determination last week that recommended cutting the price Chorus should be allowed to charge for wholesale copper broadband connections by $12.53 a month to $8.93. 

It is due to finalise its determination in June.

Vodafone spokeswoman Michelle Baguley said today that price sounded ''about right'' to it. Chorus has said the change could cut $160 million off its annual earnings before interest, tax, depreciation and amortisation.

Former telecommunications commissioner Ross Patterson has weighed in, accusing the Government of "unprecedented" and "undue political inference" of the commission by threatening to regulate. 

Many lobbyists have argued people using copper broadband services should not cross-subsidise the alternative ultrafast broadband network by more than they will currently do as a result of the Government's decision to contribute $1.35 billion of taxpayer funding to the UFB network - for example by paying a higher wholesale price for broadband than recommended by the commission.

Patterson said if the Government was considering "artificially increasing" the cost of copper-based broadband in a bid to increase the uptake of UFB, that policy was doomed to failure.

But Key said it was important that UFB was rolled out. 

The Government has previously justified co-funding the UFB network on the basis that it would lift the country's overall economic performance and help finance its social goals. 

"It's quite correct the Government is taking a very close look at that Commerce Commission ruling which is a interim ruling," Key said in Parliament.

Curran said Key was "treating the independent regulator and New Zealand families with disdain", accusing him of putting the interests of Chorus above those of consumers.

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