Watchdog rejects Labour's concerns

TOM PULLAR-STRECKER
Last updated 09:50 28/06/2013

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The Commerce Commission has rejected Labour's concerns that a failed industry effort to broker a deal over the price Chorus could charge for copper broadband amounted to collusion.

It was reported last month that major telecommunications companies had suggested Chorus should be allowed to charge just under $14 a month each for its 1 million wholesale broadband connections, but that Chorus had rejected the compromise.  

Labour communications spokeswoman Clare Curran said a letter she had received from Commerce Commission chairman Mark Berry confirmed the nature of the negotiations.

"What really concerns me is [Communications Minister Amy Adams] was fully complicit," she said.

Berry said the commission understood that telecommunications companies had had discussions about the wholesale price of copper broadband and was "currently confirming our understanding of the situation".

But he said the commission did not believe the talks breached the Commerce Act, since pricing was regulated and the discussions were "limited to encouraging the Minister for Communications and Information Technology to legislate for a different regulated [wholesale broadband] price".

"As such, telecommunications companies cannot themselves fix, control or maintain the regulated ... price," he said.

The talks were brokered by the Telecommunications Forum and Adams was kept abreast. She had made it clear that had a final industry agreement been reached, it would then have been put out broadly for consultation.

Curran wrote to the commission asking it to investigate and to take action, saying there was  "serious concern that collusion may have occurred between telecommunication

companies in order to determine a price that may have been acceptable to Chorus".

"This is a fundamental issue which cuts to the heart of price fixing behaviour for which the

Commerce Commission was established to prevent," she said.

Even though no deal was done, Curran said the issue mattered because the talks were an attempt to bypass the Commerce Commission. She questioned how consumers' interests would have been represented.

Berry promised her a "more fulsome reply once we have confirmed our understanding of the situation".

Since the commission recommended a regulated price of less than $9 in a draft document and ultrafast broadband is not expected to fully replace copper for two decades, the rejection of the attempted industry compromise amounted to a billion-dollar gamble by Chorus.

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- BusinessDay

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