Consumers may have to wait
CallPlus and Orcon have confirmed their promises to pass on wholesale broadband prices to consumers have been thrown into doubt by the possibility that higher wholesale prices could later be backdated.
The Commerce Commission ruled last month that the price Chorus can charge internet providers for a copper phone and broadband connection should fall by $10.54 a month from December next year. CallPlus and Orcon were quick to announce they would pass on savings they made.
But Chorus has asked the competition watchdog to review the prices in a process that is expected to take two years and the commission is not ruling out backdating that pricing.
CallPlus chief executive Mark Callander said the possibility that the final prices could be backdated to December next year had "added a new dimension" to its earlier commitment to pass on wholesale price cuts to consumers.
"The risk of a backdate is a substantive issue," Callander said. "You are starting to balance off risk at that point."
Orcon chief executive Greg McAlister said wholesale prices could rise as a result of the reviews, though he thought that was unlikely.
He did not believe the commission would backdate the prices but said that if it decided to do so, that would "of course" threaten Orcon's ability to pass on next December's price cuts.
Instead of backdating prices, the commission should give the industry six months' to a year's notice of any price changes, he said.
Backdating pricing would plunge the "whole industry into way too much uncertainty", he said.
Telecommunications Users Association chief executive Paul Brislen said internet providers would be quite foolish to pass on next December's savings if there was a risk they could be retrospectively reversed "or worse" a year later.
The price the commission sets for copper line pricing following the "full price principle" (FPP) review ordered by Chorus needs to be based on the costs the company would incur building a new nationwide copper access network, the regulator acknowledged in a submission to the Business, Innovation and Employment Ministry in September.
Although the law is clear that the price cuts ordered by the commission will take effect from next December, the commission has said it has yet to decide whether the prices that result from the FPP reviews should then be "backdated" to next December.
It plans to release a discussion document canvassing that and other issues, probably next week.
Chorus chief executive Mark Ratcliffe said on Monday that there was a precedent for such prices to be backdated, but did not provide further details yesterday.
- Fairfax Media