Govt could pay Chorus more upfront

Last updated 09:50 03/12/2013

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The Government may pay more upfront to telecommunications company Chorus to keep the rollout of its flagship ultrafast broadband (UFB) programme on track.

Prime Minister John Key yesterday ruled out any slowdown in the roll out after Chorus took a hit over pricing from the Commerce Commission.

Key did not spell out how the Government would deal with the setback but it is understood an option on the table would be to amend the contract and pay Chorus more upfront to lessen the impact of the commission's ruling.

That could be done in tandem with Chorus revamping its capital expenditure plans by diverting more into UFB and away from other investments.

Chorus is going to the High Court over the commission's ruling, which effectively halves the price it can charge for copper-broadband connections.

But Key signalled yesterday that waiting for the outcome of an appeal was not an option because it would take too long.

Installing ultrafast broadband nationwide was a key plank of National's 2008 election platform.

The Government's options are limited because of a revolt by its minor party allies, who say they won't back legislation by-passing the commission's ruling because it would mean higher internet prices.

Key said the Government did not want to delay the rollout.

"The reason for that is that this is a system that will allow New Zealanders to enjoy world-class connectivity and we need that for schools and hospitals and businesses," he said.

"If we delay that rollout we ensure New Zealanders are behind the eight ball at a time we want New Zealanders leading the world, not behind the world."

Key insisted yesterday the refusal of allies ACT and UnitedFuture to back a legislative option was not a surprise, and suggested it had always been off the table.

"Bluntly ... we never believed our partners would either vote for it or . . . we would be able to get that through Parliament."

But that raised questions over why the Government issued a discussion document detailing legislative options and did not inform Chorus that a legislative fix was never an option.

That may have had an impact on the company's share price, which has been volatile in recent times.

But Key rejected suggestions that the Government should have made a formal statement to that effect much sooner.

A report will be delivered to the Government this week outlining the effect of the Commerce Commission ruling on Chorus and a decision will be made after that on what steps to take.

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- © Fairfax NZ News


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