Kiwis protected from broadband price shocks

Broadcasting, Communications and Digital Media Minister Kris Faafoi says the new reduced price cap for Chorus’ most commonly purchased wholesale fibre product protects New Zealanders from future price shocks, while providing a fair price for the telecommunications infrastructure company and certainty for retail service providers.

Chorus’ 100/20 Megabits per second (Mbps) Ultra-Fast Broadband wholesale product is likely to become the basic fibre wholesale service (the ‘anchor service’) from 2020 under the Telecommunications (New Regulatory Framework) Amendment Bill.  An anchor service ensures that a basic broadband service is available to consumers at reasonable price, to provide an ‘anchor’ on the price and quality of other fibre services.

Under the Amendment Bill, Chorus will be required to provide retailers with anchor services, which are the wholesale inputs to retail UFB services.  The anchor services are the basic broadband and voice products.

“By constraining the starting price caps for the UFB services (such as the 100/20 Megabit service) to 2019 levels, we can ensure New Zealanders have broad price stability in these services as the transition to the new regulatory framework occurs,” Mr Faafoi said.

In March this year, Chorus announced increases to its UFB wholesale fibre prices that departed from its forecast price path released in 2014.

“The Government sought a contractual solution with Chorus on the price of its 100/20 Mbps service, and I’m pleased to announce Crown Infrastructure Partners and Chorus have agreed on a better price path. This represents a fairer deal for everyone: a good price for New Zealand broadband consumers, and a reasonable price for Chorus.

“The new price cap also provides stability to retail service providers who will acquire the anchor product from Chorus when the new regulatory framework is implemented.”

The previous price cap was $49.65 per month.  It will now be reduced to $45 from 1 July 2018 to 30 June 2019 and then $46 from 1 July 2019 until 31 December 2019. The $46 price cap in December 2019 will form the starting price cap for the new ‘anchor’ UFB wholesale service price under the new regulatory regime from 1 January 2020.