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Broadband price hike fears allayed

Published: 12:19PM Friday May 04, 2012 Source: Fairfax

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Fears phone and broadband plan prices might increase by $5 a month in towns and cities following a regulatory decision designed to give a "leg up" to the ultrafast broadband network appear to have been allayed.

The Commerce Commission has today proposed halving the price telecommunications providers would need to pay Chorus to unbundle rural phone exchanges and provide their own connections to rural customersver Chorus' copper phone lines, while leaving urban pricing almost unchanged.

The price paid for unbundled phone lines in major towns and cities, where all unbundling has occurred to date, would fall by nine cents a month, meaning the proposal would have little, if any, effect on current prices paid for phone and broadband services by consumers.

Companies that unbundle Chorus' local loop currently need to pay Chorus a monthly line rental of $19.84 in towns and cities and $36.63 a month in rural areas.

The variable rates were insisted on by the last Labour government as part of its 2006 industry reforms. The National government ordered the commission to switch to uniform national rental, which the commission has today proposed setting at $19.75 a month.

The decision to average-out prices in urban and rural areas was widely interpreted as an attempt by the Government to make the separate ultrafast broadband network, which will only be built in urban areas, more competitive with copper.

When consultations were taking place on the UFB network, Orcon chief executive Scott Bartlett said he feared a uniform national charge for unbundled copper lines might mean their cost in urban areas would rise by about $5 a month, which would have put pressure on internet providers to raise their phone and broadband prices in towns and cities.

However, the proposed pricing released by the commission today would appear to avoid that.

Telecommunications retailers do not need to unbundle exchanges to provide a service to customers. The alternative is for them to pay Chorus a higher price and wholesale connections provided by Telecom over Chorus' network.

The differential between the unbundled price and the wholesale price had been set by the commission to encourage unbundling in urban areas.