Have-nots paying for the haves


It was good to see Vodafone’s Matt Williams pointing out in the Dominion Post (10 September), that people who live in rural and small town New Zealand would be unfairly penalised by Ministry of Business, Innovation and Employment (MBIE) pricing proposals for copper internet connections vis a vis fibre connections.

In a discussion paper released last month, MBIE proposed that the price of copper DSL and VDSL broadband connections be kept artificially high so people will be encouraged to switch to fibre (ultrafast broadband, aka UFB). That would mean maintaining DSL/VDSL prices at present levels or even increasing them.

This flies in the face of a Commerce Commission draft decision last December that the regulated price of wholesale copper broadband connections should be more than halved, from around $20 per line per month, to $8. That draft decision acknowledged that customers for copper broadband were already being ripped off.

Forcing copper users to subsidise UFB is not just a short-term thing. People in dozens of smaller towns don’t get a sniff of fibre until well after 2020. Rural people are on the never-never.

In Wairarapa, where I live, only Masterton is in the UFB rollout programme. If you happen to live in Carterton, Greytown, Featherston, Martinborough or on a farm, you would be forced to pay artificially high copper broadband rates for many years, to help make UFB look more attractive to consumers in larger centres.

That’s not fair.

VDSL is not the answer, either
Faster VDSL copper connections are being touted by Chorus (owner of the national broadband network) as a sop to those who can’t get UFB. The carrot is that VDSL can give much faster connection speeds than plain DSL. That is misleading, because unless you are near the local telco exchange or roadside cabinet, real-life VDSL speeds can be little faster than DSL and hugely slower than fibre.

Also, because VDSL is based on the copper network, under the current proposals its price would remain artificially high for many years, to subsidise UFB take-up. While competition will undoubtedly push fibre prices down, under the MBIE proposals there would be minimal competition to force down the prices of copper connections, be they DSL or VDSL.

I accept that the UFB roll-out has to be phased and that such phasing will favour larger centres. But why should people who can’t get UFB pay over the odds for a second-best copper connection? Should Carterton folks be subsidising Chorus’s efforts to persuade Khandallah folks to switch to fibre?

How about charging significantly lower copper broadband prices for people who aren’t even on the fibre horizon?

These issues had been exercising my mind for several months, while Chorus had been lobbying against last December’s  Commerce Commission recommendation that copper prices be reduced. Their lobbying has certainly borne fruit with MBIE and its minister Amy Adams.

Surely there must be an opposing lobby, I thought, and I was considering doing my bit. Last week I finally got off my chuff and sent a shortened version of this post to the editor of the Dominion Post. It was published on Friday. Probably pissing against the wind, I thought as I sent the letter. But amazingly, the very next day a serious lobby did emerge – calling itself the Coalition for Fair Internet Pricing. Strength to their bow!

Coalition for Fair Internet Pricing campaign
This campaign is explained on the Consumer NZ website under the headline Axe the Copper Tax.  The lead organisations include the Telecommunications Users Association of New Zealand (Tuanz), InternetNZ and Consumer NZ. Supporter organisations include CallPlus and Slingshot, the Federation of Maori Authorities, Greypower, Hautaki Trust, KiwiBlog, KLR Holdings, National Urban Maori Authorities, New Zealand Union of Students’ Associations, Orcon, Rural Women, Te Huarahi Tika Trust and the Unite Union.

The organisation will concentrate on a submission to minister Amy Adams’ consultation process on the MBIE proposals, then run a comprehensive public campaign against the proposals.

See also Tuanz CEO Paul Brislen’s piece in NBR; and David Farrar’s post at Kiwiblog.

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3 Responses to Have-nots paying for the haves

  1. Bill Bennett says:

    The political solution to this is so simple, it’s laughable. The government could get the results it wants by having one copper price where there is a fibre alternative and another where there isn’t.

    There, problem solved.

  2. jmacg says:

    Another good incentive for people to switch to fibre would be greatly increase both fibre speeds and data caps.

  3. Pingback: Broadband duckshoving by our local politicos | Martinborough Musings

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