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Government to commission Chorus investigation as CallPlus goes to court over UFB pricing review

Government to commission Chorus investigation as CallPlus goes to court over UFB pricing review

Communications and technology minister Amy Adams has announced an independent inquiry into broadband infrastructure provider Chorus' financial status and ability to carry out its ultrafast broadband and rural broadband build contract requirements.

Adams said the Ministry of Business, Innovation and Employment had worked with external consultants in recent weeks to analyse Chorus' position "across a range of pricing options, based on publicly-available information".

The ministry would work with Crown Fibre Holdings to get independent advice on Chorus' status and ability to deliver on the UFB contracts, she said.

The Commerce Commission recently decided the additional cost of Chorus' unbundled bitstream access service would be $10.92 per line per month from 1 December next year. Combined with the unbundled copper local loop component, the cost would total $34.44 per line per month.

Last December, in a draft decision, it proposed the UBA component would be priced even lower, at $8.93 per line per month.

Chorus has said the Commerce Commission price decision means it won't be able to make the required investment in the UFB network, tipping a $1 billion funding shortfall by 2020 and a drop in earnings of $142 million.

CallPlus, meanwhile, has filed High Court proceedings over the government's review of the Telecommunications Act 2001, which intervenes in the Commerce Commission's wholesale UFB price setting function.

"We have some concerns that the government has not taken into account a number of factors that will have a material impact on the competitive market and most importantly our customers, says CallPlus CEO Mark Callander.

"The government should stop the consultation process as it would be wrong to launch major new policy initiatives or legislation until this matter has been reviewed."

The government's review has only dealt with broadband pricing, but should address a number of other factors required under section 157AA (3) (B) of the act. It therefore contravenes the act, CallPlus says.