Vocus and Vodafone, the two telcos partnering to unbundle UFB fibre, were quick to register opposition to Chorus’ unbundled fibre pricing.
Chorus released its proposal on Thursday. The wholesale network company proposes that service providers wanting to unbundle pay a monthly access charge of $28.70 per line. This covers the fibre line from the customer to the nearest node or splitter.
In addition, there is a $200 monthly charge to connect each splitter back to a handover point. A splitter usually provides connection to 16 customers.
These layer 1 prices compare with between around $40 and $65 a month for bundled, layer 2 fibre service connections. The relatively small price gap between layer 1 and layer 2 is because fibre wholesale prices are regulated and depend on input costs. There is only a small difference between the input costs for layer 1 and layer 2.
By law New Zealand’s fibre wholesalers must offer a commercial unbundling option by the start of 2020. At this stage prices are unregulated. The Commerce Commission expects wholesalers to negotiate with service providers wishing to unbundle. If this fails, the regulator may choose to step in.
In a press release Vocus CEO Mark Callander says the maths just doesn’t stack up. He says: “…the Commerce Commission will now need to intervene, it’s as simple as that. The UFB network was designed to be unbundled and ultimately is an asset that the government has helped fund.”
Vodafone told the New Zealand Herald that the Chorus proposal would see broadband prices rise by $40 a month. But as Chorus points out, there is no change to the regulated layer 2 service price.
Chorus has given the industry until May 7 to provide its feedback on the proposed price.