NZ's UFB protected from broadband price hike

New Zealand wholesale telecommunications service provider Chorus has agreed to lower the price cap for its 100 Mbps downlink wholesale Ultrafast Broadband (UFB) product following negotiations with the government.

Chorus, which separated from the former Telecom New Zealand in order to secure the contract as the operator of the government-funded UFB network, has agreed to a new pricing framework with the government-led Crown Infrastructure Partners.

Chorus had announced in March that it planned to lift UFB wholesale prices beyond the increases forecast in its 2014 projections. But the government sought and secured a contractual solution to reduce the price increases while ensuring a fair profit for Chorus.

Under the new agreement, the price cap for Chorus’s 100 Mbps downlink 20 Mbps uplink UFB service will be reduced from the original $49.65 per month to $45 until July 2019 and $46 until December that year.

This $46 price cap will form the starting price cap for the new anchor price cap of UFB wholesale services that will be introduced under a new regulatory regime commencing in 2020.

Under the new regime, Chorus will be required to provide retailers with basic broadband and voice services at a regulated price cap. These services are intended to act as an ‘anchor’ on the price of other fibre services.

“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,” New Zealand Broadcasting, Communications and Digital Media Minister Kris Faafoi said.

“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.”

Image credit: ©stock.adobe.com/au/Stringer Image

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