New Chorus services a 'cynical attempt' to dodge regulation, CallPlus says

Tuesday 22nd July 2014

The Commerce Commission will investigate a claim Chorus's plans to deliver broadband services outside the current terms of regulation are still captured by the legislation and breach the Telecommunications Act.

Internet service provider CallPlus, which recently bought Orcon for an undisclosed sum, made the complaint in submissions to the commission on Chorus's proposal, saying the Boost variants appear similar enough to the regulated basic unbundled bitstream access (BUBA) service as to be captured by the act, and that the telecommunications network operator doesn't have the right to withdraw very fast digital subscriber line (VDSL) service.

"Chorus’s proposed actions, taken together, are a cynical attempt to avoid the regulatory regime by forcing migration to non-regulated services," CallPlus said in its submission. "It is inappropriate for Chorus to 'game' the regulatory framework to avoid a service being regulated."

The regulator is obliged to investigate the complaint to determine whether the proposed changes breach the standard terms determination for regulated UBA services.

"The commission is very supportive of innovation within the industry and of commercial services that compete with regulated services, especially when it leads to improved services for consumers," Telecommunications Commissioner Stephen Gale said in a statement. "However, regulated services must be properly maintained and not be eroded."

The commission is considering the extent to which the new variant services would complement or substitute existing regulated UBA services, what investment they would need, and whether the changes are consistent with the Telecommunications Act. The regulator will also consider whether the proposed changes, including the withdrawal of the VDSL and bandwidth management services, are allowed under existing regulation, and what the impact will be on consumers.

The deadline for cross-submissions on the issues paper has been extended to Aug. 1.

In its submission on the paper, Chorus said the variant services, which it claims would increase the reliability of high-definition video, "are exactly the kinds of commercial services that the regulatory regime under the Telecommunications Act was designed to accommodate and encourage." The network operator said the variants are designed to enhance Chorus's existing portfolio of services, rather than replace it.

"Chorus believes that these service levels will be critical in facilitating an RSP’s (retail service providers) ability to offer innovative and reliable new services based around HD video content. That cannot happen now because, although BUBA will from time to time support HD video content, it will not do so reliably," it said.

In its submission, Telecom Corp, Chorus's biggest customer, said it doesn't see enough commercial value in the proposed Boost variant to warrant a premium "as it does not appear to us to add anything to the service experience our customers receive today" and that combined with plans to degrade existing regulated services, fails to meet the good faith obligation in the standard terms determination.

BusinessDesk.co.nz

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