The copper tax

Hamish Fletcher at NZ Herald reports:

Smaller telcos are seething about Government proposals they say would make wholesale copper internet prices artificially high, hinder competition and hurt innovation.

A discussion document released this week by the Communications and Information Technology Minister, Amy Adams, suggests Chorus’ wholesale charges for copper line services should be set between $37.50 and $42.50 a month.

This is up to $10 higher than the Commerce Commission’s proposal last year for monthly wholesale charges and follows complaints from Chorus that if copper prices are too low, it could inhibit the uptake of fibre services being rolled out as part of the Government’s $1.5 billion ultra-fast broadband scheme.

Smaller internet retailers which pay these wholesale charges have loudly opposed the Government paper proposals. Slingshot and CallPlus chief executive Mark Callander said the move would keep copper prices artificially high and amounted to a levy to bolster the rollout of fibre lines.

They’re right. Effectively it is a tax on copper. But even worse, the money goes to Chorus. The price of copper lines should be as determined by the Commerce Commission under the Telecommunications Act, not set by Government.