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Govt to ban cheap broadband

Written By: - Date published: 8:01 am, December 4th, 2012 - 46 comments
Categories: john key, telecommunications - Tags: ,

There’s a fabulous win for consumers and a Government good news story out of the Commerce Commission yesterday – significant cuts in the cost of broadband for consumers.  You.

As prices keep rising and wages don’t, finally we might get a fair break.

But John Key’s not happy.  As National’s troubled Ultra-Fast Broadband program creaks along (they’ll still be promising it next election, as in 2008 and 2011…), fibre is struggling to roll-out.  Businesses are being offered it at a hugely more expensive price than copper, and turning it down.

Copper getting cheaper is the last thing it needs.

So John Key wants to stop the decision, and isn’t ruling out legislating over it.

We can’t be reducing Chorus’ profits by $160 million per year!

And we can’t make customers want fibre by making it attractive, so we’re going to punish them with higher prices until they take what’s good for them…


46 comments on “Govt to ban cheap broadband”

  1. vto 1

    Once again, Soviet-era Russia would be most proud.

    Like central government handouts for the NZX.
    Like central government assistance for farmers.
    Like central government planning for our second biggest city, Christchurch.
    Like central government control of universities.

    Go Stalingrad. You’re onto it.

    • Tazirev 1.1


    • Well ‘Stalingrad’ was an abuse of a socialist revolution by a greedy bureaucracy. The Stalinists creamed off the surplus from the state industries and didnt allow the economy to advance. Had they not been bought off by the West to stop the threat of ‘communism’, the workers would have got rid of them.
      In NZ the greedy, parasitic comprador Keysites, pocket the rent from their monopolies and farm the Hobbits as a throw-back to most inefficient, barbaric colonial type capitalism.
      Its going to be harder for the Hobbits to throw off the shimmer of the NZX or dreams of becoming a new gentry, but fortunately we have allies in China where the 100s of millions of workers do not sit around as peasants and are creating the most combative mass of workers in the world.

  2. geoff 2

    John Key may as well have just said: I don’t give a shit about the general public, all I care about are shareholders.

  3. geoff 3

    In August Chorus reported a $100 million profit for 7 months of operation, here

    So for 12 months that works out to around $190 million per year.

    So even after you take off the $160 million, they’ll still be stripping on the order of $30 million per year in profit from kiwis.

    • Lanthanide 3.1

      Actually the other recommendation by the commerce commission was a slight reduction in the cost of a fixed copper phone line, which is estimated to take $20m off their revenue. I believe in fact that is the final decision and it’s going through.

      So these two changes together would take that $190m profit down to just $10m. That is a very large cut.

      • geoff 3.1.1

        Even better!

        As I understand it, Chorus owns the ‘local loop’, the copper lines that run from the exchanges to
        people homes?
        If so then this is infrastructure that was largely paid for many years ago by NZ taxpayers before the privatisation of Telecom. Therefore the closer it can be run at cost the better.

      • felix 3.1.2

        Shouldn’t be any profit in it at all.

        • Lanthanide

          I’m not sure I agree with “no profit in it at all”, but I would be much happier if any profits were returned to the government, not a private company, due to the lack of real competition in NZ.

      • mikesh 3.1.3

        Their bottom line for 7 months was 102m. So 12 months would actually be 175m. Remove 180m and they are running at a loss.

  4. marsman 4

    Chorus is Telecom is it not? Same old same old, once were monopolies with the help of National.

  5. muzza 5

    Fibre was always a programme lacking in requirements and anything that resembled a coherent business case. It was only ever a tax-payer subsidised effort for the benefit of the shareholders in Chorus/Telecom, and with some spurious future uses of it, as yet to come into the light.

    Copper still has legs, that was always clear, and becoming more obvious by the day!

    • Lanthanide 5.1

      The only justification I ever saw touted for fibre was “television over fibre”. Because a bunch of couch potatoes is way to economic nirvana?

      I think their billboards in 2008 were also aimed at young idiot males that believed the promise of “faster internet” meant “next year some time” and “you’ll be able to pirate all you want”. The types that generally don’t care about voting unless they see something in it for them.

      • millsy 5.1.1

        TV over fibre has tremendous overheads and is more expensive to both transmit and receive IMO.

        Luddite as it may be, A teletext enabled analogue TV set doesnt crash or freeze up, or does it enable user to rack up large bills watching the content.

      • infused 5.1.2

        A lot of businesses have taken up fiber, and it has made a real difference.

    • Draco T Bastard 5.2

      The biggest advantage that I can see for fibre over copper is that the network would no longer be reliant upon extensive use of a fairly rare element. Going to fibre would also increase bandwidth which means that we actually would have a hell of a lot more options open to us.

      As I said yesterday and several times before – If we hadn’t sold Telecom and deregulated telecommunications we’d already have FttH in most of the country.

      • Lanthanide 5.2.1

        Copper is not ‘fairly rare’, it’s just in high demand. High demand ensures high prices for scrap, which helps with proper use of the resource.

        The argument is also rather a losing one, because they’re not going to rip the existing copper lines out of the ground. I would think that new subdivisions and developments are likely to be rolling out copper these days, and probably will continue to do so for many years yet.

        • bfloyd

          Apart from a rather large percentage of generalisation based on bigotry, and arguing that because copper is “in high demand” rather than scarce..(High demand usually ends up with whatever is in demand becoming “scarce”) and do you actually know just how nuch copper ore there is left in the ground? …

          The copper that is in the ground now will become more valuable as the new ore being mined diminishes, so yes, there will be a time when it will be more valuable to dig up, and recycle than just “leaving it there”….

          It really does get tiring having people who’s world stops just past their nose attempting to predict a future…. While all they are ctually doing is making excuse for profiteering….

          Maybe it’s time for you to drop the “chardonney socialist” disguise, and don the blue rosette….I don’t think anyone with an iq over room temperature is fooled anymore…

        • Draco T Bastard


          Wish I could remember the article I read that showed that copper was past peak production. It’s seems that it’s past peak discovery.

          The argument is also rather a losing one, because they’re not going to rip the existing copper lines out of the ground.

          Oh, I think they will especially the copper that’s in a pipe. Can use it to draw through the new fibre.

          I would think that new subdivisions and developments are likely to be rolling out copper these days, and probably will continue to do so for many years yet.

          But they shouldn’t be. Doing so kinda defeats the purpose and increases the costs of getting fibre out later.

          • Lanthanide

            Oh, I think they will especially the copper that’s in a pipe. Can use it to draw through the new fibre.

            I think that would rather violate the Kiwishare provision.

            But they shouldn’t be. Doing so kinda defeats the purpose and increases the costs of getting fibre out later.

            That’s kind of the point. Install copper now while all the work is being done and it’s easy and cheap to do so. If copper is later required for some purpose, it’s much more expensive. Copper cabling is (still) not actually that expensive.

            • Draco T Bastard

              I think that would rather violate the Kiwishare provision.

              And why would it do that? A phone line doesn’t need copper.

              That’s kind of the point.

              So, according to you, increasing costs is the point of private enterprise.

        • lprent

          Copper is quite common relatively speaking. The problem is that it is common in low concentrations.

          It is comparatively rare in easy to mine concentrations compared to how much we use it. However we have been using it as a metal for thousands of years. Consequently the best and most readily available surface deposits are in our cities…….

  6. Well it’s Nationals usual philosophy. “If you are a worker you are there to keep the country working and other than that we don’t give a rats arse about you”.

    We just expect you to give 100% of your energy to make NZ a vibrant place for us to operate our businesses in a profitable way.

  7. Amazing how Key wants to get involved when it suits him (and his cronies) but not when it doesn’t…When asked about jobs, for example, he says things like the government doesn’t create jobs, it creates the environment for jobs, yet when it suits his own agenda, he is more than happy to intercede. Double standard, much?

    • fatty 7.1

      true…despite Shearer’s latest favourite phrase, the Nats are not really hands off in regards to the economy, they are very hands on when it suits them

      • vto 7.1.1

        They are not hands off at all fatty, that is total bullshit.

        They are in fact completely interventionist.

        Some examples;
        Canterbury dairy farming and Ecan.
        Loans to Joyce’s mediworks company
        Threatening legislation re chorus
        Christchurch rebuild
        Offering taxpayer electricity companies to the NZX

        In fact they are more nanny state, lead their supporter in business by the hand, than Clark and her lot ever were

        It is of course an acknowledgment that the free market private enterprise model doesn’t actually work in the way they have been led to believe. They need a new religion.

        • Derek Seymour

          Exactly, their assertion the free-market reigns supreme is supreme bullshit. They tinker with it all the time. It’s pseudo capitalism. When it goes out of kilter, they try to correct it, according to their own doctrine. A vote for either the Nats or Labour is a vote for a party which wants (demands) social engineering. Pay your money, and take the ride.

          Key’s tax break for the hobbit industry is a great example. Money for Hollywood, none for the engineering sector.

  8. infused 8

    Copper is crap. End of story. VDSL2 is the only good thing on copper. Unless a business can get that, fiber is far better.

    You can’t deliver voip over copper (well you can try, good luck with that). It’s half duplex with most connections. It has poor upload speed and high latency.

    • lprent 8.1

      VOIP – Works fine at home and at my small workplaces in recent years on copper on ADSL2. Have you actually used it?

      The worst I ever had was a bit of echo on the other end once inside NZ – they had a normal telecom line (and I’ve had it on that as well). Of course it is crap when you call PNG, but so is straight copper, cell, or fibre.

      You can carry a voice signal easily on just 64k bandwidth, and most of the last few decades it has been 32k in full duplex per circuit for most of the switches and exchange in NZ servicing the copper network.

      Basically my guess is that you’re trying to share too little bandwidth through too many people. Increasing the available bandwidth through fibre or the like is fine when you have a lot of people using voice at the same time but often it is just as efficient to simply add more circuits.

    • Lanthanide 8.2

      I’m on copper with VOIP and it works fine.

      • Tim 8.2.1

        Just a thought …. are they going to be rolling out UPS units in every home when copper bites the dust? It’s a bugger in an emergency when the power goes off and you’re the only person in a neighbourhood that still has a directly connected phone (a la Chch earthquake)

        • gnomic

          Ah, well thereby hangs a tale. It seems the answer to your question about a UPS is not unless the end user pays for it. This link is interesting about the process involved.


          See also. http://www.crownfibre.govt.nz/ufb-initiative/frequently-asked-questions/

          Q: How will fibre connect from the street to my home?

          A: The connection is to a device known as an ONT (Optical Network Termination device) which the LFC will install, own and maintain. The ONT is the point at which the fibre service connects to networks in your home (which may be copper, Ethernet, Wi-Fi etc.) The ONT will be located in a position of the householder’s choice, generally just inside the house. An additional fee may apply if the householder wishes to site the ONT in a difficult location or a long way from the street frontage. The ONT does require a power source, so locations such as a laundry, adjacent to a fuse box etc. can work well.

          Q: What happens to legacy copper services when I connect to UFB?

          In the home, services such as fax, security alarms, St John’s medical alarms, EFTPOS, Sky TV connections – which run over copper today – can generally be configured by your service provider to operate with UFB. Ask your RSP for more information on this as part of the process of connecting.

          Q: What happens to the copper itself when I connect to UFB?

          A: At least initially the copper will generally remain in place. In the future it is possible that legacy copper will be removed but this is subject to further consideration by the Government, industry and other stakeholders.

  9. gnomic 9

    The existing copper cable based telephone system is to be decommissioned (just like CDMA and analogue TV broadcast), according to an article I saw recently in a computer reseller industry magazine. Not many people know that but I think we should be told. No date given for the demise of plain old telephone service. Afraid I haven’t got the source to hand right now, but I can supply later if anyone is interested. While POTS is obviously declining in usage, I find myself wondering just how good an idea this is. Perhaps a Save Our Pots campaign?

    • Draco T Bastard 9.1

      Perhaps a Save Our Pots campaign?

      Not worth it. Use of the telephone is decreasing and basic broadband has more than enough bandwidth for those who want to make a voice call.

    • millsy 9.2

      POTS may not be sophisticated, but it sure is reliable and proven, and a good communication method for people who just want a basic phone service (ie pensioners, etc). And what’s more, it still works in a power cut.

      Sometime I think there is nothing wrong with old school reliable technologies. The company I work for still uses fax machines, which is a quick and easy way of exchanging text, some industries, ie shipping still use telex, some banks and government departments still use mainframes from the 60’s and ’70s. Teletext seemed to work alright in getting the news and other information out there (I wrote to several penpals I ‘met’ from Keypad club, and I first heard about Cave Creek on teletext), and you cant beat a radio station for streaming music and audio programs at low cost.

      I think the last word goes to a famous author, “I dont know of anyone trying to hack into my typewriter”.

      • Draco T Bastard 9.2.1

        That comes across as ZOMG, the past was soooo good, we should go back there. Are you turning into a conservative millsy?

        There’s reasons why we’ve moved on from the old POTS. It really was very limited and didn’t achieve anything close to the amount of information dispersion that we’re seeing now.

        • millsy

          Its not about being conserative, liberal or progressive. Im pro-technology, dont get me wrong, even if it is only on a budget – my smart phone only being a cheap and nasty $89 Huawei, broadband internet, with wifi links as well as 3/4G technology has the potential to revolutionise communications.

          In saying that, there is nothing wrong with legacy technology.

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