Wednesday, 3 December 2014

Move along, folks

So here's where we've got to with the wholesale price of internet services.

Internet service providers (ISPs) used to buy access to Chorus's copper lines and electronics for $44.95 a month.

This price was too high and insupportable, and everyone knew it (including Chorus, if it's being honest).

And sure enough it's just been lowered by the Commerce Commission, to $38.39.

Good outcome? You'd think so.

But.

Chorus isn't happy. It didn't want it lowered, or at least by not that much.

ISPs aren't happy. They wanted it lowered to closer to $34.44 (the Commission's estimate of the same price overseas).

TUANZ says the ongoing uncertainty over the price is "disappointing".

Could everyone get a grip, please?

Chorus should be happy. It wasn't knocked back all the way to $34.44.

ISPs should be happy. They're getting a too-high price fixed for them - maybe not pushed as low as they'd like, but hey, this is where the technical experts say it really should be.

The government should be happy. Copper prices aren't undermining uptake of the new fibre network the government is subsidising as much as they might have.

Consumers, and TUANZ, should be happy. They've had the reduction in the price already passed through to them in better value broadband plans (if you believe the ISPs), but in any event it should reach them one way or another.

So there are two ways forward.

One is take to the mattresses in another round of rent-seeking from the regulatory process - submissions, counter-submissions, legal challenges, appeals, smoke, mirrors, subterfuge and artifice, enriching only the lawyers and the specialist economists in a negative-sum game.

And the other is to acknowledge a deal that more or less works for everyone, and get the hell on with doing what the various parties are supposed to be doing, which is making money for themselves by providing a better service for us, the consumers.

I wonder which will happen?

2 comments:

  1. We cannot expect them to cease the regulatory competition - it is profit maximising behaviour, or at least it is the behaviour that their shareholders expect to see. What 'we' can do - and I really mean the media can do - is stop giving attention to them for doing it. So often the media uncritically adopts the self interested burble and spin of industry and share broking firms as if it were fact.

    "Regulator's decision to hold Xmas causes uncertainty and cost, bad for consumers", says Turkey. Rest of world shocked.

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  2. Maybe you're right about what's 'expected' of them. For me though it's a whole cast of mind thing - which is more important, gaming or producing - and I'm not at all sure it's in a company's longer term interest given potential unintended consequences, direct costs, and indirect costs of loss of focus on core business

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