New Labour leader David Cunliffe led off the questions on Chorus, asking Prime Minister John Key if he still believed Chorus ''will go broke'' if the Government did not intervene to change the pricing for access to the old copper-based broadband network as proposed by the Commerce Commission.
Despite Mr Cunliffe, new deputy leader David Parker and Green Party co-leader Russel Norman pressing Mr Key for details, the prime minister was not fazed.
Mr Key defended comments Chorus might go broke, saying the Cabinet had received advice based on commercial and in-confidence briefings between Chorus and the Ministry of Business, Innovation and Employment.
Chorus earlier released its submission on the Government's discussion document ''Review of the Telecommunications Act 2001'', saying it supported the Government stepping in and updating the policy framework as proposed in its discussion document.
''It is clear the current framework is no longer fit for purpose.''
Former telecommunications commissioner Ross Patterson was one of three independent experts who Chorus said supported the development of a high-quality, stable and predictable regulatory environment in New Zealand.
Dr Patterson said the current regulatory framework was not fit for purpose and undermined the Government's vision to switch people from the old copper lines and to the fibre network still under construction.
''The policy objective is no longer to promote competition in telecommunications markets by driving competition deeper and deeper into the network of a vertically integrated incumbent,'' Dr Patterson said in his report.
''Instead, the policy is to create a structurally separated network to replace the legacy copper network with a next-generation fibre network in the most efficient manner, to ensure consumers receive the benefits of ultrafast broadband as quickly as possible.''
Dr Patterson was tasked with forming a view on the ''best practice'' telecommunications regulatory framework which should apply to the new fibre network from 2020, and what should be put in place to attain that.
Ms Adams sought the review after Telecommunications Commissioner Stephen Gale proposed sharp cuts to the regulated price of unbundled bitstream access (UBA), a copper-based service, something the Government viewed as undermining its bid to underwrite the building of the fibre network.
The proposed cuts to UBA pricing came after a three-year freeze and were seen as a way to offset the national averaging of the price of unbundled copper local loop access, which effectively increased prices for urban customers, accounting for about 70% of users as part of a proposed transition period.
Submissions on the review closed last Friday and came with a late push by a collection of lobby groups claiming Chorus would unfairly get some $588 million in regulatory relief if wholesale prices for unbundled bitstream access were not cut as sharply as the Commerce Commission wants.
Craigs Investment Partners broker Chris Timms said it was unclear whether Chorus would go broke if the wholesale broadband cost was reduced to the level suggested by the Commerce Commission.
However, the price cut would significantly slow the installation of the ultra-fast fibre network.
''You have people on one side saying they are being charged too much but those same people want UFB. Which is it? You can't have both.
''Chorus needs the income to roll out UFB. It is that simple,'' he said.
Vodafone New Zealand, which acquired fixed line assets when it bought TelstraClear, opposed government intervention in its submission, saying Ms Adams' proposal ''does nothing to guarantee success of the UFB initiative'' and was ''jumping the gun'' after just two years of the fibre programme, BusinessDesk reported.
Vodafone, the country's largest mobile phone operator said short-term intervention was unprecedented, favouring only Chorus and undermining consistent regulation of the network monopoly.
Chorus said in its submission the copper pricing framework was threatening to undermine the key migration policy by shifting the price relativity.
''While Chorus has got on with it and completed 20% of its fibre build, the industry is still heavily focused on copper pricing.''
Chorus had 19,000 fibre connections as at June 30 out of its 1.78 million total fixed line connections and entry-level products were cheaper than services on the old network.
Chorus wanted UBA and unbundled copper loop (UCLL) access pricing to be frozen until 2020, saying after the time of the demerger it was envisaged that at a combined $45.92 a month, it would create the best opportunity for UFB's success.
At a glance
• Commerce Commission suggested it cut what Chorus charges retailers for access to wholesale copper internet services by $12 a month.
• About $190 million of shareholder value was wiped off the company on the day of the announcement.
• The Government proposed setting the wholesale charge for copper line services between $37.50 and $42.50 a month.
• The Coalition for Fair Internet Pricing said the Government was imposing a $600 million tax on broadband customers.
