Last week Chorus announced changes to the pricing of two of its most popular service variants.
The table below details the price points and timelines announced by Chorus for the Max/500Mbps service:
| 2018 | Mid-2019 | Mid-2020 | |
| Residential | $65 | $60 | $56 |
| Business | $75 | $70 | $66 |
Why reduce prices on this high-speed service?
The anchor 100/20 BS2 service (baseline fibre service that must be available for sale under agreement with the Crown) has been capped at $46 from mid-2019. Through moving the price point for Max/500 closer to the anchor product, and assuming retail ISPs pass on this reduction, the Max/500 service price point becomes close enough to become the default option for many consumers.
More than that, it muddies the water on the maths around unbundled fibre. With high speed layer 2 services becoming more cost effective, the return on investment calculation becomes harder for the ISPs pursuing an unbundled fibre strategy.
While we don’t yet know the price for unbundled fibre, it is fair to say that the lower the price of layer 2 BS2 services, the less attractive unbundled fibre becomes given the costs associated with rolling it out.
10Gbps GPON trial
Chorus has also announced plans to start trialling a 10Gbps consumer GPON service.
The arguments for unbundling fibre are largely (though not exclusively) around price and speed. Chorus seems to clearly be cutting those discussion points off at the knees with the reduction in price and increased speeds.
In other news…
Chorus continues to look hard for non-regulated and higher margin sources of revenue with these additional announcements made last week:
- At present BS2 services are, broadly speaking, cheap, fast and weak on support. BS3 services are fast, 3-5 x the price of BS2, and covered by stronger support SLAs. Chorus has announced a consultation period where they are looking for feedback on a hybrid BS2/BS3 product, presumably a slightly more expensive options than BS2, but with a restoration target of better than 48 hours.
- BS4 (the same as HSNS) changes announced are largely cosmetic but do allow for HSNS/BS4 services to be ordered over a UFB handover in Chorus UFB zones, which reduces network costs and simplifies delivery.
- CRT (the regional backhaul product offered by Chorus) is in for a shake up, with lower prices set to be announced early to mid-next year. When Chorus first released CRT it forced prices across the industry down, but in recent times CRT pricing has held firm while other carriers have continued to drop their prices. The next move from Chorus has the potential to cause a sizeable shift in the market once again.
Brendan Ritchie
