Chorus tries to duck first year of telco levy

Telecommunications Development Levy, which will replace the TSO, will collect $50m a year until 2015/16

Chorus is objecting to contributing to the first year’s installment of the levy that will majority-fund the Rural Broadband Initiative.

The Telecommunications Development Levy (TDL), which will replace the Telecommunications Service Obligations (TSO), will collect $50 million each year until 2015/16 from providers of telecommunication services that earn more than $10 million a year in revenue.

The more companies in the pool, the less each of them has to pay.

In the first round of submissions to the Commerce Commission, Chorus claims it shouldn’t be liable for the payment for the 2011/2012 year because it was not a separate company in the preceding year, it was part of Telecom. However Chorus says it is likely to be liable for payments in future years.

Chorus, when it was still a division of Telecom, won the $285 million contract with Vodafone to roll out the RBI.

Telecommunications user groups, in their submissions, are split on the issue of whether Chorus should contribute to the first year payment.

TUANZ agrees with Chorus. “In the immediate instance (year one) no as Chorus was not trading separately during the 2010/11 year. However, from the following year, Chorus meets all the definitions of a liable person and so should be included in the TDL.”

InternetNZ says Chorus should pay. “Chorus contributing to the TDL accords with the purpose of the TDL and ensures a more even distribution of the TDL across the industry”.

Vodafone, 2degrees, Farmside, Kordia and TelstraClear also favour Chorus contributing from year one.

“Chorus’ liability was clearly contemplated by Parliament and anticipated by the previously integrated Telecom Group,” says TelstraClear in its cross- submission. “Excluding Chorus from this liability would be complicated and distorting, creating inequitable consequences including a windfall for Chorus.”

Their view is backed by Vector, which in its submissions also tries to get out of paying the levy by suggesting that the definition of liable companies be limited to “those supplying services to end-users”.

Vector isn’t alone in trying to escape the fee, Sky TV – which was named in the Commission’s discussion document as possibly qualifying, also says it should be excluded.

Meanwhile Telecom declines to take sides on the issue of whether Chorus should pay in the first year: “The submissions have flushed out that there are legal arguments that support both the proposition that Chorus should be captured and the proposition that Chorus should not,” says Telecom in its cross-submission.

“These arguments illustrate that the issue is not clear cut and there are various interpretations that could be supported.”

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