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Chorus accused of using secret information in bid for regional work

Monday 2nd September 2019

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Chorus rejects a claim it used confidential information gleaned from a consultancy in bidding for government funding to extend broadband to the Marlborough Sounds. 

Consultancy Creative Development Solutions is suing the network operator for breach of a non-disclosure agreement, saying Chorus took its ideas on board from a mooted joint venture and used that information when making its own, ultimately unsuccessful, bid. 

The two-week hearing before Justice Robert Dobson began in the High Court in Wellington today. The trial is only determining whether Chorus is liable and will need a second hearing to determine the quantum of damages if liability is proved. 

Clive Elliott QC, counsel for CDS, said the consultancy worked with Marlborough District Council to design a "holistic and consumer-centric" approach that was a different way of looking at regional development and was "not just focused on revenue and profit." The Labour-led government put greater emphasis on regional development. 

The goal was to expand Chorus's network to support wireless internet service providers in a bid to reach the last 1 percent of the population in an integrated package. Marlborough Sounds was a "worst-case scenario" because of its topography. 

The region's aquaculture and tourism industries meant there was potentially high economic value, but it required a different lens to view what was traditionally seen as an uneconomic customer base only serviced due to legislative obligations, he said. 

Justin Smith QC, representing Chorus, told the court that Marlborough council's involvement was the key attraction for the network operator to consider the proposals because spending money on its own wouldn't be economic. 

Chorus had understood council to have funding in the "tens of millions" of dollars, and "at one point, $23 million," Smith said. 

Elliott said Marlborough council had hoped to leverage a partnership with Chorus and use that model in other regions, so as to recoup some of the cost developing the plan - known as Smart Services Initiative - with CDS. 

The consultancy and council sought assurances from Chorus that it wasn't bidding for Rural Broadband Initiative 2+ or Provincial Growth Fund money without them, he said. 

Smith said Chorus had already prepared its plan to bid for the rural areas and that the council-backed proposal wasn't of any use or value to Chorus. The company preferred its own plan, he said. 

Chorus also rejected the claim that it owed a fiduciary duty to CDS, saying there was no relationship and that the consultancy and council were dealing with a number of potential competitors, including Huawei, he said. 

Marlborough council chief information officer Stacey Young was the first witness. She told the court that Chorus was considered as a potential supplier because of its strong expertise in fibre and copper networks. 

She said Chorus didn't indicate at any point that it didn't want to proceed with the proposal and that her impression was that they were working towards a positive outcome. 

The case is continuing. 


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