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Chorus faces four months of price pain

Posted on 2014/06/14 at 09:16:35
Posted in: chorus

Infrastructure company Chorus will have wear lower wholesale broadband prices for at least four months after regulators pushed back its final pricing review until April next year.

The Commerce Commission is undergoing a review of two sets of prices for copper wholesale broadband services. These are the prices Chorus charge internet retailers such as Vodafone and Orcon, who then onsell services to customers.

Initial decisions from the commission cut what Chorus charges for these services by 23 per cent, which the infrastructure company last November said would hit its earnings before interest, tax, depreciation and amortisation (ebitda) by $142 million per annum.

The new prices come into effect from December this year.

Chorus, which is rolling out the lion's share of the Government's fibre-based ultra-fast broadband scheme, requested a wider review of both sets of prices from the Commission (known as a final pricing principle review).

Although the regulator was aiming to have both of these reviews completed by the time the price cuts come into force, the commission today said it aims for a draft decision on both sets of prices by December and a final decision by April 2015.

"While the Commission announced in March that it intended to produce a draft determination by August and complete a final decision by 1 December 2014, it has decided to change that time frame to allow for matters raised in the submissions from Chorus, Telecom, Vodafone, Callplus, Orcon and internet NZ," the regulator said this morning.

Chorus said it was "very disappointed" by today's news.

"While we acknowledge the FPP processes are challenging, we are very disappointed that the timetabling aims announced by the Commission in February have now been changed," said Chorus general counsel Vanessa Oakley.

"We agreed with the Commission's statements in March that prompt completion of those processes provided the best certainty for everyone. We also believed that appropriate levels of consultation could be undertaken within the original timeframe".

Although the lower wholesale prices will come into effect in December, Chorus said there was a precedent for backdating any change in the prices announced in its final April 2015 decision.

Advocacy group internetNZ said it welcomed the Commerce Commission's "sensible decision to extend the copper pricing consultation" and said it will provide a better result for Kiwi consumers and businesses alike.

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