Chorus pricing battle hits Appeal Court

TOM PULLAR-STRECKER
Last updated 10:35 31/07/2014

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Chorus' battle to avoid steep cuts to wholesale copper broadband prices will resume in the Court of Appeal in Wellington this morning.

The company is seeking to reverse a High Court ruling that the Commerce Commission properly applied the Telecommunications Act last year when it slashed the price Chorus will be allowed to charge for copper broadband connections from $21.46 to $10.92 a month.

The new pricing, which the commission based on international benchmarking, is due to take effect in December.

The commission is reviewing the price cut at the request of Chorus, which is allowed under the Telecommunications Act to ask the regulator to come up with a new price based on fully modelling its costs.

However, it believes the commission should rework the price it came up with through the initial benchmarking process and give the company the opportunity to accept that new price as an alternative to continuing with the full review.

Chorus argued in the High Court in Wellington this year that the commission had erred when it set the price at $10.92 as it had assumed international benchmarks to be the highest price it could allow, failing to give proper weight to a clause in the Telecommunications Act that required the competition watchdog to take into account investors' incentives "to innovate in new telecommunications services".

In his High Court judgment, Justice Stephen Kos said language used by the commission to justify its pricing decision had been "unfortunate" but the regulator's ruling should stand.

Chorus came in for a storm of criticism after announcing it would appeal against that decision.

Labour communications spokeswoman Clare Curran said Chorus' appeal was a waste of time and it should "get on with the job of connecting Kiwis to ultrafast broadband".

Chorus spokesman Ian Bonnar said "for us it is about seeking clarity on what remains an unclear point of law".

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