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Chorus welcomes faster telco review

Last updated 12:56 08/02/2013

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Chorus has welcomed a decision by the Government to bring forward a comprehensive review of telecommunications regulation.

Its shares were up more than 10 per cent in lunchtime trading after Communications Minister Amy Adams bowed to pressure from the company.

The review sidelines a Commerce Commission draft determination that would have slashed the price Chorus could charge for the use of its copper-based broadband network.

Chorus chief executive Mark Ratcliffe said the decision to immediately kick off the regulatory review was a "principled" positive step.

"We're looking forward to transparently engaging with the industry to help shape a new environment where everyone - government, infrastructure companies, and retail service providers - are incentivised to work to a shared vision where ultimately New Zealanders are the winners."

The Government amended the Telecommunications Act in 2011 as part of its preparations for its $1.35 billion investment in ultrafast broadband, saying then that it would commence "a general review of the policy framework for regulating telecommunications services in New Zealand" by September 2016 with the goal of completing the review by March 2019.

But Adams today announced the review, and another that will look at the Telecommunications Service Obligation that limits fixed-line rentals and guarantees unmetered local calling, would now start "immediately".

Former Communications Minister Steven Joyce had indicated copper-based broadband would act as a competitive check on the price telecommunications retailers would be able to charge for fibre-based ultrafast broadband.

But Adams signalled the review would result in a more fibre-friendly regulatory regime.

"Throughout the establishment of the Government's UFB and RBI [rural broadband] initiatives, user groups were clear in their calls for the need for fibre connectivity as a priority. The Government is committed to world-class fibre infrastructure, and the long-term gains it will bring," she said.

"Increased certainty around the transition path from copper to fibre will promote development of retail fibre products, boosting the ability of New Zealand homes, businesses, schools and hospitals to maximise the transformative potential of these technologies.

"The policy framework needs to be predictable and stable for all concerned, and in my view, it is therefore desirable that these two reviews get underway immediately."

The battle over telco regulation came to a head after the Commerce Commission issued a draft determination in November that recommended cutting the price Chorus should be allowed to charge for wholesale copper broadband connections by $12.53 a month to $8.93 from December 2014.

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Chorus estimated the price cut would slash up to $160 million off its annual earnings before interest, tax, depreciation and amortisation and said it would inhibit the take-up of ultrafast broadband by making existing copper services cheaper in comparison.

Chorus shares were up 32 cents at $3.18 during lunchtime trading.



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