Chorus copper prices set by December

TOM PULLAR-STRECKER
Last updated 15:59 28/03/2014

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The Commerce Commission says it can finalise the prices Chorus should be allowed to charge for access to its copper network by December.

That is despite warning last year that similar modelling exercises had taken some overseas competition authorities "several years" to complete.

The aggressive timetable could eliminate the risk the telecommunications industry might be plunged into chaos later when payments in the tens or hundreds of millions of dollars might otherwise have to be backdated, either to or from Chorus and internet providers.

The commission last year stunned Chorus by ordering a 23 per cent cut to the combined wholesale price of a copper phone line and broadband connection.

The new pricing of $34.44 a month, which was based on international benchmarking, was due to come into effect in December this year.

But under the commission's proposed timetable that pricing might never come into effect and would instead be superseded by new prices. The new prices would be arrived at by modelling what it would cost to build a new copper access network.

The commission had previously said the so-called "final price principle" (FPP) review of copper broadband connections could be completed by December.

However, today it said that after discussions with French contractor Tera Consultants, which the commission had retained for the modelling exercise, it also believed it could complete the review of copper line pricing by the same date.

Complicating matters, Chorus has asked the High Court in Wellington to set aside the existing copper broadband price determination that had been due to take effect in December.

The commission should then have a second shot at coming up with a benchmarked number that also fully takes into account a government mandate concerning investment incentives, Chorus said.

Representing Chorus, David Goddard, QC, argued at a hearing this month that Chorus and other industry participants should have the opportunity to view the new determination before deciding whether they wanted to continue with the copper broadband FPP review.

Hearing the case, Justice Stephen Kos appeared to give some hope to Chorus' cause, referring at one stage during the proceedings to what he described as "errors of reasoning" in the commission's original determination.

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- Fairfax Media

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