Chorus copper broadband appeal rejected

MATT NIPPERT
Last updated 11:22 08/04/2014

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A consumer group has welcomed a High Court ruling on copper broadband prices, saying it should eventually deliver lower prices for telecommunications users.

The court said today that Chorus had lost its challenge over cuts to copper broadband prices by the Commerce Commission.

Telecommunications Users Association of New Zealand (Tuanz) chief executive Paul Brislen welcomed the judgment.

"It's a very small step during the journey but an important one. We're a step closer to price reductions we've been expecting for three years," he said.

The commission had decided Chorus could charge only $10.92 a month for copper broadband connections, down from $21.96.

Brislen said lower prices were not expected soon as a drawn-out process to establish final prices for the sector was continuing.

"Chorus was arguing the commissioner got it all wrong, and if they'd won it we'd be back at square one," he said.

The pricing decision led to a steep fall in Chorus' share price, which has slumped 50 per cent over the past year.

In early trading today, Chorus shares sold at $1.75, down 2.2 per cent on opening.

In a three-day hearing in the High Court in Wellington, Chorus claimed the commission had taken a "mechanical approach" rather than following an evidence-based decision-making process and had therefore erred in law when cutting prices.

Chorus' main argument was that pricing comparisons made by the commission with Sweden and Denmark were too restrictive and resulted in an overly narrow consideration of possible prices.

In a judgment released today, Justice Stephen Kos rejected Chorus' appeal.

"The simple fact is that the commission did not accept Chorus' submissions," he said.

"Despite the combined intelligence and force with which Chorus' submissions were delivered, I am left unpersuaded that the commission erred in law.

"In my view, submitters were plainly aware that a price point above the confines of a more limited benchmark range was a possibility. The commission, in my view, was also open to that possibility.

"In my view, the commission has done just as Parliament had prescribed."

Chorus said in a statement issued to the NZX that the judgment would result in the status quo prevailing and it was contemplating an appeal.

Chorus general counsel Vanessa Oakley said: "We will be reviewing the court's findings in detail.

"We have always acknowledged that the commission had significant challenges in applying the law as it stands and we remain of the view that benchmarking is an outdated methodology."

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The commission welcomed the judgment.

Telecommunications Commissioner Stephen Gale said he hoped to be able to complete the pricing review by December.

"The cost modelling currently under way for the [copper broadband] service is our best way of promoting price certainty for Chorus and retail service providers as soon as possible," he said.

Brislen was sceptical whether the December deadline would be met and predicted a final pricing determination was more likely in the middle of next year.

The judge awarded costs against Chorus.

- Fairfax Media

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