Chorus made to wait for price ruling

18:19, Nov 19 2012
The Commerce Commission will rule on whether wholesale copper-based broadband plans must be sold at a cheaper rate.

Internet providers should find out early next month whether regulators are likely to cut the wholesale cost of copper-based broadband plans by as much as $5 a month.

Wholesale price cuts could be beneficial for consumers, at least in the short term, if they are passed on by internet providers.

But they threaten to take a big bite out of Chorus' profits and, Chorus argues, delay the take-up of ultrafast broadband by making fibre-based services less attractive in comparison.

Chorus has not been able to forecast its future dividends because of the uncertainty.

The Commerce Commission yesterday announced it would push back the date for its final ruling on the price Chorus can charge for unbundled phone lines from Friday until December 3.

It now intends to release the ruling at the same time as issuing a draft decision on the price of unbundled bitstream access (UBA) - a wholesale product which is a much bigger earner for Chorus and a key component in the cost of most broadband plans.


The commission made it explicit yesterday that there was a direct link between the local loop price and the UBA price.

Chorus' share price plunged 13.6 per cent during two days' trading in May after the commission published a draft report that proposed reducing the average price of unbundled phone lines by about $5 a month, to $19.75 a month.

Chairwoman Sue Sheldon said in August she and other directors had been lobbying hard to prevent the commission slashing the price of its copper-based services. She said the regulatory uncertainty was likely to hang over Chorus for another six months until the commission finalised its determination on wholesale pricing.

She went on to say she had not detected any change in the commission's stance since Stephen Gale replaced Ross Patterson as Telecommunications Commissioner in July, despite speculation the Government's decision not to appoint Patterson was intended to signal a desire for a more "investor-friendly" approach to regulation.

Fairfax Media