Chorus says cheap copper line access may deter fibre buy-in   4 May 2012

Paul McBeth

Chorus, the telecommunications network operator carved out of Telecom last year, is warning that the industry regulator's bias toward cheaper access to the ageing copper lines may discourage buy-in for the fibre network under construction.

In a draft determination, the Commerce Commission indicated it wants to reduce the geographically averaged unbundled copper local loop (UCLL) service to $19.75 a month from its current price of $24.46 over two years.

UCLL lets Chorus's competitors use the copper network between an exchange and an end-customer's premise to offer their own voice and broadband services. The current urban price only has to come down $19.81, and the biggest access gains would be in non-urban areas, which are sitting at $36.63.

Chorus says the draft decision, if ratified, would impact on about 6 percent of its copper-based access services, based on current volumes, and foreshadows more regulator intervention.

"Chorus is disappointed that this creates uncertainty for investors and industry," the company said in a statement. "At a time when New Zealand is making a very significant investment in building a fibre world, Chorus is concerned that the commission's draft decision creates a potential disincentive for retail service providers and end customers to transition to fibre services."

Wholesale prices for access to the copper lines were averaged as a result of legislation enabling Telecom to carve out its Chorus unit last year, something that rankled with rival telecommunications companies who claimed it would lift their costs. The de-averaged urban and non-urban prices are $15.82 and $29.19 respectively, the regulator said.

At the time, Ministry of Economic Development officials downplayed concerns about the impact on copper-line prices, saying it wasn't "deemed significant" and that any increase in UCLL pricing may “have the positive impact of encouraging more investment and innovation on fibre.”

Chorus is holding an investor conference after midday to discuss today's announcement.

The shares fell 1.4 percent to $3.52 in trading yesterday. The stock has gained 20 percent since listing in November last year.

The regulator wants to cut the geographically averaged price after relaxing population density criteria because New Zealanders are spread more thinly around the country than other nations.

The commission is also consulting on whether there are grounds to investigate whether the pricing principles for the unbundled copper low frequency service (UCLFS) should be tweaked. The UCLFS lets telecommunications companies access and connect with the low frequency in Chorus' copper local loop network, which connects an end-user's building to the handover point in the local phone exchange.

The UCLFS price is the same as the UCLL price, though the differences are different. The UCLFS's copper loop has been shortened by as much as the UCLL copper loop, and Chorus may "under-recover forward-looking costs" for the low frequency service, the regulator said.

(BusinessDesk)

Add a comment

Bookmark and Share

News

New Zealand Prime Minister welcomes Royal baby

3 May 2015 News
Prime Minister John Key has congratulated Their Royal Highnesses, The Duke and Duchess of Cambridge, on the birth of their second... more

Waikato-Tainui Commemorates 20 Years of Raupatu Settlement

30 Apr 2015 News
  2015 marks the 20th anniversary of Waikato-Tainui settling its Treaty of Waitangi Raupatu claim and the iwi is encouraging... more

Business

Dotcom et al get three-month reprieve on extradition hearing

1 May 2015 Business News By Paul McBeth
May 1 (BusinessDesk) - Internet entrepreneur Kim Dotcom and his fellow Megaupload co-accused have won a three-month reprieve on... more

Migration curbs, tweaked inflation target not warranted

1 May 2015 Business News By Pattrick Smellie
  Migration curbs, tweaked inflation target not warranted, says English May 1 (BusinessDesk) - The government is not... more

Living

Britain remembers the ANZACs - 100 years on

25 Apr 2015 ANZAC By Charlotte Everett
100 years after allied forces landed in Gallipoli, 25 April – ANZAC Day – has been commemorated in the UK officially for... more

A Kiwi's guide to ANZAC in Europe - our list of events across the UK, Ireland and beyond

24 Apr 2015 ANZAC By Charlotte Everett
Tomorrow marks the 100th ANZAC Day, and if you are a Kiwi or Aussie far from home there are plenty of events on to enable you both to... more

Property

NZ building consents rise in March, snapping declines

30 Apr 2015 Property By Paul McBeth
April 30 (BusinessDesk) - New Zealand building consents rose in March, snapping three months of declines, with increased intentions... more

More foundation options for Canterbury homeowners

29 Apr 2015 Property
Building and Housing Minister Dr Nick Smith has welcomed the update to the technical guidance,Repairing and rebuilding houses... more

Migration

Migrant exploitation Bill passed

30 Apr 2015 Migration
The Immigration Amendment Bill (No 2) which cracks down on employers who exploit migrant workers passed its final reading in... more

NZ migration hits new annual record in March

23 Apr 2015 Migration By Tina Morrison
April 23 (BusinessDesk) - New Zealand migration hit a new annual record in March, as more students arrived from India and China and... more

Travel

Air NZ's Houston link paves way for United Airlines tie-up

17 Apr 2015 Travel & Tourism By Fiona Rotherham
  Air NZ's Houston service paves the way for partnership with United Airlines, analysts say April 17 (BusinessDesk) - Air New... more

Wellington Airport revised fees 'just within' OK range

17 Apr 2015 Travel & Tourism By Tina Morrison
  Wellington Airport's revised fees are 'just within' acceptable range of returns, regulator says April 17 (BusinessDesk) -... more

Sport

Netball: Ascot Park Hotel Southern Steel defeat Mojo Pulse

3 May 2015 Netball
ANZ Championship Netball Ascot Park Hotel Southern Steel (50) defeated Mojo Pulse (49) A youthful Ascot Park Hotel Southern Steel... more

ANZ Championship: Official Result & Statistics

2 May 2015 Netball
Official Result: Mission Queensland Firebirds (56) defeated West Coast Fever (48) The Mission Queensland Firebirds have inflicted... more

Columns

Gordon Campbell Key’s abuse of secrecy over Iraq & The TPP

30 Apr 2015 Opinion By Gordon Campbell
  For the past week or so we’ve been hearing a lot about the child-like side of our Prime Minister. So I guess we... more

Gordon Campbell on Indonesia’s latest round of executions

29 Apr 2015 Opinion By Gordon Campbell
To no-one’s real surprise, Indonesia has carried out its second wave of executions this year. Given the varied nationalities... more

Kiwi Success

Simon Allen appointed chair of New Zealand Refining

30 Apr 2015 Appointments By Paul McBeth
April 30 (BusinessDesk) - Simon Allen has been elected chairman of New Zealand Refining Co, which operates the Marsden Point... more

Former Transpower head Patrick Strange joins NZX board

30 Apr 2015 Appointments By Suze Metherell
April 30 (BusinessDesk) - Former Transpower chief executive Patrick Strange has joined the board of the stock market operator,... more

Recruitment

Apprenticeship scheme launched

18 Apr 2015 Recruitment
The He Toki ki te Mahi Apprenticeship Training Trust was launched by Prime Minister, the Rt Hon John Key at Rehua Marae in ... more

Chinese rail workers must be paid minimum wage

17 Apr 2015 Recruitment
KiwiRail must immediately stop further Chinese engineers from working here until they can guarantee they are being paid the New... more