Chorus to appeal copper pricing judgment

Friday 11th April 2014

Chorus will appeal a High Court ruling upholding the Commerce Commission's determination setting the regulated prices on the telecommunications network operator's copper lines.

The Wellington-based company said it has sought leave to appeal Justice Stephen Kos's judgment this week, which tossed out its attempt to set aside the regulator's initial pricing principle (IPP), which directed the price Chorus can charge for unbundled bitstream access (UBA) services.

"We must continue to use every option available to us in order to provide clarification of pricing principles and section 18/18(2A) (of the Telecommunications Act), which is a critical part of the regulatory regime and affects both current and future industry outcomes," general counsel Vanessa Oakley said in a statement.

"It is important to note that seeking this further guidance does not disturb Chorus's strong focus on the final pricing principle (FPP) processes underway, which are due to be completed by the commission by 1 December 2014," she said.

Chorus appealed the commission's final determination in November last year setting the UBA monthly price at $34.44 per line, up from the $32.35 price initially mulled in its draft decision. That was composed of $10.92 for UBA, which facilitates internet services, and $23.52 for the unbundled copper local loop, used for voice telephony. The UBA service allows internet retailers to use Chorus's components on the copper lines without having to replicate them.

At last month's hearing, Chorus claimed the regulator erred in law when setting the price Chorus can charge for access to its UBA services in that it didn't have any evidential basis to narrow its inquiry and ignored a section of the legislation aiming to support the government's goal of building a nationwide fibre network.

The commission rejected the claim, arguing that the change in regulation, rather than the decision, had shocked the market.

Justice Kos today said the regulator's benchmark range of prices followed "a process probably more extensive than Parliament had in mind" and wasn't limited when the commission reached its determination. It also exercised permissible judgement when applying a section of the law designed to minimise the risk regulation would have on investment and innovation in the sector, he said.

Chorus shares edged down 0.3 percent to $1.77 yesterday, and have climbed 23 percent this year after being punished in 2013 during the height of the regulatory uncertainty.

BusinessDesk.co.nz

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