Chorus puts up proposal for copper line pricing

Monday 17th February 2014

Chorus, the telecommunications network operator spun out of Telecom in 2011, has put up an alternative proposal to the Commerce Commission on how its physical copper lines should be regulated in a bid to fast-track the process.

The Wellington-based company says the regulator should use the existing network configuration as a hypothetical equivalent operator to determine the value of assets and level of operating cost at their current replacement cost, rather than using fibre-only and fibre/wireless as equivalents.

"Compared to the proposal in this submission for modelling a copper network, the fibre only and fibre/wireless options in the paper would be more costly and give rise to TSLRIC (total service long run incremental cost) prices that are higher, and the modelling much more complicated and time consuming," the company said.

Chorus made the proposal as a submission on the commission's work to set a final price for what the network operator can charge for services on its copper lines to find the true cost of the service rather than relying on international experience as a benchmark.

The review is broken into two parts, with the regulator seeking views on how to set the methodology in valuing the unbundled copper local loop service, which lets retailers rent the lines for voice and broadband services. The second part relates to the unbundled bitstream access service, which gives internet service providers access to the network company's electronic switchgear on the copper lines.

Chorus also supported aligning the timetable for the UCLL and UBA processes to ensure the final pricing principle can be set by December this year, when the company is expected to adhere to the new regulated prices.

Last year the Commerce Commission proposed cutting the network operator's pricing on its copper line services, which Chorus says has left a $1 billion hole in the funding to finance roll out of the government-sponsored ultrafast broadband network.

Chorus is in negotiations with Crown Fibre Holdings over the building of the network, but Communications Minister Amy Adams has indicated the government expects the company to fill most of the $1 billion hole.

The company's shares fell 1.7 percent to $1.445 on Friday, and have increased 0.4 percent this year.

BusinessDesk.co.nz

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