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No appeal from Chorus or Spark on final pricing for copper network

Thursday 28th January 2016

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Telecommunications network operator Chorus and retailer Spark New Zealand will not lodge appeals against the Commerce Commission's final decision on pricing for access to the ageing copper network, which is progressively being replaced by fibre-optic cable.

Chorus was judged the winner in the competition regulator's final decision, just before Christmas, in a long-running process to determine the price at which Chorus could offer competing telcos access to its copper network, with a leap in its share price and its credit rating placed on notice for upgrade.

The country's largest retail provider of fixed-line services, Spark New Zealand, raised its prices in response and confirmed to BusinessDesk this morning after the Chorus announcement that it too would not appeal the outcome of a process that one investor described as "a regulatory debacle" that created a rollercoaster ride for listed telecommunications companies in recent years.

"We hope all other parties accept this decision without appeals so that we can move forward as an industry - we have no intention of appealing, unless someone else does, which would force us to participate in an appeal process," a Spark spokesman said in an email to BusinessDesk. 

The deadline for appeals is Feb. 3.

Chorus chairman Patrick Strange said in a statement: “After full consideration of all facets of the final determination, the Chorus board has elected not to appeal the decision, despite disagreeing with some key elements such as the lack of backdating.” 

“While we are aware that some investors feel there may be merit in further testing aspects of the determination in court, it is the strong view of the board and management that the best long-term value for our shareholders and customers will be achieved through the industry focusing on bringing New Zealand better broadband.

“We do not believe this can be achieved in an environment of continued regulatory uncertainty and appeal. We hope all other industry participants also elect to put this difficult phase behind us, and focus on working together to deliver value to New Zealanders."

However, if other parties appeal, Chorus was likely to cross-appeal, Strange said.

Chorus would now focus on the government's review of the Telecommunications Act 2001, occurring this year, in pursuit of "a more stable and predictable framework."

"We must not repeat the major market distortions of the last four years."

Spark said: "It’s a pragmatic decision from Chorus and we think it’s the right thing to do. It’s a big step closer to the industry being able to draw a line under this long-running process."

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