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Chorus local loop backlash Commerce Commission extends consultations

Thursday 21st June 2012

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The Commerce Commission is extending consultations on its draft regulations for the traditional copper telecommunications network after a backlash from the investment community, who fear its initial thinking will stifle the uptake of ultra-fast broadband.

While the commission is standing by its draft decision, it will issue a new discussion paper dealing with a wide range of differing views about technical aspects of the way the so-called "unbundled copper local loop" - the traditional backbone of national telecoms infrastructure - should be regulated and priced.

However, the commission is sticking to its original timetable for final decisions by Nov. 30, with new pricing kicking in from Dec. 1.

Equities analysts were still digesting the news this morning. Shares of network operator Chorus fell 1 percent in early NZX trading to $3 a share.

The Ministry of Economic Development is also understood to have been concerned that the commission's draft decision on Chorus's UCLL pricing runs counter to the government's $1.5 billion subsidy policy to accelerate the national roll-out of UFB.

Among submitters to raise serious concerns was Wellington funds manager Harbour Asset Management. Its managing director Andrew Bascand warned the commission in writing that the proposed approach would add to negative sentiment among institutional investors, who see the commission as taking "extreme" initial positions and creating an unpredictable regulatory environment.

“The further discussion paper will provide clarification for submitters on the relationship between the different copper based services,” said Telecommunications Commissioner Ross Patterson. “This discussion paper will provide an input into the rescheduled conference.”

A further discussion paper is expected to be released in July, with submissions due in August, and a conference held in September.

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