ComCom kicks off UBA final pricing principle process

Friday 7th February 2014

The Commerce Commission has outlined its proposed process to determine pricing for Chorus's regulated copper network, and hopes to achieve a result by December when reduced prices are scheduled to kick in for the network operator.

The regulator today released a process and issues paper on how it will determine the final pricing principle for Chorus's unbundled bitstream access services, which gives internet service providers access to the network company's electronic switchgear on the copper lines.

The final pricing principle means the watchdog will have to determine an economic cost model to find the true cost of the service rather than relying on international experience as a benchmark.

The commission is already working on a similar determination for access to Chorus's services on the unbundled local loop, which lets retailers rent the lines for voice and broadband services, and will use the UCLL process to help inform the UBA one.

Its initial view is that it will use Chorus's copper network and potentially the rural broadband initiative's fixed wireless in its modelling to determine the price.

The commission aims to complete the review by Dec. 1, when its previous ruling comes into effect and would impose steep cuts to what Chorus can charge its customers for access to its UBA services.

"The new UBA price takes effect on 1 December and will have a significant impact on the New Zealand fixed-line telecommunications market," Telecommunications Commissioner Stephen Gale said in a statement. "It's important the commission takes steps to provide certainty by setting a final price by this date."

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 last traded at $1.38, and have slipped 4.2 percent this year.

BusinessDesk.co.nz

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