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Commerce Commission UCLFS review lacks full cost consideration: Chorus

Commerce Commission UCLFS review lacks full cost consideration: Chorus

Mark Ratcliffe claims decision matches regulatory framework flaws

Chorus CEO, Mark Ratcliffe, claims the Commerce Commission’s proposition to re-set unbundled copper low frequency service (UCLFS) connection charges lacks consideration of all costs associated with the service.

Earlier today, the Commission initiated a review of the regulated UCLFS and released a draft decision updating the connection charges retail service providers (RSPs) pay to connect end users to the broadband infrastructure company’s UCLFS.

RSPs currently pay UCLFS connection charges in addition to ongoing monthly rentals for accessing these services.

The Commission has determined that UCLFS connection charges should be re-set to match the benchmarked unbundled copper local loop (UCLL) connection charges which were determined as part of the initial UCLL benchmarking decision released in December 2012.

It has also proposed the new UCLFS connection charges be backdated so they apply from the date of its initial UCLL decision on December 3 last year.

“This is yet another example of the regulatory framework delivering prices that are disconnected from real costs,” Ratcliffe said.

“The Commission has proposed re-setting UCLFS connection charges based on the benchmarking of connection charges for local loop unbundling in other countries.”

“Why wouldn’t they look at the actual prices that Chorus pays to services companies and which are negotiated through a competitive tender process? These costs have not been accounted for in the proposed charges and the draft prices do not reflect those real costs.”

Chorus claims that if implemented, the Commission’s draft decision will reduce UCLFS connection charges by between 5.8 and 31.1 per cent. It estimates that the decision, if finalised, would have a $5 million to $6m annualised earnings before interest, taxes, depreciation and amortisation (EBITDA) impact.

Read more: ComCom pushes final decision on UBA, UCLL prices to April 2015

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Tags infrastructureUCLLpricingCommerce CommissionChorusUCLFSbroadband

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