The High Court has dismissed Chorus’ challenge to the Commerce Commission’s regulated price of the broadband infrastructure company’s Unbundled Bitstream Access (UBA) service.
Telecommunications commissioner, Stephen Gale, said the decision will allow the Commerce Commission to focus on completing the Final Pricing Principle (FPP) review by December 1, 2014.
He claims the current cost model for Chorus’ UBA service is the Commission's “best way of promoting price certainty for Chorus and retail service providers.”
Chorus has stated it will review the Court’s findings in detail, but maintains that the benchmarking is outdated, according to general counsel, Vanessa Oakley.
“Today’s decision simply leaves the status quo in place,” Oakley said.
“Our focus continues on the parallel ComCom processes that use cost modelling for the first time to review the benchmarked prices of regulated services.”
“The ComCom has recently said it is aiming to complete the price review contemporaneously by December 1, 2014.”
“If the ComCom meets that timetable the cost modelled price for UBA and a new cost modelled price for the unbundled copper local loop (UCLL) service will apply from December 1.”
On November 5, 2013, the Commerce Commission listed its final benchmarked UBA price at $NZ10.92, about a 50 per cent reduction from the existing $NZ21.46 monthly charged. Chorus said the $NZ44.98 it charges retail service providers for a copper line and broadband services would therefore drop to $NZ34.44.
As a result, Chorus said it would be unable to borrow the sum it requires to make up to a $NZ3 billion investment in ultra-fast broadband (UFB).
At the time, it said it expects the benchmark to have around a $142 million annualised earnings before interest, taxes, depreciation, and amortisation (EBITDA) impact based on connection numbers at September 30 last year.