Chorus in pricing fight with regulator

Dylan Bushell-Embling
telecomasia.net
New Zealand infrastructure operator Chorus has come out swinging against a regulatory decision to slash the price it is allowed to charge for wholesale access to its copper network.
 
CEO Mark Ratcliffe has warned that if the cuts are allowed to go through, the company will not be able to raise the NZ$3 billion ($2.49 billion) needed to help build the nation's Ultrafast Broadband fiber network.
 
Regulator Commerce Commission yesterday announced its final decision on the review of pricing for the additional cost of Chorus' unbundled bitstream access (UBA) service, setting this component at NZ$10.92 per month.
 
This translates to a total UBA price of NZ$34.44 per line per month, a 23% cut to current prices and well below the government's proposed price range of NZ$37.50 to NZ$42.50.
 
In a statement, Chorus CEO Mark Ratcliffe said such a price cut would impact the company's ebitda by around NZ$142 million per year.
 
“The loss of these revenues would have two very negative consequences for Chorus’ funding ability,” he said. “We would have much less cash every year to invest and we simply will not be able to borrow the sums of money we need to make up to a $3 billion investment in UFB.”
 
He called on the government to intervene to override the regulator's decision, lest the potential benefits of the government's UFB project go unfulfilled.
 
But the Commerce Commission said it had derived the price from a benchmark of average prices across five international markets, and had been careful not to under-estimate the UBA price in order to preserve incentives to invest in infrastructure.

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