Commerce Commission bumps copper access price $2

Today’s Commerce Commission final decision is unlikely to settle the row over the price of connecting a home to the copper broadband network. Get ready for an extension of what has been described as a particularly grumpy debate.

The Commerce Commission’s final decision on the additional costs of Chorus’ unbundled bitstream access prices the service at $10.92 a month from December 2014. That’s up from from the $8.93 price in the Commission’s draft decision.

This makes the total wholesale cost of a copper line $34.44 a month from the end of next year. The current wholesale price of a copper line is $44.98. However, the final decision price is less than the $37.50 set by government in its discussion document earlier this year.

Communications and Information Technology Minister Amy Adams responded to the decision with brief statement saying: “Now that the final UBA price is known, the Government will consider its options in detail before making any further decisions”.

When the Commerce Commission released its draft determination last December, Chorus objected saying the change would cost the company $150 million a year.

The draft price ruling dropped the monthly fee paid to Chorus by $10, the final ruling cuts the fee to $8. All things being equal, the Commence Commission’s final decision price would change the cost to Chorus from $150 million to $120 million a year.

This meant a political problem – the former Telecom NZ division is building most of the government subsidised fibre network. Prime Minister John Key made an ill-judged comment about the earlier price potentially sending Chorus broke.

Chorus disagreed with the Prime Minister’s analysis. It had to. If the company was really in danger of bankruptcy it had a legal obligation to warn shareholders. The $2 difference takes some of the heat off Chorus, but may not be enough to satisfy shareholders – who were warned a price cut was coming when the company demerged from Telecom.

[digitl 2013]

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