Regulator sets out early view on copper network pricing model
By Paul McBeth
July 9 (BusinessDesk) - The Commerce Commission is seeking feedback on a new paper setting out its preliminary view on
what model to use when setting the regulated price on Chorus's copper line network.
The antitrust regulator anticipates modelling a fibre-to-the-home network with fixed wireless access in remote areas to
come up with the unbundled copper local loop service and use costs based on Chorus's copper-based inputs for the
unbundled bitstream access service, it said in a statement. Both models will use third-party assets, such as lines
companies' power poles. UCLL lets retailers rent the lines for voice and broadband services while UBA gives internet
service providers access to the network company’s electronic switchgear on the copper lines.
The commission is trying to develop a model to find the total service long run incremental cost (TSLRIC) for building an
equivalent network, which it will then use to set a final price to regulate Chorus's copper line services after the
network operator sought the more thorough process after disagreeing with the initial price set using a theoretical
model.
"We have been working closely with our external advisers to formulate a set of proposals on building cost models for the
telecommunications services we are pricing," Telecommunications Commissioner Stephen Gale said in a statement. "We now
welcome input on our proposed approach and a number of key modelling decisions prior to assisting us with modelling the
UCLL and UBA services."
Submissions are due on Aug. 6, with a draft determination expected at the start of December and a final decision in
April next year.
The regulator is proposing a five-year regulatory period, and will decide on whether to backdate prices when announcing
its draft determination.
The consultation comes as Chorus appeals a High Court judgment upholding the commission's determination, with a hearing
in the Court of Appeal scheduled for the end of this month.
At the High Court hearing earlier this year, Chorus claimed the regulator erred in law when setting the price Chorus can
charge for access to its UBA services in that it didn't have any evidential basis to narrow its inquiry and ignored a
section of the legislation aiming to support the government's goal of building a nationwide fibre network.
The commission rejected the claim, arguing that the change in regulation, rather than the decision, had shocked the
market.
Shares of Chorus fell 0.3 percent to $1.725.
(BusinessDesk)