Court quashes Chorus appeal

Regulated price cuts to wholesale copper broadband services stand after Chorus' appeal fails.

Chorus is once again studying its options after the Court of Appeal dismissed its case against the New Zealand Commerce Commission's repricing of regulated copper broadband services.

The Court of Appeal dismissed the New Zealand network operator's appeal against a High Court judgment on the price it could charge for wholesale copper broadband services, or Unbundled Bitstream Access (UBA), as reset by the regulator in November 2013.

The commission set the UBA monthly price at NZ$34.44 per line, more than NZ$10 per month lower than the previous price.

"We're clearly disappointed by today's decision to maintain the status quo, but it is not entirely unexpected," said Chorus general counsel Vanessa Oakley.

The commission's determination will apply from 1 December 2014, unless Chorus' other line of defence, a review under the Telecommunications Act of the pricing methodology used by the commission, succeeds. Chorus has invoked that review process; however, it is unlikely to be completed before April 2015.

In making its decision, the commission followed an extensive consultative process with interested parties, the Court of Appeal found.

"The commission exercised its judgment in a way that was reasonable, factually supportable, and consistent with the Telecommunications Act," it said.

Earlier, Chorus unsuccessfully challenged the commission's determination in the High Court, where Justice Kós rejected all of the company's arguments. He found that the commission had done what parliament had prescribed, if not more, in setting the price.

Chorus remains unimpressed.

"Today's regulatory environment is completely out of kilter with the industry's structure and the effective delivery of the government's policy. We felt it necessary to appeal the High Court's decision to try to get some further clarification on the fundamental issues around pricing UBA in New Zealand," the company said in a statement.

It will continue to "engage constructively" with the commission, it said, to deliver a sustainable outcome that "truly reflects the costs to efficiently deliver regulated broadband services in New Zealand, while encouraging future network investment."

Telecommunications Commissioner Stephen Gale welcomed the decision.

"Today's decision will allow the commission and industry to focus on the cost modelling required to set the UBA price in accordance with the 'final pricing principle'. We look forward to being able to provide a draft decision in early December."

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