High Court dismisses Chorus regulatory appeal

New Zealand network operator Chorus is reviewing a High Court ruling rejecting its appeal against a regulatory price review that could drastically cut the company's income.

The High Court has dismissed Chorus's appeal against the Commerce Commission's determination of the regulated price of Chorus’s Unbundled Bitstream Access (UBA) service. The determination is scheduled to come into effect from 1 December 2014.

“We will be reviewing the Court’s findings in detail. It was important that a regulatory decision of such significance for investment in communications infrastructure enabling better broadband for New Zealand was reviewed by the Court," said Vanessa Oakley, Chorus's general counsel.

Oakley said the appeal was on a question of law only rather than a review on the merits as is permitted in other industries.

"We have always acknowledged that the Commission had significant challenges in applying the law as it stands and we remain of the view that benchmarking is an outdated methodology,” she said.

Oakley said Chorus is continuing to focus on the parallel Commission processes that use cost modelling to review the benchmarked prices of regulated services. The Commission has said it is aiming to complete the price reviews by 1 December.

“If the Commission 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 1 December,” she said.

Chorus is the government's major partner in building New Zealand's new ultrafast broadband fibre network, but still derives most of its revenue from copper-based services.

When the determination was first announced in late 2012, Chorus said it would cut NZ$150 million a year off its revenue. The government attempted to overrule the Commission through legislation but was stymied after an effective campaign by the Telecommunications Users Association, Internet NZ and Consumer left it without enough votes in Parliament.