More feedback on Chorus

By Hamish Fletcher, BusinessDesk

There are worries in the industry that the price regulation could put consumers off switching to below-ground ultra-fast fibre lines from copper services. Photo / Supplied
There are worries in the industry that the price regulation could put consumers off switching to below-ground ultra-fast fibre lines from copper services. Photo / Supplied

The Commerce Commission is giving the industry more time to have its say on proposed regulations in the telecommunications market.

The watchdog is reviewing the benchmark data that sets what wholesaler Chorus charges phone and internet retailers for access to parts of its copper network.

It is feared the review could negatively impact Chorus' earnings and a draft decision from the commission last month saw Chorus' share price tumble by 27c in one day to close at $3.25.

Chorus shares closed down 2c yesterday at $3.01.

The commission is standing by the draft decision but now will issue a new discussion paper dealing with how access to parts of the copper network should be regulated and priced.

While it is extending the amount of consultation, the commission is sticking to its original timetable to make final decisions by November 30, with new pricing from December 1.

The Ministry of Economic Development is understood to have been concerned that the commission's draft decision runs counter to the roll-out of the Government's ultra-fast broadband scheme. There are worries in the industry that the price regulation could put consumers off switching to ultra-fast fibre lines from copper services.

Among submitters who raised serious concerns on the commission's draft decision was Wellington funds manager Harbour Asset Management.

Its managing director Andrew Bascand warned the commission in writing that the proposed approach would add to negative sentiment among institutional investors, who see the commission as taking "extreme" initial positions and creating an unpredictable regulatory environment.

A further discussion paper is expected to be released in July, with submissions due in August, and a conference held in September.

Paul Harrison, head of equities at BT Asset Management, said in May that the commission's draft decision added "a whole lot of uncertainty into the mix".

Brokers had promoted Chorus' split from Telecom to international investors, who - as a result of the regulator's moves on copper pricing - may be wary about investing in New Zealand again, which would be unhelpful for the upcoming state-asset listings, Harrison said.

- NZ Herald

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