Chorus says regulation will jeopardize fiber investment plans

New Zealand network player Chorus has lashed out at new pricing regulations for jeopardizing its plans to invest in a new fiber-optic network.

In a statement published on its website, the operator described recent regulatory proposals as a “black hole” that would put funding at risk.

New Zealand network player Chorus has lashed out at new pricing regulations for jeopardizing its plans to invest in a new fiber-optic network.

In a statement published on its website, the operator described recent regulatory proposals as a “black hole” that would put funding at risk.

Authorities want to lower the price Chorus (Wellington, New Zealand) can charge retail broadband companies for access to its copper network, but their proposals would see fees tumble from a current monthly rate of NZD44.98 ($37.19) a month to just NZD34.44, with changes set to come into effect on 1 December 2014.

Chorus claims this would lower its annual earnings before interest, taxation, depreciation and amortization by NZD142 million and lead to a funding shortfall of NZD1 billion by 2020.

The operator hopes the government will step in to prevent the telecoms regulator from driving through such a dramatic reduction in wholesale fees.

“Without the proposed government intervention, the loss of these revenues would have two very negative consequences for Chorus’ funding ability,” said Mark Ratcliffe, the chief executive of Chorus. “We would have much less cash every year to invest and we simply will not be able to borrow the sums of money we need to make up to a $3 billion investment in ultra-fast broadband [UFB].”

Chorus was separated from incumbent operator Telecom New Zealand (Wellington, New Zealand) in late 2011 and now provides wholesale services to broadband providers across the country.

“We are intensely disappointed with today’s decision,” said Ratcliffe. “Chorus is ahead in its UFB build program, is leading an industry transition to fiber and making other investment to improve broadband in New Zealand. But unless the Government intervenes, it is likely that the benefits for New Zealand will be significantly compromised.”