Chorus says regulatory moves imperil New Zealand’s fiber future

New Zealand operator Chorus has lashed out at regulatory moves to slash wholesale prices for access to its copper broadband services, arguing it will put the “once in a generation” transition to fiber at risk.

Meeting with New Zealand’s Commerce Commission, as well as representatives of the country’s retail operators, Mark Ratcliffe the chief executive of Chorus (Wellington, New Zealand), said the regulatory proposals had led to a “dramatic flight of international capital out of Chorus and New Zealand”.

New Zealand operator Chorus has lashed out at regulatory moves to slash wholesale prices for access to its copper broadband services, arguing it will put the “once in a generation” transition to fiber at risk.

Meeting with New Zealand’s Commerce Commission, as well as representatives of the country’s retail operators, Mark Ratcliffe the chief executive of Chorus (Wellington, New Zealand), said the regulatory proposals had led to a “dramatic flight of international capital out of Chorus and New Zealand”.

When Chorus was demerged from Telecom New Zealand in 2011, in a process of “structural separation” designed to improve transparency and broadband competition, around 75% of its shares were held by international investors, but that figure has since fallen to around 45%, according to Ratcliffe.

Ratcliffe reckons the price cut to NZ$8.93 ($7.14) a month will ultimately hamper take-up of the fiber broadband services the government is supporting, wiping NZ$160 million off Chorus’ earnings before interest, taxation, depreciation and amortization.

“How is it that we are making a NZ$3 billion investment, and just as this investment begins the revenues and price signals supporting the investment are all over the place?” he asks.

Unsurprisingly, retailers including Telecom New Zealand (Wellington, New Zealand) have rejected Ratcliffe’s analysis and voiced their support for the Commerce Commission’s pricing proposals.

Telecom New Zealand reportedly claims to have signed up 1,000 so-called ‘ultra-fast broadband’ customers since it began selling the service in April and said that consumers are willing to pay more for fiber because of the benefits it delivers over a basic copper service.

Nevertheless, government authorities are set to carry out a review of telecoms regulation – in apparent concern over the moves by the Commerce Commission – and could ultimately overhaul the decisions on copper pricing.

“What’s clear is that the mooted ‘evils’ of vertically integrated Telecom that the current framework was designed to address no longer exist,” said Ratcliffe, urging the government to take action.

“The review announced by the government provides the opportunity to achieve a coherent framework that is fit for purpose,” he said.