The Commission is also seeking the views from the sector on whether the Commission should conduct a section 30R review of the standard terms determination for the UBA service and if so, what the review should look at.

The Commerce Commission has today released draft decisions for consultation setting proposed prices that Chorus can charge for use of their local copper lines and broadband service. These are wholesale prices that Chorus charges retail telecommunications companies.

The proposed maximum monthly rental price that Chorus can charge for its unbundled copper local loop (UCLL) is $28.22, an increase on the current price of $23.52 that was established by international benchmarking at the end of 2012.

The additional proposed maximum monthly rental price for the unbundled bitstream access (UBA) service is $10.17, a small decrease on the price of $10.92 that was established by benchmarking at the end of 2013, and which came into force yesterday.

Today’s total proposed wholesale price for the UBA service will therefore be $38.39 per month, compared to the price that came into effect yesterday of $34.44 per month. Prior to yesterday, $44.98 per month was the price Chorus has been able to charge for the UBA service for the past few years.

Lias: Boo.

Any bluster aside from them aside, Chorus won and you can tell by how the sharemarket reacted.
A sad day for the NZ consumer, being shafted to prop up a publicly listed company with a government granted monopoly.

linw: I'd happily pay a bit more to see rural services improved. Not all consumers are that selfish.

The Commerce Commission draft decision on wholesale copper charges this morning has introduced new uncertainty for users of broadband services by proposing a $4 increase from their interim decision. Users have already seen the benefit of lower prices flowing through as a result of this process and improved competition. TUANZ expected that yesterday’s implementation of the interim prices would further reduce prices. This may now be reversed in April next year when the final price applies.

TUANZ is also concerned that the Commission has chosen not to make a formal statement on backdating at this point until they release a discussion paper on the issue.

The detail around these numbers is complex and detailed and TUANZ CEO Craig Young is concerned that the time for organisations to submit on the decision is limited.

“We will endeavour to submit as quickly as possible to fit in with the Commission’s timelines, however we certainly don’t want to be hasty,” said Mr Young.

“We will continue to participate fully in this process, always speaking for the end-users of these services. Our concern has always been over ensuring a fair and competitive market which is sustainable and continues to provide world class services to New Zealanders at fair prices.”

internetNZ is displeased that today’s announcement of a draft final pricing principle for copper broadband hasn’t provided the certainty the industry needs.

While disappointed that the price has come out higher than the amount set by the Commerce Commission earlier this year, InternetNZ respects the importance of a free and independent body making these decisions.

InternetNZ CEO Jordan Carter said that what the industry most needed at this point in time was certainty over the pricing and with the Commission’s refusal to make a position clear on backdating we have not got that.

“We’ve had a legal opinion that suggests that backdating should not be put in place. We don’t understand why the Commerce Commission didn’t take the opportunity to provide certainty when that is what every part of the industry has called out for.

“What the Commission has done is release a stack of documentation and asked organisations to digest a lot and make comment on in a very short span of time. We’re grateful that the Commission says that it will consider requests for extensions and we hope that isn’t an idle offer.

“From our perspective, it’s important that we get this process right, not rushed. “

InternetNZ is also worried about the disincentive to unbundling that the latest figures provide. Unbundling is important to providing competition in the industry, most broadband users are still using copper. This reduces competition in that space.

InternetNZ will now focus on working its way through the very detailed documents and may have further comment in coming days.

Spark New Zealand said today it was undertaking an urgent review of all broadband and fixed voice customer pricing following the announcement by the Commerce Commission of proposed new wholesale rates that Chorus charges retail service providers, including Spark.

“Today’s announcement is unexpected and we are now facing costs approximately $60 million a year higher than we previously anticipated. These higher costs will affect all our fixed services, not just broadband services,” Managing Director Simon Moutter commented.

“For the past two years, we have been anticipating a $10 reduction in broadband costs, which has been reflected in our current customer pricing. But what we didn’t expect was a $5 increase in the cost for a residential or business line – for both broadband and standalone voice services. All of this comes on top of recently implemented increases in Chorus connection charges for broadband services.”

Mr Moutter said intense market competition meant the anticipated reduction in wholesale broadband charges (signalled by the Commerce Commission as far back as December 2012), had already flowed through into retail broadband prices.

“For instance, what you get in our basic $75 broadband plus home phone plan today would have cost you $105 three years ago. In that time, our wholesale costs have barely moved until the new charges came into effect yesterday.”

“Given today’s decision, we feel we have no choice but to undertake an urgent review of our current pricing across both voice and broadband plans.”

Mr Moutter said as well as the surprise increase in line charges, there is now considerable uncertainty about when these new charges will take effect – with the possibility of backdating any increase to 1 December 2014. “This means we will need to take a conservative view now to hedge against any financial exposure from the final decision.”

Mr Moutter said today’s announcement highlights the challenges as retail broadband providers fiercely compete to give consumers the best possible deals, yet face a continually shifting outlook in terms of their underlying costs.

“This is not a criticism of the Commerce Commission, which as the regulator is required to follow due process – or of the process itself which is inevitably complex given the transition from the previous regulatory regime.

“Over the last two years, we have consistently called for more certainty to ensure retailers can plan appropriately and deliver customers the best competitive deals. We led an initiative seeking an agreed industry solution for wholesale broadband charges, and we also welcomed the Government’s attempt to provide this certainty through legislation.

“Neither came to pass, meaning we - and the rest of the industry - were left with only the initial schedule of charges set out by the Commission in 2012 and 2013 to guide our budgeting and retail pricing. These initial charges were finalised by the Commission in November 2013, upheld by the High Court in April 2014 and by the Court of Appeal in September 2014. They have been anticipated by Spark and other providers in our existing customer pricing.”

sbiddle: Just for some clarification it's the copper component that's going to go up, not the wholesale UBA port cost.

Historically copper lines cost more in a rural area then an urban area. This changes on the 1st Dec when these were averaged out. This price will be increasing by $5 per month. The UBA port cost will decreases from $10.92 to $10.17

linw: I'd happily pay a bit more to see rural services improved. Not all consumers are that selfish.