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ComCom trims phone line costs

Monday 3 Dec 2012 8:54 a.m.

The new price, effective from December 1, 2014, represents a 3.85 percent reduction

The new price, effective from December 1, 2014, represents a 3.85 percent reduction

The Commerce Commission has snipped just 94 cents off the monthly price Chorus can charge customers for access to its copper phone lines.

The final decision, released on Monday, cuts the geographically averaged price from $24.46 to $23.52 per month per line.

In its draft decision in May it proposed a rate of $19.75.

The new price, effective from December 1, 2014, represents a 3.85 percent reduction as opposed to a 19 percent cut originally proposed.

The draft decision led to a drop in the price of Chorus shares as estimates predicted the company could lose up to $100 million in annual earnings if the cut and changes to the unbundled bitstream access (UBA) service price went ahead.

Chorus chief executive Mark Ratcliffe warned in August the uncertainty over the pricing was an issue for the company.

Telecommunications Commissioner Stephen Gale, who took over from Ross Paterson who oversaw the draft decision in July, says the smaller reduction came after feedback from industry players.

He said the commission wanted to charge less for the unbundled lines as they were shorter than the average, but says there is no clear evidence that the shorter lines cost less.

It says it is preferable that all unbundled lines be priced the same regardless of length.

The commission set urban and non-urban unbundled monthly rental prices of $19.08 and $35.20 that come into effect immediately.

In a draft decision also on Monday it issued a new price for Chorus' UBA service which cuts the current charge by more than $12 a month.

It proposes a full UBA price of $32.45 per month per line down from the current price of $44.98 for most lines.

It will release its final decision in June.

NZN

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