ComCom consults on price-quality regulations for Chorus, disclosure requirements for fibre companies

27 May 2021

New Zealand’s Commerce Commission has released for consultation its draft view on the maximum revenues wholesale fixed line provider Chorus should be able to earn from its fibre network over the first three years of the new regulatory regime that takes effect from 1 January 2022 and the minimum quality standards Chorus should meet. Telecommunications Commissioner Tristan Gilbertson said the estimated price-quality path would cap Chorus revenues for three years from 1 January 2022 at NZD689 million (USD502.2 million) in 2022, rising to NZD786 million in 2024, in line with forecast demand. The revenue cap is around 4% lower than proposed by Chorus across the period. The Commission’s draft decisions include the expenditure that Chorus can recover over the regulatory period. Following scrutiny, the Commission proposes to reduce Chorus’ expenditure allowance across the period by NZD210 million (in real dollars), a 14% reduction on Chorus’ proposal. However, Chorus may re-apply for some categories of expenditure included in this reduction via another mechanism.

The Commission has also outlined its draft decisions on information disclosure requirements for Chorus and the three other regulated companies that operate fibre networks in the country – Enable Networks, Northpower Fibre and Ultrafast Fibre. In addition, the Commission has proposed some limited amendments to the Input Methodologies – the upfront framework of rules that underpin the regime. These amendments are intended to enable the effective implementation of the Commission’s draft decisions or to enhance certainty about the rules, requirements and processes that apply to price-quality paths and the ID requirements. The Commission is separately consulting on the initial value of Chorus’ fibre network at the start of the regulatory period, or what is referred to as its regulatory asset base (RAB). Submission can be made until 8 July.