olesale access broadband service has been set at an average $41.69 a month over the next five years, up from the $38.43 price signalled in its previous determination and the $38.39 level set in the initial round of price-setting, which came into effect on December 1 last year. However, Chorus is not allowed to backdate the charges to last year, a decision that the regulator’s commissioners were divided on. Chorus shares jumped as high as $3.75, and were recently up 19 per cent to $3.70, valuing the Wellington-based company at $1.47 billion, compared to the $1.23 billion market capitalisation before the decision was released. The network operator anticipates 2016 earnings before interest, tax, depreciation and amortisation of between $580 million and $600 million as a result of the decision, upgrading guidance from a previous forecast for a “modest decline” from the $546 million in 2015. “We have consistently said that the previous draft prices significantly underestimated the true value of Chorus’s network, so it is pleasing that the commission has taken on board the industry’s repeated requests and used some of the real world costs of building a network,” CEO, Mark Ratcliffe said in a statement. “This lengthy, volatile process highlights the importance of the post-2020 regulatory review to ensure a more stable and predictable framework to deliver better broadband for New Zealand.” Chorus has been critical of the regulatory process, claiming the original decision would force it to cut prices too steeply and put its investment in building a nationwide fibre network at risk. It is more optimistic the government will alter the regulatory regime for its fibre services when it completes a review of law overseeing the industry, set for a 2020 start. Telecommunications commissioner, Stephen Gale, told a briefing in Wellington the increase in price was largely due to the regulator missing out a key trenching component in its July draft determination, something the industry rapidly pointed out during the final round of submissions. “It’s unfortunate that the error wasn’t picked up in July,” Gale said. “The parties that have been involved have had now two complete shots to make suggestions as to where the model needs to be adjusted, so I think that gives you confidence that the analysis has converged, and in this final step, as you’d expect, the model has been subjected to a very close scrutiny.” According to Spark NZ, today’s decision by the commission to significantly hike regulated Chorus line charges for copper broadband and landline services is the worst possible Christmas present for NZ consumers and businesses. The new charges are almost $8 per month (including GST) per connection higher than what all NZ retail broadband providers currently pay, and almost $4 a month higher than the commission proposed in its second draft decision just a few months ago in July. As the Chorus line charges represent about half the typical retail price for broadband and landline voice services delivered over the Chorus copper network, this decision has a substantial impact on what most Kiwis will pay for their internet or landline phones. Spark NZ MD, Simon Moutter, said, “We had been hoping that the commission decision would allow us to pass on some savings to customers from retail price increases earlier this year if the commission had stuck to its decision not to backdate when the new higher charges would take effect. However, while the commission has confirmed no backdating, given the significant and unexpected cost increase we will have to assess the impact of this decision on our ability to return savings to customers as previously indicated. “We are now also forced to increase our retail voice and broadband pricing to take into account the significantly increased costs now faced from higher regulated Chorus line charges. While the Commerce Commission decision is effective from tomorrow, it will take months before the higher charges flow through completely into pricing for our customers. We will be advising customers of pricing impacts as soon as possible. “The massive swings in successive Commerce Commission decisions within a matter of months makes it extremely hard for any business to invest, plan and price its services effectively. We have now had two years of market disarray, with significant fluctuations at every stage of the process. The losers out of this are New Zealand consumers and businesses.” The commission decision means that New Zealanders will pay almost double the median regulated lines charges in other comparable countries. It also means that the regulated charges for access to the aging, decades-old Chorus copper network will now significantly exceed access charges for entry-level plans on the new state-of-the-art UFB fibre network. This decision is doubly frustrating given the efforts taken with customers to help keep broadband and landline prices down. This decision is a slap in the face for the 50,000 customers who joined Spark earlier this year to send submissions to the commission asking it to keep Chorus charges down, as part of Spark’s Be Counted campaign.