ComCom Issues Draft Decision On Revenue Limits And Quality Standards For Chorus

The Commerce Commission has published its draft decision to set Chorus’ maximum allowable revenue at $3.3 billion for the period from 1 January 2025 to 31 December 2028.

This decision will ultimately impact the prices consumers pay for fibre.

“We are keenly aware of the cost-of-living pressure faced by Kiwi consumers and propose a number of mechanisms that will slow the rate of price increases for fibre services over the next regulatory period,” says Telecommunications Commissioner, Tristan Gilbertson.

The Commission estimates these changes could save consumers more than $250 million over the four-year duration.

In addition to the proposed revenue cap, the Commission is also consulting on the quality standards Chorus must meet.

“New Zealand has world-class fibre services, and we want to ensure consumers’ performance expectations continue to be met,” says Mr Gilbertson.

This includes potentially covering situations where a technician visit is required to connect a fibre service - which is where the Commission continues to see complaints around Chorus meeting its commitments.

“The proposed new standard sets a target threshold on meeting the agreed date of connection so Kiwis can have certainty around when they can expect to connect to the fibre network.”

Submissions on the draft Price-Quality Path (PQP) decision can be sent to infrastructure.regulation@comcom.govt.nz, by 5pm on 15 August 2024.

A final decision on Chorus’ PQP will be made in Q4 2024.

Background

The Commission’s decisions on revenue and quality work in conjunction with earlier draft decisions on Chorus’ expenditure allowance. A final decision on Chorus’ expenditure allowance will be made in August 2024.

New Zealand’s fibre networks were built by four regulated fibre wholesalers in partnership with the Government under its Ultra-Fast Broadband (UFB) initiative. The other three regulated fibre wholesalers are Enable Networks, Northpower Fibre and Tuatahi First Fibre (previously Ultrafast Fibre).

These networks are now regulated through a price-quality and information disclosure regime, introduced in 2022 following amendments to the Telecommunications Act. The regime has the long-term benefit of telecommunication end-users at its heart.

The Commission set Chorus’ PQP for the period from 1 January 2022 to 31 December 2024, on 16 December 2021. On 28 February 2023 the Commission determined the duration of Chorus’ second PQP as four years starting from 1 January 2025. The Commission is required to determine Chorus’ PQP for this second period before 1 January 2025.

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