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Chorus anchor price cap set at $46/month, telco bill tweaked

Chorus has agreed to a $46 monthly price cap for its anchor service from July after Telecommunications Minister Kris Faafoi introduced a suite of changes in legislation governing the industry.

The telecommunications network operator set the price on the 100/20 megabit per second service after the government sought a contractual arrangement to rein in the price path before a new regulatory regime comes into place. The price is currently $49.65, and under the new arrangement, will be cut to $45 for the period covering July 2018 through June 2019. The $46 price will take effect in July next year and will form the initial price cap under the new pricing structure effective in 2020.

"This represents a fairer deal for everyone: a good price for New Zealand broadband consumers, and a reasonable price for Chorus," Faafoi said in a statement.

The minister lodged a supplementary order paper in Parliament yesterday making a number of amendments to legislation enabling the new regulated price structure. Parliament's economic development, science and innovation select committee noted the likelihood of an SOP being used to protect consumers from price shocks by setting a cap based on an earlier price path.

Chorus chief executive Kate McKenzie welcomed the SOP as providing greater certainty on the treatment of Crown financing, Commerce Commission oversight of exemptions from the business line restrictions, the timeline for de-regulating copper lines in fibre areas, and ensuring emergency 111 services are available to vulnerable customers.

"We welcome this step towards a new regulatory framework for New Zealand’s key communications infrastructure," she said. "We look forward to the passage of the bill and to starting work on implementation."

Chorus shares were unchanged at $4.75, having gained 13 percent so far this year. That's more than the 3.3 percent increase on the S&P/NZX 50 index over the same period. Retail service company Spark New Zealand fell 1 percent to $3.82, and is up 6.1 percent so far this year.

Local fibre companies including Chorus, Ultrafast Fibre, Northpower and Enable got a win with the latest amendments. They propose preventing the minister from recommending a service in the second phase of the ultrafast broadband network roll-out being declared an unbundled product before 2026.

Vodafone New Zealand urged MPs in its submission to encourage investment on fibre networks through unbundling to allow for direct access to the equipment. The telecommunications retailer said that was central to promoting competition.

Other proposed changes would limit the way the Commerce Commission can amend the methodology used to set regulated prices.

The regulator's monitoring regime will also be expanded to cover compliance in ensuring emergency services are available even in the event of a power failure, which would knock out fibre services. The commission will have to monitor competition in, and the performance and development of, the telecommunications market and retail service quality within it. It will be allowed to conduct inquiries into any matter relating to the industry or for the long-term benefit of New Zealand consumers.

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