Commission welcomes High Court judgement over UBA challenge

The Commerce Commission welcomes today’s High Court judgment in relation to Chorus’ appeal against the Commission’s November 2013 decision setting cost-based prices for the unbundled bitstream access (UBA) service.

Telecommunications Commissioner Dr Stephen Gale says today’s decision will allow the Commission to focus on completing the Final Pricing Principle (FPP) review by 1 December 2014.

“The cost modelling currently underway for the UBA service is our best way of promoting price certainty for Chorus and Retail Service Providers (RSPs) as soon as possible.”

Background

The Telecommunications Amendment Act 2001 introduced a new cost-based pricing principle for the UBA service, to have effect from 1 December 2014. The Commission completed a pricing review of the UBA service on 5 November 2013 – setting forward-looking cost-based prices for the UBA service by benchmarking the additional costs of providing the UBA service.

The Commission received five applications to calculate the price for the additional costs of the UBA service in accordance with the final pricing principle – total service long-run incremental cost (TSLRIC).

Following receipt of these applications, the Commission was required to determine a cost-based price for UBA under the final pricing principle (FPP). In doing so the Commission had to:

• follow the process set out in Subpart 4 of Part 2 of the Telecommunications Act 2001 (Act) for pricing review determinations; and • calculate the cost of UBA in accordance with the FPP set out in Subpart 1 of Part 2 of Schedule 1 of the Telecommunications Act 2001 (Act) using a forward looking cost-based method: total service long run incremental cost (TSLRIC).

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