The Commerce Commission was in the sights of Chorus chairman Patrick Strange yesterday when he delivered his address to the telecommunication company's annual meeting in Wellington.
The imposition of lower copper pricing prescribed by the commission had meant constraints on the company and a difficult time for staff.
Chorus was required to apply the new pricing of about $34 for retailers to access its copper network from December compared with $45 at demerger, sharply reducing revenue.
Last December, the commission announced a new draft position of $38 after detailed modelling.
''Bizarrely, they reversed their earlier intention to apply this from last December, requiring us to continue to use pricing which, by their own reckoning, is manifestly too low, until their pending final decision,'' Dr Strange said.
Chorus was waiting on the final copper pricing decision from the commission in December.
The cost of the uncertainty was a cost to New Zealand.
The final price would have a significant bearing on the ability of Chorus to fund investment in broadband.
''It will also determine the extent to which we can review the cost-saving initiatives introduced to address the funding shortfall from the commission's initial, now discredited, pricing.''
Chorus had been forced to restrict proactive maintenance and IT investment which had meant poorer outcomes for end users, he said.
As well as running the business at its limits, Chorus had needed to suspend dividends to shareholders, something it regretted.
The company would consider returning to dividends if it received a favourable final pricing decision from the commission.
Cutting dividends had been a poor signal to New Zealand and international investors Chorus needed to fund its future network.
Equally, the departure of about 8000 shareholders from Chorus' register in the two years since the company last paid a dividend was a serious loss as they were predominantly the small New Zealand holders the Government had worked hard to bring into the markets, Dr Strange said.
Chorus planned submitting confidential and conditional proposals to Crown Fibre Holdings in the UFB2 process, by which the Government aimed to extend fibre coverage.
By making the submissions, the board would take a long-term view.
It would not take a short-term view on UFB2, or on dividends, if it compromised the value directors could bring long-term to the shareholders.
Nor would the board invest shareholders money where the regulatory and policy regime did not offer appropriate stability.
The company would also make a submission on the Government's review of the telecommunications regime, and welcomed the Crown's suggestion a building block model similar to that used in the electricity sector might be implemented from 2020 onwards.
''We have welcomed this approach in principle, because we believe it is the only logical solution to encouraging long-term network investment.
''We believe that with the right regulatory and policy settings, New Zealand could achieve regional and rural broadband coverage well beyond the Government's current goals,'' Dr Strange said.
Chief executive Mark Ratcliffe echoed his chairman's sentiments about the regulatory regime remaining a ''deep concern'', while noting a less fractured industry was a positive change.
Chorus shares last traded at $2.88, up 1c.
- BusinessDesk
