Under the new regime, Chorus will be subject to price-quality regulation. This means the Commission sets the maximum revenue Chorus can earn from its customers and the minimum quality standards it must meet. Any expenditure proposed by Chorus and approved by the Commission will help determine the revenue Chorus can recover from retail service providers who use its network to sell broadband services to homes and businesses. These costs are ultimately passed onto consumers via their retail bills.

In its proposal for the first regulatory period from 1 January 2022 to 31 December 2024, Chorus is seeking approval to invest $983 million on network extensions, installations and to sustain service quality. On an annual basis this is a 44% reduction compared to what Chorus spent in 2020. Chorus is also proposing to spend $599 million to operate its network over the same period. This is a 17% increase in annual spending compared to what it spent in 2020.

The Commission will assess Chorus’ proposal against the Chorus capex input methodologies set by the Commission in 2020 that underpin how the regulatory regime treats capital spending.

As part of its assessment the Commission will use stakeholder views to help identify particular areas of focus, and is now calling for feedback on whether Chorus’ proposed spending is prudent and efficient, and whether it reflects good industry practice.

A copy of Chorus’ proposal documentation and the Commission’s consultation document are available on the Commission’s website. Submissions close on Friday 12 March.