“Chorus will be able to earn revenue up to $4.1 billion over the regulatory period from 1 January 2025 to 31 December 2028 – in line with anticipated growth in demand,” says Telecommunications Commissioner, Tristan Gilbertson.

Maximum revenue is the amount Chorus may recover from its customers over the regulatory period and reflects Chorus’ prudent and efficient forecast costs. These forecasts incorporate Chorus’ expenditure plans – as approved by the Commission – and have been updated to reflect external factors such as inflation. 

“We saved consumers $172.6 million over four years through our earlier decision on prudent and efficient expenditure,” Mr Gilbertson says. 

“The revenue cap we’ve set today is another protection for consumers because it helps to constrain prices at an absolute level and phases the recovery of revenue in a way that eases the cost burden by around $250 million over this regulatory period. This smoothing of revenue is important given current cost pressures on Kiwi consumers. 

“We’ve also enhanced the quality standards Chorus must meet. This locks-in the level of performance consumers have come to expect and prevents back-sliding by Chorus.”

Mr Gilbertson said the Commission has been encouraged by the smooth transition to the new fibre regime, and the constructive contribution from industry on its consultation for Chorus’ 2025 – 2028 price-quality path. 

“The fibre regime is doing its job by encouraging Chorus to invest ahead of demand in critical national infrastructure while protecting the interests of consumers in terms of price and quality,” says Mr Gilbertson.

Background

New Zealand’s fibre networks were built by four local fibre companies — Chorus, Enable, Northpower, and Tuatahi — in partnership with the Government under its Ultra-Fast Broadband (UFB) initiative.

These networks are now regulated through a price-quality and information disclosure regime, introduced in 2022, following amendments to the Telecommunications Act (Act). 

Enable, Northpower, and Tuatahi are subject to information disclosure regulation only, while Chorus (as the largest fibre provider) is also subject to price-quality regulation. 

The fibre regulatory regime is intended to incentivise local fibre companies to act in the best interests of consumers and to promote outcomes consistent with competition in telecommunications markets. Information disclosure requirements exist to ensure sufficient information is available for people to assess whether this is being achieved. Price-quality regulation allows the Commission to set the maximum revenue Chorus can earn from its customers and the minimum quality standards it must meet. 

The Commission’s final decisions on revenue and quality are the culmination of its process to reset Chorus’ price-quality path for the 2025-2028 period. This has included receipt of Chorus’ expenditure proposal in October 2023, releasing a draft decision on expenditure allowances in April 2024, a draft decision on revenue and quality in July, and a final decision on expenditure allowances in August. 

In response to cost pressures on Kiwis and Chorus’ expenditure proposal, the Commission has deferred recovery of around $250 million in revenue to future regulatory periods by slowing the depreciation rate that applies to certain long-lived fibre assets.

The Commission declined 9% of Chorus’ proposed expenditure for the next regulatory period from 2025-2028 on the grounds that it did not satisfy the ‘prudent and efficient’ requirement.