Commerce Commission proposes new regulations on Fibre Broadband

Commerce Commission proposes new regulations on Fibre Broadband
Wednesday, September 16, 2020

The Commerce Commission has released it’s first proposed approach to regulating fibre price quality and the types of information providers should publicly disclose.

The new paper sets out the proposed proves and approach to regulating telecommunications companies that provide fibre access services in New Zealand.

From 1 January 2022, Chorus, Enable Networks, Northpower and UltraFast Fibre will be subject to new forms of regulation under the Telecommunications Act. The paper from the Commission details its proposed high-level approach and process to determining the information disclosure and price-quality regulations these companies will be subject to.

What is the purpose of the new regulations?

The main focus of the new regulations if around the information providers should disclose publicly, how much Chorus can charge and the quality standards it has to meet.

“The purpose of this paper is to set out our early thinking on how we approach the major aspects the new regulations will cover. This includes the type of information providers should publicly disclose and how we would set the amount of revenue Chorus can recover and the quality standards it must meet,” says Telecommunications Commissioner Tristan Gilbertson.

“We recognise that this form of regulation is familiar to New Zealand’s gas pipeline and electricity lines companies but is new for telecommunications services,” Mr Gilbertson says.

“We want to hear as many views as we can, particularly from the wider telecommunications sector and consumer groups, to help shape our approach and processes from the beginning and inform how this regime will evolve over time.”

Why are the new fibre regulations being put in place?

The price-quality path The Commission sets will regulate the total revenue Chorus can recover from providing regulated fibre services, and the quality at which those services are provided. The price-quality path is intended to create incentives for Chorus to act in ways that are consistent with the long-term benefit of end users, such as creating incentives to invest in its network, to innovate and improve efficiency, and to deliver services at a level that meet end-user demands.

View the proposed paper and have your say here

Fibre Broadband in New Zealand

The rollout of fibre the fibre broadband network has increased dramatically over the last few years. The Government’s Ultra-Fast Broadband Initiative originally aimed to provide fibre access to the properties 75% of the population. The program has expanded twice since then and now aims to achieve  fibre-to-the-premises to 87% of the population (including 1% private fibre) by 2022.

The Government’s Crown Infrastructure Partners contracted with four companies to build these fibre networks: Chorus, and three local fibre companies (LFCs) – Northpower Fibre, Ultrafast Fibre and Enable Networks.

Under the new regulatory regime in Part 6 of the Telecommunications Act 2001, the Commission will set the maximum revenue that Chorus can earn from their customers and the minimum quality standards it must meet. This is referred to as price-quality regulation. Additionally, all four fibre network providers will be required to publicly disclose information on their performance, such as on their profitability, revenue, and capital expenditure. This is referred to as information disclosure regulation and is intended to shed a light on their performance for stakeholders and consumers.

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