New Telecoms laws will favour consumers

New Telecoms laws will favour consumers
Tuesday, July 19, 2016

Great news for the Kiwi broadband consumer!  Communications Minister Amy Adams (someone who is well on board with what we're trying to do here at Broadband Compare - see here) this week announced major plans to change the way that the telecommunications network operators, such as Chorus, Enable and Northpower Fibre, can charge for wholesale access to their regulated telecoms and broadband services.

The Government has a masterplan to rewrite the current legislation governing telecommunications that will tilt the regulatory approach of the sector more in favour of the end consumers and businesses that the investors in fibre and copper networks.  The Government's favoured approach is to impose a revenue cap based on an ultrafast broadband provider's regulatory asset base and alongside that there is a plan to add price caps for basic services, which would likely be voice-only, entry-level broadband, and basic broadband products.

The Government is aiming to have the new regime in place from 2020, with immediate regulation for Chorus because of its dominance in the national market (Chorus own and manage over 70% of the ultrafast Fibre network in New Zealand), while the other local fibre companies such as NorthPower, Ultra-Fast Fibre and Enable would only face the threat of regulation because they face more competition.

The Government appears to be a little wary of being overly prescriptive in its proposals, and while it tries to protect both end users and investors post-2020, it appears that it is (rightfully in our opinion) the consumers that are going to come out on top.

Commenting on the release, brokerage house First NZ said that it's "an approach that on balance appears to elevate end user requirements above that of investors in the fixed line services being regulated."

"This is probably most evident for Chorus in the decisions being made around the imposition of a revenue cap with anchor product pricing caps, and in the apparent willingness of the government to accept asymmetric risk outcomes on returns for Chorus in the implementation of the regulatory framework."

First NZ said that investors can have more confidence that the price regulation of providers, primarily Chorus, is moving towards a similar model to that used in the highly competitive electricity sector in that "it should earn a fair rate on its asset base" which although open to interpretation seems to have worked well for electricity and the power sector.

First NZ does raise one more important point about the time and outcome.  "The uncertainty doesn't just impact Chorus and its investors, but impacts the broader industry including RSPs (retail service providers - these are the brads that consumers know and use), the LFCs (local fibre companies - companies like Northpower Fibre, Enable etc) and end users," First NZ went on to say that "This lack of clarity and long timeframes for better visibility on outcome may also impact government initiatives such as the extension for the UFB (Ultrafast Fibre Broadband) network and RBI (rural broadband initiative), which highlights the reasons for providing more clarity sooner."

The Minister for Communications, Amy Adams launched the review of the 15-year-old Telecommunications Act last year and with an outcome not expected until 2020 we're looking at almost 5 years for this change.  Well here at Broadband Compare we think that good things come to those who wait and so we can't be too unhappy as consumers.  We're probably going to end up with cheaper broadband plans on a fantastic, fast, robust, fibre broadband network.  We'd call that a win!

If you think you're currently paying too much for your internet or don't know what type of connection you can achieve then compare broadband plans here on Broadband Compare.  You can filter by broadband speed, data caps and broadband price so whether you are looking for the fastest internet provider in New Zealand or the cheapest internet provider in New Zealand they will all be listed on Broadband Compare.



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