Government announces final details of Telecommunications Act reform

Thursday 1st June 2017

The government has announced the final details of the reform package for the Telecommunications Act that refines regulatory settings that will apply to fibre and copper fixed line services from 2020.

The aim is to deregulate the copper network where it competes with fibre from 2020, expected to cover three-quarters of the population by then. The government launched a review of the 15-year-old Act in 2015 to gauge the crossover with broadcasting and to have a look at the way network service pricing was regulated after Chorus underestimated the extent it would have to cut wholesale prices when it was carved out of Telecom Corp, now Spark. In February it announced a fixed-line regulatory package following consultation and the final details include some changes.

Among other things wholesale prices for copper services in non-ultra fast broadband (UFB) areas will be inflation adjusted from 2020, the ministry of business, employment and innovation said on its website. A small change will be made to the valuation method for older assets, which will simplify the initial valuation of the assets of regulated suppliers. The Commerce Commission will not be required to decide whether investments made by UFB providers before 2020 were efficient. It will clarify that the price-capped fibre broadband anchor product is intended to be an entry-level product, not the most popular product and the direct fibre access service (a business-grade fibre product) will also be price-capped.

To complement the fixed line regulatory reform, the government will streamline regulatory processes for mobile regulation. The government has also decided to augment consumer safeguards and to provide more regulatory oversight of retail quality standards and dispute resolution processes, MBIE said.

Under the new system, UFB providers will have to disclose information about their revenues and costs publicly, Telecommunications network operator Chorus will also be subject to a revenue cap from 2020 and local fibre companies will face competition from copper and cable, but can be regulated if problems arise.

Chorus said it "welcomes the next step" in the process.

"The right regulatory settings for broadband connectivity, which sensibly support efficient investment without costly duplication of utility infrastructure, will ultimately deliver better quality and greater affordability for all Kiwis," said Chorus executive Vanessa Oakley in a release to the stock exchange. A bill is now expected to be introduced to parliament in the second half of the year, she said.

"There is a need to strike a balance between providing investors with a fair return on the significant network investments they've made with the broadband innovation and the quality consumers clearly want," said Oakley.

(BusinessDesk)

Comments from our readers

No comments yet