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ComCom embarks on fibre study to get a handle on looming new policy framework

Friday 27th April 2018

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The Commerce Commission is launching a formal study into the country's fibre services to get a better handle on the nature of New Zealand's networks and operations in anticipation of a new policy framework currently being considered by legislators. 


Telecommunications Commissioner Stephen Gale today announced the study under the Telecommunications Act, which lets the regulator investigate any industry matter or the long-term benefit of consumers. The commission wants to start gathering information from Chorus and the local fibre companies to help it get ready for the new regulatory framework to be set up by the Telecommunications (New Regulatory Framework) Amendment Bill. Parliament's economic development, science and innovation select committee is scheduled to report on the bill next week. 


The duration and scope of the study will depend on when the bill is passed, and the regulator expects to gather information on assets and capital spending on fibre networks, operating costs, quality dimensions of fibre services, and products, pricing and revenues of fibre services. 


"Sharing this study now under our market studies power in the Telecommunications Act gives us a head start on gathering information from Chorus and the local fibre companies," Gale said in a statement. "We expect the information about fibre services to be useful regardless of the form that regulation might take." 


The Commerce Commission will hold an industry workshop next Wednesday on how fibre will be regulated in the future and will provide more information about the study at the time. The regulator will publish a summary of its findings at the end of the study. 


"We expect this information will further our understanding of fibre service providers' networks, fibre services, network operations and business practices," Gale said in a letter to interested parties. "The information is likely to include data on management of fibre networks, planning for future growth and improvements, product development, and accounting systems." 


Legislators are reviewing a bill proposing a new regulatory regime for fibre networks, applying a similar pricing methodology to energy networks and airports. The previous government launched a review of the existing law 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 New Zealand.


The new regime also seeks to improve the information available to consumers, imposing greater oversight of the development and maintenance of consumer codes and empowering the Commerce Commission to act if those guides are inadequate.


The lobbying took a late turn last month when Vodafone New Zealand chief executive Russell Stanners wrote to the committee after delivering his oral submission, accusing network operator Chorus of a "cynical move" to hike the price of a service likely to become an anchor broadband service before the price was locked in. 


In an interview earlier this month, Stanners told BusinessDesk the lack of competition in fibre meant the local fibre companies hadn't invested in upgrading the speed of the networks, opening the way for wireless technology to be a viable alternative. 


"What we’re saying to the government is you need to make sure there are incentives on these guys because at the moment there's a danger of having the best new fibre network overtaken by wireless," Stanners said. "That’s why the current review is a big step - it’s an inflexion point where the government can continue to build a successful model or watch while it withers on the vine." 


A key element to Vodafone's formal submission is for strong incentives to innovate over the ultrafast broadband network, with unbundling to allow direct access to the fibre central to generating competition. 


Rival retailer Spark New Zealand's submission generally sought greater restrictions on network operator Chorus and urged an easing of retail regulations. Two Degrees Mobile supported the thrust of the bill but said it was concerned about locking in the advantage to monopoly fibre suppliers over the supply of non-fibre services and that it was concerned about access to terms to dark fibre access services that feed into non-fibre services. 


While Chorus supported the bill, it suggested faster deregulation of its existing copper-line services and more flexible legislation to allow for new technologies and service providers getting fibre access. 



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