Now that the heavy lifting of fibre deployment has been done, the Commission is focusing on fostering competition
Transitioning to a new regime now that fibre has been built: On Thursday, The Commerce Commission of New Zealand proposed new regulations on price and quality of service for fibre networks. The new rules reflect the vision of a utility-style regulatory framework for fibre, which was enshrined in the amendments of the country’s Telecommunications Act in 2018. The amendments also included deregulating copper services where fibre becomes available, and regulating the phase-out of Chorus’s copper network with a code, which was adopted in December 2020. The new regime reflects the fact that the Government’s Ultra Fast Broadband initiative (UFB) is approaching completion, with 87% of the population expected to be able to connect to fibre by 2022. The Government contracted with Chorus and with three local fibre companies to build these networks (Northpower Fibre, Ultrafast Fibre, and Enable Networks). The Commission is seeking a smooth transition from the previous regulatory regime while also creating incentives to competition.
Caps on revenue and expenditure for Chorus: For Chorus, the Commission is setting a revenue cap for the three years between 2022 and 2024, rising from NZD689m (USD502m) in 2022 to NZD786m (USD573m) in 2024, reflecting the forecast demand. This is about 4% lower than Chorus initially proposed. The Commission also set a limit on the expenditure that Chorus can recover over the regulatory period, capped at NZD210m (USD153m). This is 14% lower than Chorus’s proposal. With regard to quality, the Commission is proposing availability and performance requirements to be met in each area where Chorus operates.
Information disclosure requirements are also proposed: For all the four regulated fibre service providers in the country (Chorus, Enable Networks, Northpower Fibre, UltraFast Fibre). This will include data on pricing, current and future expenditure, quality performance, and financial statements. In the future, the Commission aims to provide analysis to understand how fibre providers compare with one another. The Commission aims to make final decisions on both sets of rules by November 2021, in order to have the new regime into force by January 2022. The rules will sit alongside ‘anchor regulations’ set by the Government for the Fibre 100 service (currently used by most fibre customers in New Zealand) which is subject to a CPI-X price cap and service levels requirements.
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