The Commerce Commission is to explore whether competitive developments in the market mean it can relax the rules on four fibre wholesalers
The regulator is currently developing the framework for 2025-2028
On 7 December 2023, the Commerce Commission announced its intention to consider a possible deregulation of fibre networks in New Zealand. The country’s fibre infrastructure has been rolled out by four regulated wholesalers – Chorus, Enable, Northpower and Tuatahi – in partnership with the Government under its Ultra Fast Broadband (UFB) initiative. These firms are now overseen by a price-quality and information disclosure regime, introduced in 2022 following amendments to the Telecommunications Act. While Enable, Northpower, and Tuatahi are subject to information disclosure regulation only, Chorus is also subject to price-quality rules. The Commission is in the process of determining Chorus’s revenues and service standards for ‘Price Quality Period 2’ (PQP2), which spans 2025-2028. The regulator is focused on ensuring that PQP2 provides Chorus with the right incentives to continue investing and to extend coverage into more remote and rural areas.
Seeking early input from stakeholders
Before the start of the four-year PQP2, the Commerce Commission must consider whether there are reasonable grounds to start a fibre fixed line access service (FFLAS) deregulation review. According to Telecommunications Commissioner Tristan Gilbertson, New Zealand’s regulatory regime has a number of mechanisms built in to ensure it remains fit for purpose, with the telecoms sector fundamental to consumers, businesses and the country. This is the first time authorities will be looking at potentially relaxing the rules around fibre services, taking into account the state of competition in the market. With the second regulatory period set to begin on 1 January 2025, the Commission is now seeking stakeholder views on the draft framework and principles it should use to make that assessment.
A two-step process towards potential deregulation
The regulator is particularly interested in changes in competitive conditions since the new regime came into force, including the increasing use of wireless broadband services (i.e. fixed wireless access) and Chorus’s proposals to withdraw copper lines in some areas. The Commerce Commission will be looking at whether competition has developed to the point where regulation may no longer be necessary. If the Commission firstly determines that reasonable grounds exist to consider deregulation, it must then complete the review and make a recommendation to the Minister for Digitising Government. This should outline its proposals for the fibre services or geographic areas that it considers should be removed from information disclosure or price-quality regulation. The deadline for submissions to the draft assessment framework is 16 February 2024, with comments on matters raised by other stakeholders due by 15 March.
