Regulators in both Australia and New Zealand are seeking to ensure network providers still operate in the best interests of consumers
ACCC consults on NBN Co regulation
On 23 August 2023, the Australian Competition and Consumer Commission (ACCC) launched a consultation on NBN Co’s revised variation to its Special Access Undertaking (SAU), the framework for the economic regulation of the operator until 2040. If accepted, the proposed variation will set the rules for broadband providers to access the NBN in future, including wholesale price controls and minimum service standards. Before reaching a final decision, the ACCC will consult and assess the operator’s proposal against the statutory criteria and consider whether it is likely to promote the long-term interests of Australian consumers and businesses.
Positive signs for the latest draft SAU
The ACCC’s preliminary view is that NBN Co’s revised variation is a material improvement on its previous proposal from November 2022. According to Commissioner Anna Brakey, the draft SAU appears to address concerns that led the authority to reject that proposal. The regulator was initially not clear on how certain aspects of the undertaking would promote the long-term interests of end users (e.g. by raising prices for low-use consumers and at the most popular speed tier of 50Mbps). The ACCC also had specific concerns relating to the apparent limitations on its ability to make regulatory decisions to encourage NBN Co to invest and operate more efficiently over time. Adjusting the SAU has been a drawn-out process, with two earlier versions submitted and withdrawn, although there are signs it may now be moving towards a conclusion.
Revenue limits and service quality standards for Chorus
On 31 August 2023, New Zealand’s Commerce Commission launched a consultation on its approach to resetting revenue limits and quality standards for Chorus, the country’s largest telecoms infrastructure provider. Chorus and New Zealand’s other three regulated fibre wholesalers (Enable Networks, Northpower Fibre and Tuatahi First Fibre) are now overseen by a price-quality and information disclosure regime, introduced in 2022 following amendments to the Telecommunications Act, which has the long-term benefit of fibre end users at its heart. Under this framework, the Commission sets a ‘Price Quality Path’ (PQP) that limits the amount of revenue Chorus can earn from its customers, while setting minimum standards of service it must deliver to meet the needs of fibre consumers. The PQP is intended to incentivise Chorus to act in the best interests of consumers and promote competition in telecoms markets.
Commission looks to sustain network investment
The current PQP expires on 31 December 2024 and the Commerce Commission must set the next iteration (referred to as PQP2) by that date to cover the period 1 January 2025-31 December 2028. According to Telecommunications Commissioner Tristan Gilbertson, the regulator is focused on ensuring that PQP2 provides Chorus with the right incentives to continue investing in order to deliver benefits for users of fibre services and to extend coverage into more remote and rural areas, going beyond its current 87% footprint. Gilbertson also highlighted the impacts of extreme weather events, which have underlined the importance of investment to ensure infrastructure resilience and reliability. The regulatory regime allows for this investment where there is a demonstrated case for it.
