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ComCom releases findings from fibre services study

20 Dec 2018

The Commerce Commission has published the findings from its study of telecommunications fibre services in New Zealand.

New Zealand’s fibre networks are being built by Chorus and three local fibre companies as part of the Government’s ultrafast fibre broadband initiative.

The networks supply voice and broadband services to hundreds of thousands of homes and businesses.

The study was launched in April this year to give the Commission a better understanding of providers’ networks, fibre services, network operations and business practices.

The information gathered throughout this study will help it develop and give effect to the new regulatory framework for fibre networks.

“Through this study we wanted to build our understanding of fibre industry practices while the shape of future regulation was still being finalised. We looked into issues such as how fibre providers manage their networks in terms of their physical assets and information systems, and how they plan for the future,” says Telecommunications Commissioner Dr Stephen Gale.

“The findings from this study give us more insight into the fibre providers we will be regulating, which puts us in a good position to develop targeted regulation for them under the new framework.”

Having concluded this study, the Commission will now focus on implementing the new framework for regulating fibre services.

Note 19 of the summary report, released today, says, “Many of our findings from this study confirmed our understanding of issues relevant to fibre regulation, while building on our existing knowledge base.”

The Telecommunications (New Regulatory Framework) Amendment Act 2018 gained royal assent on 12 November 2018.

The new provisions require the Commission to develop and implement a new regulatory regime for the four fibre network providers which will apply from 2022.

Under this new regime, the Commission will set the maximum revenue that Chorus can earn from their customers and the minimum quality standards it must meet - this is referred to as price-quality regulation.

Additionally, all four fibre network providers will be required to publicly disclose information on their performance, such as on their profitability, revenue, and capital expenditure.

The report summary shows the complications in managing Chorus versus the local fibre companies (LFCs)

Note 22 reads, “Any differences in the way fibre companies operate may impact our approach to implementing the new regulatory framework. It will be crucial to ensure the regulatory requirements are appropriate for each LFC.”

The sub-notes go on to outline on issues such as “the differences between the way Chorus and the LFCs operate” and “the sharing of physical assets and processes with electricity distribution businesses,” and that the Commission “may also need to consider the regulatory approach to related party transactions.”

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