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Commerce Commission to promote competition in telco markets

By Shannon Williams, Tue 2 Feb 2021

The Commerce Commission has launched an online survey in a bid to help telecommunications stakeholders have their say on the next phase of regulation for fibre service providers.

It follows the Commission finalising the key regulatory rules, requirements and processes, known as input methodologies, for the new regulatory regime. 

These rules apply to Chorus as well as local fibre companies Enable Networks, Northpower Fibre and Ultrafast Fibre, which supply wholesale inputs to retailers.

"Now the rules underpinning the regime are finalised, we want to hear from stakeholders as we work to set a revenue cap and minimum quality standards for Chorus and information disclosure requirements for all providers," says telecommunications commissioner Tristan Gilbertson. 

"In particular, we want to hear from wholesale customers of fibre networks about the key risks they think may lead to a lessening of competition in wholesale and retail telecommunications markets, as well as key opportunities to promote competition," he says.

"We also want to hear what role sunlight regulation and Chorus price-quality path will have in mitigating risks or seizing opportunities to promote workable competition in telecommunications markets for the long-term benefit of end-users," Gilbertson adds.

The Commission expects the survey will give it a better-informed view on the extent to which the promotion of workable competition in telecommunications markets is relevant to setting the revenue cap and minimum quality standards for Chorus and information disclosure requirements for all providers. This will assist the Commission to set the next phase of regulation consistent with its obligations under the Telecommunications Act.

The information disclosure requirements will apply from January 2022 and the first price-quality path for Chorus will apply for the period January 2022 until the end of 2024.

Submissions close on 25 February 2021.

The Government's Ultra-Fast Broadband Initiative aims to achieve fibre-to-the-premises to 87% of the population (including 1% private fibre) by 2022. Rural areas of New Zealand are covered by the separate Rural Broadband Initiative. These new fibre networks will provide faster and more reliable voice and broadband internet services to consumers.

The Government's Crown Infrastructure Partners contracted with four companies to build these fibre networks: Chorus and three local fibre companies Enable Networks, Northpower Fibre, and Ultrafast Fibre.

Under the new regulatory regime in Part 6 of the Telecommunications Act (the Act), all four fibre service providers will be required to publicly disclose information about their performance, such as on their costs, prices, profitability, revenue, and capital expenditure. This is intended to shine a light on their performance for stakeholders and consumers. This is referred to as information disclosure (ID) regulation.

Additionally, the Commission will set the maximum revenue that Chorus can earn from its customers and the minimum quality standards it must meet. This is referred to as price-quality (PQ) regulation. 

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