Our submission on fibre regulation

The Commission has submitted to the Economic Development, Science and Innovation Select Committee on the Telecommunications (New Regulatory Framework) Amendment Bill.

The Commission has submitted to the Economic Development, Science and Innovation Select Committee on the Telecommunications (New Regulatory Framework) Amendment Bill.

We support the overall intent of the Bill as it introduces a well understood ‘utility-style’ regulatory framework for wholesale fibre services, focused on the long-term benefit of consumers. Our experience with the regulation of electricity, gas, and airports under Part 4 of the Commerce Act will assist us in implementing the new regime. However, it is important to note that this is not a ‘cut and paste’ exercise. There is limited experience internationally for utility-style regulation being applied to telecommunications markets and the Commission has a large body of work ahead of it to implement the new regime.

Key themes of our submission:

Timeframe

The Bill, as currently drafted, requires us to implement all elements of the new regime by the end of 2019, with the possibility of an extension of up to two years. Based on past experience in implementing similar regimes for the electricity, gas and airport sectors which took 4 years to complete, this date will be extremely challenging for us to meet without making trade-offs that adversely affect the quality of the regime.

We indicated we will seek the extension if the implementation date is not reviewed to provide a more realistic timeframe.

This would see us:

  • Develop the input methodologies (upfront rules) over an 18 month period,
  • Develop price-quality regulation for Chorus over the following year for the period 2020-2023, and concurrently,
  • Develop the information disclosure requirements for Chorus and LFCs over the 12 to 18 months following the IMs being set.

This is still faster than when we established utility-style regulation for electricity, gas, and airports. Assuming the Bill is passed mid-2018, this would mean regulation for fibre is in place before 2022. In addition, the Commission would also develop a copper withdrawal code and deregulate legacy copper services in areas where fibre is available. These tasks will involve significant time and resources and consultation with stakeholders and the wider industry.

Retail service quality

We welcome the Bill’s increased focus on improving retail service quality for consumers.

Retail telecommunications is a priority for the Commission due to our ongoing concerns about service quality and large volume of consumer complaints. We recommend that the industry codes to be developed by the Telecommunications Forum would be more effective if we were given the ability to enforce them.

Catering for new technologies

We have considered how the Bill can allow the regulation to accommodate competition from new technologies that emerge to compete with fibre.

Technical implementation matters

We have also considered how technical matters in the legislation can be clarified to achieve more predictable outcomes.

You can read our full submission on the Bill at http://www.comcom.govt.nz/the-commission/about-us/commission-submissions/

Finally, we are considering how best to use the next few months to prepare for when legislation is passed, including engaging with stakeholders.