ComCom to look at deregulation of select fibre services

“Right now, we think regulation should remain in place for the core fibre broadband service going into homes and businesses across the country – called bitstream – but there’s some competition for other fibre services, and deregulation may be appropriate,” says Telecommunications Commissioner, Tristan Gilbertson.

Mr Gilbertson says today’s decision marks the end of the first step in a two-stage review process where the Commission first determines what services should be considered for more detailed investigation into deregulation, and then undertakes the more detailed review of the selected services.

“Telecommunications is a dynamic market and regulation needs to keep pace with changes in the competitive landscape.

“It’s important to note we haven’t decided to deregulate – we’ve instead accepted there are grounds for considering deregulation. For deregulation to take place, we need to be satisfied there’s enough competition to protect the interests of consumers. 

“Our decision to look at deregulation for the smaller fibre providers – Enable, Tuatahi and North Power – recognises these providers occupy a different position in the market than Chorus.

“In reaching this decision, we’ve taken into account feedback on our draft decision and accepted there’s a case for looking into these four fibre services further, where previously we didn’t see grounds for considering deregulation.”

Mr Gilbertson says the Commission will continue to monitor the market and start deregulatory reviews for other fibre services if there is a case for it before the next formal statutory review.

“At the moment there’s not enough competitive constraint to warrant a review of the core bitstream service connecting Kiwi homes and businesses. The predominant competing technology, 4G wireless, just doesn’t get close enough – but we recognise this could change, potentially quickly, with the roll out and uptake of 5G wireless broadband services. We’ll be watching this space closely.”

The Commission is separately investigating the deregulation of copper services in rural areas and mobile terminating access services in light of changes in the industry and competitive landscape.

Background

New Zealand’s fibre networks were built by four regulated fibre wholesalers — Chorus, Enable, Northpower, and Tuatahi — in partnership with the Government under its Ultra-Fast Broadband (UFB) initiative.

These networks are now regulated through a price-quality and information disclosure regime, introduced in 2022, following amendments to the Telecommunications Act (Act). 

The regime is intended to incentivise regulated fibre wholesalers to act in the best interests of consumers and to promote competition in telecommunications markets. Information disclosure requirements exist to ensure that sufficient information is available for people to assess whether this is being achieved. Price-quality regulation allows the Commission to set the maximum revenue Chorus can earn from its customers and the minimum quality standards it must meet.

Local fibre companies (LFCs) — Enable, Northpower, and Tuatahi — are subject to information disclosure regulation only, while Chorus (as the largest fibre provider) is also subject to price-quality regulation. 

The Commission has recently determined Chorus’ price-quality path for the second regulatory period covering 2025 - 2028.

Under section 210(3) of the Act, the Commission must consider whether there are reasonable grounds to start a deregulation review for any of the seven fibre fixed line access services subject to regulation before each regulatory period.