The Commerce Commission is inviting feedback on its further consultation package on the development of input methodologies for the regulation of fibre fixed line access services.

Telecommunications Commissioner Tristan Gilbertson says the Commission published its draft fibre IMs decisions late last year and has decided to consult further on a limited number of issues after reviewing submissions and cross-submissions. 

“I’d like to thank all parties for their very helpful submissions on our draft decisions,” says Mr Gilbertson.

“We are seeking further feedback on a small number of issues in response to comments received in the previous round. 

“We’re also keen to give parties an opportunity to provide feedback on an updated draft of the IMs themselves.

“The feedback we receive will help inform our final decisions on the input methodologies that will underpin fibre regulation going forward,” Mr Gilbertson says.

As previously notified, the Commission is also publishing a separate, second consultation paper on changes we are considering to our approach to valuing the financial loss asset.

Any changes would involve adopting a discounted cash flow approach to valuation and different treatment of investments that pre-date the UFB initiative. 

Submissions on the main consultation paper and updated IMs are due by 13 August 2020, with cross-submissions due on 3 September 2020. The second consultation paper on the financial loss asset will be published on 13 August 2020. The consultation package and how to provide submissions is on our website.

Background

The Government’s Ultra-Fast Broadband initiative originally aimed to provide fibre-to-the-premises to 75% of New Zealand’s population by 2020. The program was expanded twice in 2017, and now 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 end-users.

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

Under the new regulatory regime in Part 6 of the Telecommunications Act 2001, 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. This is referred to as information disclosure regulation and is intended to shed a light on their performance for stakeholders and consumers.

The regime first requires the Commission to determine ‘input methodologies’. These will set out the rules, requirements and processes for how the price-quality and information disclosure regulation will apply to the fibre network providers. The input methodologies provide a stable and predictable regulatory regime for both regulated suppliers and consumers. This is turn builds confidence to invest in long-lived infrastructure for essential services to all New Zealanders.

This new regime is similar to how the Commission regulates energy networks and airports under Part 4 of the Commerce Act.

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