NZ Telecommunications Amendment Bill 2018: Key select committee recommendations

Bill sets scene for fibre after 2020

Summary: The 2018 bill moved New Zealand's fibre regulation to a utility-style model managed by the Commerce Commission. This established a regulated asset base (RAB) and set the rules for how Chorus and local fibre companies (LFCs) could price wholesale services and retire legacy copper networks.

After 257 written submissions and 31 personal submitters the parliamentary select committee overseeing the Telecommunications Amendments Bill released its recommendations. The Bill aims to set the regulatory scene for fibre networks after 2020.

Top of the list is a decision to keep the separation between wholesale and retail services in place. There was a possibility of relaxed rules allowing Chorus to link wholesale inputs and deliver an end-to-end-like service.

Elsewhere the committee decided that from 2020 the copper network can be deregulated in places where the fibre network is available. It even allows for the removal of the copper network where there is fibre. However, the Commerce Commission can request that this is delayed for up to two years.

Anchor product pricing debate

Another potentially controversial recommendation is that 100/20Mbps is to become the anchor product.

This will be set so that customers can buy a basic broadband service at a reasonable price. It will then act as the anchor for other prices. Average plan speed is rising fast and could be higher than this level by the time the Bill becomes law.

Industry reaction

In a statement Chorus welcomed parts of the report but says the changes don't go far enough. The company warns the rules may restrict its ability to change prices and could stifle innovation.

Chorus chief executive Kate McKenzie says the anchor product price path "unfairly restricts our ability to recover costs and would require us to price below local fibre companies."

Restricting lines of business

The company also objects to the restrictions on the lines of business it can enter. However, the Bill gives the Commerce Commission an option to provide exemptions for services on a case by case basis.

Spark was more positive about the report. Spark says it doesn't expect any of the changes to have a significant effect on its operations.

Vodafone delighted

Meanwhile, Vodafone seems delighted with parts of the report. In a media statement chief executive Russell Stanners says; “We are especially pleased the committee has listened to the concerns we raised around relaxing line of business restrictions on Chorus and LFCs and ensuring the anchor products are set fairly and in the interests of consumers.

On a down note, he says that while the committee recommends keeping fibre unbundling in the legislation, it hasn't asked for the Commerce Commission to set prices.

He says: “Leaving unbundling pricing in the hands of Chorus and LFCs will prevent unbundling becoming a commercial reality, as was the experience with copper unbundling."

More on fibre regulation

• 2021: The revenue cap decision.  ComCom finalises fibre regulations covers the Commerce Commission setting Chorus’s maximum revenue. This was when the "utility" fibre model became a reality, arguably at the expense of greater retail price competition.
• 2024: The market share reality. 2degrees–Vocus merger two years on shows that while the merger was not primarily about fibre, it was, in part, 2degrees' and Orcon's necessary response to a stagnant broadband market.
• 2025: The push for change. 2degrees, Chorus at odds over Fibre Framework review. Retail service provider 2degrees continues to lobby for "price caps" to protect themselves from the very framework established in 2018.

Spark sells half share of network subsidiary

Spark says it will sell half of Connect 8, the company's network building business to the Electra Group, a power distribution company. This will form a new joint venture that will also include Sky Communications, Electra's wireless construction subsidiary. The deal is expected to be finalised before the end of this month.

Connect 8 started as a joint venture with Vocus Communications. It was originally a fibre construction business. Two years ago Spark bought out Vocus. In the last year Connect 8 has started providing services to other utility companies.

Spark COO Mark Beder says the goal of the new joint venture is to work on wireless build projects. He says the deal is an foundation for the rollout of future mobile technology. The moves can be seen in the context of Spark's strategic commitment to focus on wireless.

Dimension Data, Spark partner to build networks

Dimension Data says it has entered "a long-term strategic partnership" with Spark Wholesale. The company says the deal will allow it to build on the automation and streamlining of its network business. Dimension Data sells wan, internet and mobility services.

Privacy Commissioner launches Trust Mark

Privacy Commissioner John Edwards has launched a Privacy Trust Mark. It aims to let people know when a product or service is been designed with their privacy in mind. Edwards says the mark represents a "privacy by design" approach was used.

At the launch Edwards announced the first two trust mark recipients: Trade Me’s ‘Transparency Reporting’ and the Department of Internal Affairs’ RealMe identity verification service.

Edwards says Trade Me is the only New Zealand agency with transparency reporting above and beyond legal requirements. "I am particularly impressed with the way Trade Me draws wider privacy issues into its transparency reports as a way of keeping the public informed of topical issues", he says.

RealMe also gets a Mark. Edwards says: “RealMe's data minimisation and user control practices are excellent. Users can control when and where their identity information is shared and can review all of their transactions and revoke their consent at their discretion. RealMe also only collects and stores information that is required to administer the core service.”

Vodafone wants your phone processor for cancer project

Dreamlab is a Vodafone app that uses a phone's processor overnight to work on data processing that helps scientists search for cancer cures. Vodafone says it doesn't use customer phone data allowances and can also work on Wi-Fi.

Australian carrier offers free mobile data

CommsDay reports that when TPG's new Australian mobile launches later this year new customers will get free plans for the first six months. These plans will include free unlimited data.

The small print says customers will be able to use the first 1GB of each day's data at 4G speeds. Any additional data after than will be available at 1 Mbps for the rest of the day.

After the first six months, the same deal will be available for $10 a month. The catch is that TPG's footprint will only cover the inner city and surrounding suburbs of Sydney, Melbourne and Brisbane alone with a smaller area of Adelaide and Canberra.