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ComCom final fibre regulatory ruling

Some concessions, but Chorus has not got the final regulatory ruling it wanted from the Commerce Commission.
Photo by Compare Fibre / Unsplash

ComCom finalises fibre regulations

Chorus will be able to earn a maximum revenues of $690 million next year under new rules set by the Commerce Commission. The maximum will rise to $790 million by 2024 if fibre demand grows as anticipated.

The maximum over three years is $60 million higher than that set in the draft ruling earlier this year, but four per cent short of the figure Chorus was looking for.

Much of the wrangling was over something known as the regulatory asset base or RAB. This is, in effect, a measure of the long-term investment made by Chorus to build the fibre network.

Chorus put the figure for its transitional value at $5.5 billion, the Commerce Commission set it at 1.5 per cent less. They used a transitional value because not all the information needed to calculate the RAB is available yet. A final figure will be set next year.

Chorus has the right to appeal the price-quality determination that was used to set the maximum profit figure. At the time of writing there is no indication the company will do that.

Yet the company has indicated that the level set by the Commerce Commission means it has little incentive to extend the fibre network beyond its 87 per cent footprint without government support.

Investors responded to the final regulatory ruling with a 2.1 per cent fall in the Chorus share price on a day the NZX index drifted down 0.7 per cent.

Big four to pay development levy bulk

Sky TV will pay the government’s Telecommunications Development Levy for the first time, but the big four telcos continue to pay the lion’s share of the tax on revenue.

As in previous years, Spark’s share of the total is one-third (33 per cent). Vodafone pays around a quarter (25.4 per cent) while Chorus pays one fifth (20.2 per cent) and 2degrees will stump up roughly one tenth or 9.5 per cent.

Collectively the four big telcos pay 88 per cent of the total. The next largest is Orcon with around a three per cent share.

The levy is set at a remarkably precise $10.145 million and is payable by any company earning more than $10 million in telecommunications revenue. It is used to fund public good services that in the past might have been considered the responsibility of a state owned telecoms monopoly.

Softly, softly Google picks up NZ 5G spectrum

Sidewalk Infrastructure Partners, a subsidiary of Google’s parent company Alphabet is buying a majority stake in Dense Air.

This will, in effect, put Google in control of the 5G spectrum Dense Air leases to Spark.

UK-based Dense Air owns 2.6GHz spectrum in New Zealand Last year it agreed a spectrum swap with Spark which allowed it to hold two adjacent 35MHz blocks. It has 40MHz of 3.5GHz spectrum.

The business operates as a wholesale carrier. It doesn’t compete with carriers but allows them to extend their coverage and reach.

Vodafone upgrades holiday mobile capacity, cans Sure Signal

Vodafone says it completed 42 mobile capacity upgrades during the year to cater for crowds at holiday hotspots. And the company says out will help festival visitors by rolling out its Cows (cellsites on wheels) at popular events.

Meanwhile Vodafone has started closing its Sure Signal Femtocell service which provided a boost to 3G services in areas with limited coverage.

The company says the technology is no longer supported by the telecoms equipment company that sold the hardware.

Sure Signal would route mobile phone calls over broadband connections equipped with the hardware.

There were 8000 Sure Signal users. Vodafone says Rural Connectivity Group sites and WiFi Calling can fill in the gaps, but there have been reports from rural areas of people who will now be left without coverage.

Freeview On Demand heads for the exit

Freeview says it will end its On Demand service late next year. The service was set up to let viewers watch shows from TVNZ, Discovery, Māori TV and RNZ. Earlier this year TVNZ left the service to offer its own on demand product.

When it closes viewers will be able to get the same material, but from each broadcasters respective service, not from a single central one-stop shop.

The move comes a week after Vodafone announced it would close Vodafone TV.

Apple, Google vice-like grip on mobiles

Andrea Coscelli, who heads the UK Competition and Markets Authority (roughly comparable with our Commerce Commission) says Apple and Google have a “vice-like grip” over people’s mobile phones.

Coscelli says the duopoly should be investigated by the proposed new “big tech” regulator planned for the UK.

Apple’s iOS and Google’s Android operating system are installed on 99.45 per cent of all phones used in the UK. It’s unlikely the proportion would be much different in New Zealand.

“Once a consumer buys a phone they are essentially wedded to the ecosystem of one of the two companies – Apple’s App Store or Google’s Play Store and their respective web browsers Safari or Chrome.”

This gives the companies the power to control the content phone users can access.

Broadband equipment sales up 7 per cent year on year

Dell’Oro Group says broadband access equipment sales were up seven per cent year-on-year in the third quarter of 2021. There was growth in fibre and fixed wireless equipment as operators focus on expanding broadband connectivity.

In other news…

2degrees opens a 200sqm Newmarket flagship store, sorry, “retail concept”, at the Westfield mall. Elsewhere the telco launched a mass SMS marketing tool called Group Textwhich may test phone users’ patience in the coming weeks.

The New Zealand Herald reports Chorus is moving Auckland staff to Graham Street. It will in the same building as NZME and across the road from Spark.

Auckland-based Soul Machines signed a five-year deal with Microsoft which involves using the company’s Azure cloud service and joint development of new products.

Ingram Micro is to distribute the Moochies Phone Watch. It’s an Australian developed smartwatch for children that lets parents track them using GPS and make video calls.