Fibre competition not strong enough to deregulate

In this edition:

• Wholesale fibre deregulation to continue
• Government sells Chorus debt
• Data centre planned for Taranaki

CommComm opts for status quo

The Commerce Commission says competition in New Zealand’s wholesale fibre market still isn’t strong enough to justify deregulating three services.

It recommends continuing regulation of point-to-point, transport, and co-location and interconnection services after finding that rival fibre networks remain too patchy to provide a meaningful constraint on the local fibre companies.

Writing in a draft recommendation to the minister, the Commission says there are pockets of genuine competition but not enough of it.

Point-to-point

Point-to-point provides the clearest example of where competition has emerged. The Commission looked at competition around individual points of interconnection and found five suburbs where two or more competing fibre networks reach at least 70 percent of addresses.

Five suburbs are not enough to establish competition across a relevant geographic market. While there are places where a customer could potentially choose between fibre networks, the competing network coverage falls away when you look at the wider area.

There are also examples of one competitor reaching the 70 percent threshold in parts of Napier/Hastings and Rotorua. But that’s still below the Commission’s preferred benchmark.

The Commission’s test is demanding: it wants to see the incumbent local fibre company plus at least two competing fibre networks. Those competitors need to collectively reach at least 70 percent of addresses in the relevant area. The five suburbs don’t come close to establishing that kind of widespread competition.

Transport completion also lacks scale

In its report the Commission found individual fibre links where alternative infrastructure could be used. There are some areas where two or more alternative providers could potentially supply usable alternatives.

Yet as with point-to-point, the problem is scale and consistency. The alternatives aren’t sufficiently widespread across the relevant provider/area combinations to create the level of competition the Commission thinks is necessary for deregulation.

Co-location and interconnection

The Commission found more competition in physical accommodation, with access seekers sometimes able to use third-party facilities, another LFC’s exchange or an RSP facility. Yet it says there is no alternative to the network-specific interconnection needed to access an LFC’s network. It also found no clear boundary that would allow physical accommodation to be deregulated separately.

Recommendations are still subject to consultation. Submissions close on 17 September. The Commission expects to publish its final report in the fourth quarter. If the recommendations stand, all three services will remain regulated, although the Commission is only proposing information disclosure regulation for the non-Chorus services.

Government to sell Chorus debt for $702 million

The government is moving ahead with plans announced in October 2025 to sell the interest-free loans Chorus used to help build the UFB fibre network. The Crown has now signed binding agreements to sell the debt for about $702 million.

The sale is expected to settle this month and deliver a gain of more than $60m over the loans' $642m book value.

The government originally expected to wait until 2036 for the loans to be repaid. It says selling them now will free up the money for other infrastructure projects, including the Cambridge to Piarere road, hospital upgrades and new classrooms.

The sale does not change Chorus ownership or its fibre network. UFB securities are not ordinary Chorus shares and the transaction simply transfers the Crown’s claim on the debt to investors.

For Chorus, there should be little immediate change. The company still has the same obligations under the securities, but the Crown will no longer be the creditor. The government says National Infrastructure Funding and Financing can provide investors with limited protection against unlikely risks to improve the price it receives.

The transaction does not necessarily mean the Crown has completely exited its financial interest in Chorus. The October proposal covered both debt and special equity securities. This week’s announcement covers the $642 million of debt; the government has not said in this release what will happen to the remaining equity securities.

CDC, Contact explore Taranaki data centre

Data centre operator CDC Data Centres and Contact Energy say they are ‘exploring a potential data centre’ at Stratford, Taranaki. The site is near Contact’s former Taranaki Combined Cycle power station. Its location offers high-capacity fibre with land and submarine links to Auckland.

CDC says any new facility would be aimed at government and high-security data processing.

If it goes ahead, the plan is for electricity to be supplied under a long-term renewable generation agreement from Contact. The companies say a large, long-term customer could help support investment in additional renewable generation and battery storage.

CDC says its data centres use closed-loop cooling systems that do not require ongoing supplies of mains water, rivers or groundwater. It would investigate a similar approach at Stratford, including rainwater collection and reuse.

One NZ shuffles management team

A management shuffle follows Nick Judd’s appointment as chief executive at One New Zealand. Chief technology officer Kieran Byrne becomes chief financial officer with responsibility for the Infrastructure Partners wholesale operation. Byrne’s role will be filled by Sharina Nisha. Sonia Fernandes becomes chief people officer.

10 years of Skinny Jump

Spark says its Skinny Jump programme is currently used by approximately one in five of the 170,000 households the 2023 Census identifies as lacking home internet.

The ten-year-old programme started in 2016 and offers subsidised prepaid broadband without long-term contracts or credit checks.

Skinny Jump by the numbers:

• 100,000+ Total households supported since 2016
• 35,000 Current active connections nationwide
• $9.1M+ Commercial value of subsidised data provided in FY25 alone
• 291 Local community delivery partners across Aotearoa

Mercury Mobile reaches 50,000 connections

Energy provider Mercury says its Mercury Mobile business now has 50,000 connections. The company says that was its target for the end of the 2026 financial year. It says it has seen accelerating momentum in the last two years with customers bundling mobile along with electricity, gas and broadband.

In the Commerce Commission’s 2025 Telecommunications Monitoring, published in June of this year, Mercury is identified as one of around 16 mobile virtual network operators operating in New Zealand. It is hosted on Spark’s network. Collectively the nation’s MVNOs accounted for 3.2 percent of mobile connections.

Mercury is also listed as a top five broadband retailer with an eight percent market share. Its share of the urban broadband market is higher at 11 percent. The report says Mercury is one of the retailers that has recently won market share from Spark and One New Zealand.

In other news...

• World Cup streaming sees record data use — NZ Herald (paywall)
  Average monthly data use now 771GB
• D2D adoption is accelerating, but unevenly — Ookla
  Mobile coverage maps are changing fast.

Chorus moves to remove ownership restrictions

Chorus is moving to remove the legacy ownership restrictions limiting who can own its shares.

The fibre network operator and the Crown signed an unconditional variation to Chorus’ Deed of Operational and Governance Undertakings. This clears the way for a constitutional change. Chorus says shareholders will be asked to approve the change at its annual meeting in November.

The current rules require ministerial approval for an investor to own more than 10 percent of Chorus voting shares, or more than 49.9 percent if the investor is not a New Zealand national.

The change follows the Ministry for Regulation’s telecommunications sector review, which identified outdated and overly complex regulation as a barrier to innovation and investment. The review recommended simplifying the regulatory framework and making it more proportionate.

This time last year Spark sold 75 percent of its data centres

Spark sold 75 percent of its data centre business to Australian private equity firm Pacific Equity Partners for $486 million, with another $98 million contingent on performance targets through 2027. The deal valued the business at about $700 million, with Spark retaining 25%. Today that business is known as TenPeaks.

Five years ago the Commerce Commission set Chorus’fibre asset value at $5.427 billion. The fibre input methodologies review used this to calculate how much Chorus could earn from operating its share of the UFB fibre network.

Ten years ago there was still an argument for using VDSL2 in rural areas.

The Download Weekly is a New Zealand telecommunications industry newsletter written by Bill Bennett. You are welcome to pass it on to your friends and colleagues. While the newsletter is free, reader support helps enormously. If you are reading this for work, donations are tax-free. A banner at the top of the page will take you to the support site.

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Bill Bennett has covered New Zealand telecommunications for nearly 40 years and was named Tuanz Journalist of the Year 2025.