Ministry review targets legacy telco red tape

In this edition:

• Telco Regulation Review makes 22 recommendations
• Spark launches direct-to-mobile satellite service
• ComCom wants voice over fibre deregulated

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Government review moves regulations on from copper

A government review of telecommunications regulation aims to strip out copper-era rules and cut compliance costs, with 22 recommendations expected to deliver $35–45 million in benefits over the next decade.

At the top of its executive summary the Telecommunications Sector Review report highlights: “New Zealand’s outdated telecommunications regulations are struggling to keep up with a world of advanced digital technology”.

The review says that while regulation remains necessary to manage competition and ensure access, many existing rules are outdated, overly complex and, in some cases, actively hinder innovation and investment.

It noted several areas function well, including regulatory practice, price-quality rules and fibre information disclosure.

Phasing out Telecommunications Service Obligations

The review recommends phasing out Telecommunications Service Obligations (TSOs) and replacing them with targeted subsidies. It found the TSOs, which guarantee basic phone services over copper, are increasingly inefficient and misaligned with consumer needs.

Fibre regulation came in for scrutiny. The report describes the current system as fragmented, rigid and unnecessarily burdensome. It proposes streamlining rules, removing duplication and consolidating regulatory processes to better reflect a mature fibre market.

At the same time, it supports retaining core protections, including the wholesale-only model for fibre networks, to preserve competition.

The Telecommunications Development Levy (TDL), which funds sector-wide initiatives, will also be simplified. Current calculation methods are seen as complex and inconsistent, requiring costly and sometimes inconsistent external audits. The proposed changes would reduce compliance costs and provide greater certainty for providers.

Consumer protection

When it comes to consumer protection, the review finds that reliance on industry self-regulation has created gaps and favoured larger players. It recommends clearer, consolidated rules and a more risk-based approach to enforcement, ensuring protections are effective without adding unnecessary compliance costs.

Lastly, the review calls for a more proportionate overall approach to regulation. It suggests the Commerce Commission should apply greater transparency and tailor its interventions based on the scale and risk of issues, reducing unnecessary complexity while maintaining oversight.

The two ministers responsible for the review are communications minister Paul Goldsmith and regulation minister David Seymour. They say the reforms aim to support innovation, competition and investment, while ensuring all New Zealanders continue to have access to affordable and reliable telecommunications services.

Comment: Few surprises but...

It’s been clear for a long time that we needed to move beyond the TSO. This was put in place decades ago when Telecom was privatised.

Yet, the review recommendation that we move to targeted subsidies was unexpected: it represents a shift from network regulation toward social policy. That said, the recommendation makes sense and bring New Zealand in line with other countries.

The reviews’ questioning of Anchor Services and geographically consistent pricing (GCP) is also interesting. These are regulatory tools designed to keep fibre affordable and fair, especially given the natural monopoly characteristics of fibre networks.

This section of the report can be interpreted as saying: we’re not sure these still work as intended. There are people in the fibre sector who wonder if they were ever effective

You could read the report’s recommendation as signalling there is unfinished business here.

It can’t be a coincidence that the Commerce Commission has recently repeatedly recommended deregulation. We’re not quite seeing a regulatory bonfire, the changes are incremental not revolutionary. Yet between the ComCom and the Ministry for Regulation there will soon be less red tape.

Expected savings of $35–45 million over the next decade seems like small change in the context of an industry that, according to the most recent TDL levy allocation turns over more than $5 billion a year. This underlines the incremental, not revolutionary approach. That said, there is little scope for greater savings.

Spark launches satellite-to-mobile via Starlink

Spark has launched a direct-to-mobile service using Starlink satellites. Customers with supported devices can send and receive text messages while having limited data connectivity.

Those on the company’s more expensive plans get satellite services at no extra cost. Customers with cheaper plans can get the service as an optional extra with prices starting at $10.

The new service arrives 14 months after One NZ became the first carrier in the world to offer a Starlink-based direct-to-mobile option.

Chief commercial officer Mark Beder says data can be used with selected apps including WhatsApp, Facebook Messenger, AccuWeather, Plan my Walk and Google Maps.

At launch, Spark will include both data and text services across eligible plans. Text-only services will then be introduced as an inclusion across a wider range of plans in the future.

Earlier today I posted a deeper look at Spark’s entry into the satellite market putting it into wider competitive context.

Fibre landline deregulation looms as demand collapses

The Commerce Commission is recommending deregulation of the wholesale fibre-based landline voice service. It says regulation is no longer needed due to minimal demand and strong alternatives.

Fibre landline voice service was introduced in 2018 to support the transition from copper to fibre. At the time it was designed so that households could continue using traditional landline-style calling.

The assumption that consumers required a traditional-style voice option proved incorrect; users transitioned to modern alternatives without assistance.

Which meant usage has fallen far short of expectations. Fibre landline voice service now accounts for just 0.36 percent of fibre connections.

Behaviour has shifted

Telecommunications Commissioner Tristan Gilbertson says consumer behaviour has shifted. Most New Zealanders now rely on mobiles or internet-based calling. Landline use has dropped by more than 70 percent over the past decade. Those users who remain typically use voice over IP (VoIP), not the regulated wholesale product.

Deregulation does not mean the end of landline-style services. Retail service providers are expected to continue offering voice over broadband for customers who want it.

The recommendation has been sent to the government, with the Minister for Media and Communications to make the final decision.

In other news...

• Elon Musk’s SpaceX files for record US$75b IPO at US$1.2t valuation — NZ Herald via Agence France-Presse
  Attention on space investment may impact New Zealand’s Rocket Lab.
• Can Europe show the way for New Zealand’s social media strategy? — Newsroom
  There is an alternative to following Australia’s unsuccessful model.
• Australia’s kids social media ban meets tech firm resistance — The Register
  Seven in 10 children still have accounts.

This time last year

One New Zealand extended its Satellite Txt service to prepaid customers while in Taranaki, local service provider Primo was wiring Egmont Village with underground fibre and city-style pricing.

Five years ago

Opposition was mounting as the government prepared changes to the Films, Videos and Publications Classification Act which could force all New Zealand internet service providers to filter internet content.

Ten years ago in Download Weekly

Spark launched its own brand fixed wireless broadband products three months after testing the service with its Skinny brand.

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