Telecommunications Act updated for fibre era

Communications Minister Simon Bridges has announced the government's reforms to the Telecommunications Act. As expected the changes are in line with announcements made in February. 

 The updates reset telecommunications regulation for the fibre era. From 2020, New Zealand's fibre networks regulation will use a utility model. Copper services will no longer be subject to regulation in areas where there is fibre. 

There are tweaks to the Commerce Commission's monitoring powers when overseeing retail services. The Act also introduces a faster process to intervene in mobile markets.

Fibre price regulated

Under the new regime, the Commerce Commission will regulate the price of the entry-level fibre broadband service. Both Tuanz and InternetNZ question the idea in the proposed Bill that a 100/20 Mbps will be the anchor product by 2020. On current trends, most connections will be at higher speeds by then.

Before it becomes law the Bill must pass through Parliament. The government expects that to happen later this year. Although the September 23 election may complicate the timing. 

Assuming the Bill passes, the new regulations will kick in from 2020. By then more than three quarters of the population will be on fibre. 

Utility regulatory model

A utility regulatory model means the Commerce Commission will value the fibre network based on its actual cost. It will value assets from before the UFB build on a depreciated historic cost basis. Any financial losses incurred by suppliers before 2020 will increase the opening value of the regulated asset base. 

 In effect, this model should give the industry greater predictability. The minister says it will reduce compliance costs and encourage innovation and investment.

 The Commerce Commission will continue to regulate copper networks in non-fibre areas. When the legislation kicks-in, regulated copper prices will have an annual inflation update.

Bridges says: “As the copper network is essentially being replaced by UFB, it is appropriate that copper regulation be removed from 2020. It makes sense to focus on the services that most people will be using.

He says: “To make sure people are protected, copper will continue to be regulated outside of UFB coverage areas. Safeguards will also be put in place to make sure that customers do not lose their copper landline unless there is an alternative service available at a comparable price and service level.”