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Bill Bennett


Telecommunications Bill resets UFB price cap

The Telecommunications Bill going through Parliament sets the tone for New Zealand’s fibre era.

By 2022 around 87 percent of New Zealand’s population will have access to fibre.

Many homeowners and businesses have already chosen to connect to fibre. This month Statistics New Zealand reported one in three broadband connections are now fibre. That’s up from one in eight connections two years ago.

According to the most recent Broadband Deployment Update from the Ministry of Business, Innovation and Employment, uptake is now 44.1 percent. In some regions uptake is already higher than 50 percent.

The numbers continue to climb.

Fibre is only likely to get more popular with Spark buying up sports broadcast rights. Early next year the company will launch an app so viewers can watch Rugby, Football and Formula One racing online in high-definition. Other sport will follow.

Fibre everywhere

I’m not sticking my head out here by saying I expect half of all New Zealanders to have fibre connections by 2022. The number could be higher.

By then Spark will have a 5G mobile network, other mobile carriers could also offer fast mobile broadband and fixed wireless services with fibre-like speeds.

Many of those left with copper networks should see better experience thanks to VDSL and other fast copper technologies.

We will be in a new communications era.

New rules

Last year the National government introduced the Telecommunications Amendment Bill. It aims to set out the rules for fixed line telecommunications in the fibre era.

Most insiders expect the Bill to have its third and final reading between now and Christmas. After then it will be law.

This week the government tabled a supplementary order paper for the Bill. Among other things it sets a new cap for the wholesale price of a fibre connection.

The government has decided that a 100/20 mbps connection will be the benchmark. It calls this the anchor service. Some in the industry have argued that by 2022, 100/20 mbps will be bordering on obsolete. Never mind, the key point is that the price cap will $46.

Telecommunications Bill brings certainty

This is important as it gives everyone in the industry something to work with as they plan strategies for the coming era.

The figure means wholesale broadband companies make a profit. They have enough incentive to expand fibre networks beyond the reach of 87 percent of the population. No doubt this will happen over time.

Likewise retail service providers know what they need to charge consumers to make their broadband services pay. Everyone in the industry likes certainty.

Elsewhere the Bill will make telecommunications regulations more like those in other utilities. It will remove unnecessary rules that are a hang-over from the copper era.

Watching service quality

The Bill also aims to get the Commerce Commission to take more notice of retail service quality. The Commerce Commission will also get to check that emergency services are available even in the event of a power failure, which would knock out fibre services.

The Commerce Commission will be allowed to conduct inquiries into any matter relating to the industry or for the long-term benefit of consumers.

Telecommunications Minister Kris Faafoi says the new regulated price: “…represents a fairer deal for everyone: a good price for New Zealand broadband consumers and a reasonable price for Chorus”.

Chorus CEO Kate McKenzie says the supplementary order paper provides some clarification. She says: “We welcome this step towards a new regulatory framework for New Zealand’s key communications infrastructure. We look forward to the passage of the bill and to starting work on implementation”.

One thing that hasn’t been said in public, but is discussed by the industry in private is that the certainty brought by the Bill when it becomes law should calm things down between the various players.

The last year or so has seen retail and wholesale companies jockey for position ahead of the Bill. Relations between players have been tense. Most of the time this has been behind the scenes, but every so often something emerges in a speech or a media interview.

Once the Bill becomes an Act, everyone can get back to the more important business of finding innovative ways to make money from telecommunications services. That means giving customers what they want and seeking out new things that we are going to want in future.



One thought on “Telecommunications Bill resets UFB price cap

  1. One might hope that the uptake, so far in advance of the models used to determine which NZ citizens can have fibre, would have had some impact on the forebearance and distortion of the UFB/LFC (local fibre, not local bitstream companies) original intentions which the bill will continue.

    The excuse for sustaining the integration of passive and active (fibre & bitstreams) to benefit LFCs in 2011 was risk related. These results show there is no risk, except that of smugly sitting on an 80/20 divide and depriving a fifth of the population of fibre, imposing complexity costs on solutions delivered over the Internet, and making the welfare of a few companies determine what benefit NZ (Inc if you must) can derive from the fibre infrastructure of the future which 100% of taxpayers have funded.

    Perhaps if you think having all the promised eggs in one or two 5G baskets is a good idea, so is having fibre availability decided by a private company’s spreadsheet rather than social governance.

    So that you don’t think me entirely disappointed, the SOP offers:

    “New section 200 requires consistent pricing for providing fibre fixed line access services, regardless of the geographic location of the access seeker or end-user.”

    Does this mean $46/month for 100/20 is nationwide? if you have fibre of course. Does the Rural Broadband Initiative deliver a similar “anchor” product?

    How much simpler would rugby coverage, banking services, education, health care and anything else that is otherwise shrinking due to physical costs be if you could assume fibre the same way we assume electricity, phone and roads.

    Sadly the only entity to reliably gain from universal fibre isn’t the operators, though they won’t be beggared. It’s NZ that stands to gain, and sadly private interests stand in the way of that with witterings about risk and cost to them while ignoring profit to the entire nation by the removal of divides with a universal basic infrastructure of open access fibre.

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