A new Bill is being introduced in the New Zealand parliament to update the country’s telecommunications regulatory framework. The Bill is set down for its first reading this month.
The Telecommunications (New Regulatory Framework) Amendment Bill is the outcome of an extensive consultation process that was undertaken between 2015 and 2017.
“The telecommunications market is changing, with new technologies, shifting consumer behaviour and evolving business models. Alongside this, consumers have vastly improved connectivity through the Government’s $2 billion rollout of world-leading communications infrastructure, with more to come,” Communications Minister Simon Bridges said.
Background
New Zealanders' access to high quality connectivity has been significantly improved through the government’s Ultra-Fast Broadband (UFB) programme and the Rural Broadband Initiative (RBI) and this is continuing through planned extensions to these programmes. The UFB programme is a NZ$1.5 billion initiative to provide connectivity through fibre optic cables to 85% of New Zealanders, in over 185 towns and cities by the end of 2024. RBI is providing faster Internet to more than 90 percent of homes and businesses outside UFB areas through NZ$400 million in grant funding from the Telecommunications Development Levy.
Most of the UFB build will be complete by 2020, and the Government's current contractual arrangements for setting wholesale fibre prices will fall away. At the same time, New Zealanders' demands for new services and capabilities continue to grow. The new Bill is expected to provide a durable regulatory framework to support long-term investment in New Zealand's telecommunications infrastructure and ensure that telecommunications services are provided at competitive prices, and that providers respond to consumer demands for quality.
Changes introduced by the Bill
All UFB providers will have to disclose information about their revenues and costs publicly. Chorus (Chorus is a provider of telecommunications infrastructure throughout New Zealand.he company was demerged from Telecom New Zealand in 2011, now Spark. Telecom New Zealand itself was formed in 1987 from a division of the New Zealand Post Office, and privatised in 1990.) will be subject to a revenue cap from 2020. Local fibre companies will face competition from copper and cable, but can be regulated if problems arise.
A clear value will be set for regulated assets at the outset, with a predictable process for updating this over time. There will also be a clear process for approval in advance of new investments, similar to that which applies to the electricity grid operator Transpower.
Chorus will be required to supply price-regulated anchor products. These will initially be an entry-level broadband product (100/20Mbps) and a voice-only product.
Mr. Bridges said, “The Bill supports the shift to fibre as the technology of choice among an increasing number of consumers, by establishing a stable and predictable framework for regulating fibre and by removing copper regulation from 2020. To ensure that consumers are protected, copper will continue to be regulated outside of fibre coverage areas. Safeguards will make sure that customers do not lose their copper landline or broadband unless there is an alternative service available at a comparable price and service level.”
In areas where UFB or other fibre is available, the copper network will be deregulated from 2020 and the Telecommunications Service Obligation (TSO), which provides for price-capped landline and dial-up services, will be removed. Consumers will have a wide range of choices in these areas, including the option of moving to fibre networks with better services and similar prices.
In areas where UFB or other fibre is not available, the TSO will be retained and Chorus will be required to continue supplying copper services at prices capped at 2019 levels (with inflation adjustments over time).
The Bill requires the Commerce Commission to collect and report on the quality of retail service delivery in a way that is more accessible to consumers. It enables the establishment of regulatory codes to improve retail service quality, if industry self-regulation is inadequate and provides for the periodic review of the existing consumer Telecommunications Disputes Resolution Scheme by the Commerce Commission.
To ensure the new system remains fit for purpose, the Commerce Commission will be required to review the pricing framework for copper services (no later than 2025).
