Telco regulation announcements set a sensible direction on first read

14 April 2016

InternetNZ is pleased with the Government's announcements this morning of the future direction of telecommunications regulation in New Zealand. In a critical and welcome decision, Minister Amy Adams has confirmed that Kiwi broadband users will be protected by wholesale price regulation of fibre and copper broadband from the start of 2020.

"Minister Adams has rightly set aside calls by some in the telco industry to allow an 'industry led solution' to manage pricing after 2020. Regulating copper and fibre broadband wholesale prices from 2020 is the right move for Internet users, the industry and for network builders like Chorus," says InternetNZ Chief Executive, Jordan Carter.

"All parties will benefit from increased certainty with the clarification of pricing rules - particularly the users, who ultimately pay for these services."

InternetNZ has submitted throughout this process in favour of such proactive regulation.

Today's announcement also clarifies that the Government intends to use a 'Building Blocks Methodology' (BBM) to price these services, as is commonly used in utilities.

"There is a lot of detail still to consider in how any pricing method balances the interests of ISPs, network owners and users.

"It's critical to ensure that network builders are not over-compensated at the expense of Internet users. The new system must not deliver endless price increases along the lines of those seen in the electricity market," says Carter.

"We also recognise the change in focus for this framework. As the Minister notes, the focus is moving from infrastructure based competition to retail level competition. That is only viable as long as the wholesale prices are kept as low as possible."

InternetNZ is also pleased that the Government has decided to keep the obligation for unbundling of fibre.

Unbundling allows retailers to have direct access to the fibre cables in the UFB network, giving them more choices in designing new broadband products.

"Unbundling helped drive falling prices and better services from its introduction on the copper broadband network in the 2000s, and we expect it will help drive the same in the fibre world.

"The detail underpinning these high level decisions will make or break the approach, and we will be very carefully analysing the detail. InternetNZ will bring an open Internet perspective to these discussions, helping Government land on a high quality, workable regulatory framework that recognises the interests of everyone in the debate - network builders, retailers and users," Carter says.