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NZ government wants to adopt 'utility-style' approach to fixed-line services

The New Zealand government said the country's fixed-line networks increasingly resemble utilities and believes there is an opportunity to move towards a similar framework approach.
Written by Aimee Chanthadavong, Contributor

The New Zealand government has proposed there is an opportunity to introduce a "utility-style" regulatory framework for fixed-line communication services after 2020.

The proposal by the government has been outlined in the Telecommunications Act Review: Options paper, which indicates fixed-line networks increasingly resemble utilities like electricity lines and gas pipelines.

The government outlined features as part of the new regulatory framework will include a system of price-quality regulation based on the building blocks pricing model, which will mean ultra-fast broadband (UFB) providers cannot make excess profits at the expense of consumers; clear rules on how assets are valued and costs are recovered; ways to protect consumers from price shocks during the implementation period; and disclosure of cost and revenue information by regulated suppliers.

"A key focus of the new regulatory framework is protecting consumers from monopoly pricing. This approach will also produce a more stable regulatory framework over time. It will encourage investment and innovation in communications networks," the paper said.

The paper also discussed the future of mobile regulation and concerns surrounding whether there are sufficient incentives for efficient infrastructure sharing, including the availability of competitively-priced national roaming arrangements.

It also looked into digital convergence and net neutrality issues, as well as ways on how handling consumer complaints by the by the telecommunications sector could be improved.

The government said the existing Consumer Complaints Code does not currently provide for wholesale-only UFB providers to be directly accountable to consumers under the Telecommunications Dispute Resolution scheme, and suggested it could be modified to ensure retail customers have the opportunity to hold wholesale-only providers accountable for poor service delivery.

Spark New Zealand has welcomed the government's early guidance and consultation on the regulation of the telecommunications sector from 2020 onward.

Spark's general manager regulation John Wesley-Smith said the early guidance provides the next step forward in ensuring how the country's telecommunications industry will be regulated post 2020.

"We see this as another step towards the provision of certainty to the industry, and, ultimately, ensuring that New Zealand telecommunications regulation is fit for purpose in the digital age and will support investment and innovation as well as a healthy, competitive market for the benefit of consumers," he said.

"We are especially pleased to see the importance of network quality regulation recognised in the paper, considering the high level of consumer and industry frustration we are seeing in the current model."

The release of the options paper is in light of the New Zealand government announcing a series of policy changes in April that will set the framework of the Telecommunications Act 2001.

The government said at the time that from 2020 it plans to move to a framework that will regulate copper and fibre services similar to the one used for utilities like electricity lines, changing the way broadband and phone services are regulated.

It outlined some of the key policy decisions will include moving to a utility-style model with "building blocks" pricing for regulating wholesale services on the copper and ultra-fast broadband (UFB) networks; considering ways to better support competition in the mobile market; retaining the current unbundling requirements to promote innovation on the UFB network from 2020; and ruling out any changes to the regulation of broadcasting infrastructure.

The review of the Telecommunications Act is part of the New Zealand government's convergence program that aims to update regulations in light of technological advances.

In September 2015, the New Zealand government released the Regulation Communications for the Future document that outlined the government's long-term vision for the communication sector. The paper outlined six challenges and asked a series of questions in an effort to prompt deep consideration of the changes that are reshaping not only the telecommunications industry, but media and entertainment as well. The government received 43 submissions from industry and consumer groups in response to the document.

The policy announcements also contribute to the government's target that by 2025, 99 percent of New Zealanders will have access to peak speeds of 50 Mbps, with the remainder able to access speeds of at least 10Mbps.

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