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New telco bill pleases few but seems to hit the mark

Paul Brislen, Editor. 07 May 2018, 7:16 am

The select committee reviewing the new Telecommunications (New Regulatory Framework) Amendment Bill, the Economic Development, Science and Innovation Select Committee, is recommending retaining some restrictions on Chorus but isn't going as far as some retail telcos would like, resulting in something of a 1:1 draw.

The bill will shape the regulatory environment in the post-UFB deployment world, once seen as a far distant proposition but now rapidly approaching. By the end of 2019 the current regulatory environment will expire and the new bill sets out how to oversee what is, in effect, a virtual monopoly in the form of Chorus's fibre network.

The UltraFast Broadband (UFB) project to deliver fibre to the home for 75% of the country kicked off in 2010 amid the high drama of requiring the former government monopoly Telecom be split in two if it wanted to win any of the fibre build contracts. The Telecom of the day underwent its own grief cycle (scoffing, outrage, pouting and shouting) before finally reaching a level of acceptance and agreeing to divide the business into a retail arm (now called Spark) and a network arm (Chorus) which in turn won the lion's share of the deployment.

After a brief stutter in 2013 when Chorus almost convinced the government that it really needed an extra $600 million (hint: it did not) to do the work it was contracted for, and once various teething problems were worked through, the programme has become something of a success story with homes and businesses signing up in record numbers and those outside the UFB-area are now asking when they will get a piece of the action.

All of which leads to the need for a new bill, one which will move the regulatory environment away from a copper-line based model to the new one based on fibre.

Chorus had hoped for a slackening of the regulations that bind the company (it is required to be a network operator and to stay away from the retail space) but that move was rejected by the Committee which is keen to ensure New Zealand does not end up with a vertically integrated monopoly for large parts of the country, as per its Telecom days.

However, it didn't all go the way of the retailers. Vodafone had pushed for a regulated price for unbundling of fibre assets and that also was rejected at this point. While competitors will be able to unbundle fibre - that is, install their own equipment in the fibre exchanges to offer their own services - at this point that price will be set by the fibre operators and the Telecommunications Commissioner will have to decide whether there's a market failure to address or not.

All this has lead to a somewhat depressed view of the telco market all round, with increased difficulty for investors and some concern that the telco market could go the way of the electricity market - highly regulated, with little innovation in the years to come.

One area where competition does exist and is driving prices down for customers is the mobile space, and with three network operators (Spark, Vodafone and 2degrees) and a raft of Wireless ISPs (WISPs) looking to the next generation of mobile technology (5G), the government is also working out how it will manage the auction of rights in the new spectrum ranges. Chorus has indicated that it might like to play in this space as well and could conceivably muddy the waters, as one regulatory expert put it, by offering wholesale 5G services or even building a single network for the whole country to use.

All of which leads to increased tension in the industry and an increase in concern about safety relating to 5G services, which have been partly addressed by this reporter.


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