Section 7: Other matters

This section covers two other issues:

• the increase in fibre networks built by non-regulated fibre service providers, and whether these fibre networks should be considered when the Commerce Commission determines a specified fibre area (Part 2AA of the Act), and
• other minor changes and clarifications that could be made to the Act, including clarifying the pathway between information disclosure and price-quality regulation for regulated fibre providers.

Issue 1: Considering non-regulated fibre networks in specified fibre areas

The intent of the specified fibre area framework is to ensure a comparable alternative fibre service is available before Chorus can stop supplying a copper service in an area. The framework requires the Commerce Commission to undertake assessments to determine when a geographic area is serviced by fibre and to then declare it to be a ‘specified fibre area’. Chorus can withdraw its copper network in a specified fibre area, and Telecommunications Service Obligation instruments cease to apply to the area.

The specified fibre area framework was developed at a time when fibre was being built almost exclusively by the regulated fibre service providers (Chorus, Enable, Tuatahi First Fibre, and Northpower Fibre). However, more market participants, for example wireless internet service providers, are expanding into fibre. Fibre built by these providers is usually vertically integrated, with the wireless internet service provider building and then retailing fibre to consumers in an area.

The Commerce Commission considers only the fibre networks built by regulated providers when determining whether a specified fibre area exists. A fibre network that is built by a non-regulated service provider would not meet the definition of a specified fibre service, and so is not considered by the Commerce Commission when determining whether a specified fibre area exists.

Problem definition

The fibre market has shifted since the introduction of the specified fibre area framework, when it was expected that regulated fibre service providers (the LFCs) would be the main fibre wholesalers in the market.

We are seeking feedback on the impact of this shift in the market, and whether there is a need to amend the scope of what can be considered by the Commerce Commission when determining if a specified fibre area exists. We are not seeking feedback about whether the specified fibre area framework should be expanded to consider other technologies, or on how the specified fibre area framework interacts with existing Telecommunications Service Obligations applicable to Chorus and Spark.

Options

Option 1: Status quo – only fibre built by regulated service providers is considered

In this option, fibre networks built by non-regulated fibre service providers would not be considered in determining specified fibre areas.

Option 2: Fibre built by non-regulated fibre service providers to be considered

This option would mean networks built by non-regulated fibre service providers could be considered when the Commerce Commission makes a determination about a specified fibre area. We propose that for non-regulated fibre to be included it would need to meet the standards anticipated in the original policy intent. This is because some fibre networks built by non-regulated providers may not be built or offered in the same way as regulated fibre. For example, they may not be offered on an open access basis.

Benefits

• Depending on design, the option may encourage non-regulated fibre service providers to include pro-competitive aspects in their networks, ie non-discrimination.

Considerations

• If there should be regulatory ‘bottom lines’ for non-regulated fibre to be considered for specified fibre areas (ie pro-competitive obligations such as open access and non-discrimination).

MBIE comment

At this stage, we do not have a preferred option. We are seeking feedback to better understand what is happening in the market and if there is a need to progress any regulatory changes here.

Questions for stakeholders

Issue 2: Other minor changes and clarifications

If, following analysis of submissions, Cabinet decides to pursue changes in any of the areas identified in this discussion document, it is likely there will be a Telecommunications Amendment Bill (except in relation to changes that can be addressed in local fibre company constitutions).

If such a bill is to be progressed, it would be prudent to take the opportunity to address other minor non-policy issues in the bill at the same time. This would include any changes that have been identified that would improve clarity, address any uncertainty or inconsistencies, and ensure that the Act is relevant and up to date. These types of changes would be similar to the scope of changes that would be considered for regulatory systems amendment bills.

See here for more information:

Regulatory systems amendment bills

The explanatory note to any future bill would likely describe the policy and provisions contained in the bill, as appropriate, and interested parties would have the opportunity to submit on the bill through the Select Committee process.

Clarifying the pathway between information disclosure and price-quality regulation for regulated fibre providers

An issue that MBIE may seek to include in a Telecommunications Act amendment bill is ensuring that the pathway between information disclosure and price-quality regulation for regulated fibre fixed line access services is clear. Section 226 of the Act provides for the Commerce Commission to make recommendations to the Minister on the appropriate level of regulation, including bringing LFCs into price-quality regulation.

The 2017 departmental disclosure statement for the Telecommunications (New Regulatory Framework) Amendment Bill that led to the relevant provisions, states that “any LFC may later become subject to price-quality regulation, should the Minister accept a recommendation from the Commission that price-quality regulation is necessary.”

However, in describing the consultation that must occur before the Commission can make a recommendation to the Minister, the Act currently references consultation provisions within another section that has the heading ‘Deregulation review’. This could potentially result in confusion that the Commission can recommend only a lower level of regulation to the Minister, which is not the case. The Commission can recommend both regulation and deregulation. This is a matter that could easily be clarified through small drafting edits.

< Section 6: Governance settings in ‘other’ local fibre company constitutions | Discussion document: Enhancing telecommunications regulatory and funding frameworks >