https://ift.tt/PQuo3qB
Chorus and the country’s local fibre companies are expressing frustration over a draft decision by the telecommunications commissioner to not deregulate fibre services.
“Our preliminary view, just three years into the new regime, is that there’s not enough competitive constraint on fibre for there to be any serious question of deregulation at this time,” telco commissioner Tristan Gilbertson said when releasing the decision last week.
Current wireless network alternatives did not yet fit the bill, he said.
“Fibre providers occupy a near monopoly position in their markets, with the incentive and ability to act contrary to consumer interests, unless there’s enough competition from alternative technologies to hold them back.”
New Zealand’s fibre networks are operated by four regulated fibre wholesalers – Chorus, Enable Networks, Northpower and Tuatahi First Fibre – in partnership with the government under its ultra-fast broadband (UFB) initiative.
Their networks are regulated through a price-quality and information disclosure regime introduced in 2022 following amendments to the Telecommunications Act.
Chorus chief corporate and regulatory officer Julian Kersey told Reseller News the company was studying the draft decision, but he believed there were grounds to start a review of fibre deregulation.
“There is clear evidence that the competitive environment for broadband has changed significantly since the current regulations were introduced,” he said.
The “extensive” regulation of fibre now appeared disproportionate given the emergence of competing technologies, he said.
“There’s a strong case for regulation to evolve as markets evolve, benefitting consumers by saving costs, reducing complexity and promoting competition in broadband markets.”
Tuatahi First Fibre chief executive John Hanna described the draft decision as “disappointing and imbalanced”.
“While we agree with the overall regulatory review framework, the commission’s review is predominantly focused on Chorus, with insufficient consideration given to the evidence presented by the smaller local fibre companies (LFCs),” he said.
This evidence highlighted the increased investment in competing broadband services since the decision to regulate was made nearly eight years ago.
“If the evidence we submitted, showing the material increase in competition for broadband services, had been meaningfully considered, it would be clear that the LFCs do not possess market power,” Hanna said.
While the three LFCs were smaller individually, collectively, they represented 27 per cent of network connections in New Zealand, Hanna said. This warranted the commission taking more time to adequately assess the grounds for deregulation.
The commission had failed to consider its own criteria, he said.
“A key factor in determining whether a review is warranted is the competitive constraint posed by alternative broadband technologies,” Hanna said.
This competition determined product and price strategies – not regulation.
“However, the commission has chosen to base the review primarily on competition by technology type, ignoring the fact that consumers are willing to make trade-offs in broadband performance for retail price,” Hanna said.
That view was difficult to reconcile with the commission’s previous advice to consumers to consider what they use, as paying a price premium wasn’t always necessary.
“Consumer price sensitivity means our fibre services are in direct competition with the alternative technologies the commission has failed to adequately consider.”
Tuatahi advocated for a regulatory framework that evolved with the market and supported competition and innovation, Hanna said.
“We believe deregulation is necessary to enable us to compete on a level playing field, particularly in the face of rapidly advancing technologies like 5G and LEO satellite.
“However, the commission’s decision, as it stands, risks undermining this goal by not adequately addressing the competitive realities faced by the LFCs.”
Deregulation was essential for enabling ongoing investment in fibre and ensuring all New Zealanders had access to high-quality, future-proof broadband services, he said.
Christchurch-based Enable Networks declined comment, however its submission to the review was made jointly with Tuatahi First.
That submission said the object of the fibre regime was to regulate activities only to the extent necessary to address a lack of competition.
“This is of particular importance when the decision to impose regulation on Enable and Tuatahi was finely balanced,” the submission noted.
Officials also acknowledged in 2015 there was a significant “upside risk” that competition from wireless networks would prove to be greater than expected, the submission said. This would weaken the grounds of the original decision.
“Not surprisingly given the dynamic nature of telecommunications market described by the commission, that risk has materialised,” Enable and Tuatahi argued.