Commerce Commission gears up for future UFB regulation

The Commerce Commission is seeking input on its proposed approach to imposing a revenue cap and service quality standards on Chorus for its UFB offering along with information disclosure rules for Chorus and the other fibre companies.

Under this new regime, the commission will set the maximum revenue that Chorus can earn from customers and the minimum quality standards it must meet. Additionally, all four fibre network providers will be required to publicly disclose information on their performance.

The commission was given these responsibilities under amendments to the Telecommunications Act, approved by Parliament on 7 November 2018.

It has issued an invitation to comment, as the first stage in a process that, according to its website, will culminate in a final decision by 30 June 2020.

In anticipation of its new role the commission, in late 2017 established a fibre regulation team led by Vanessa Howell, previously principal counsel in the Regulation branch.

The new regime is to apply from 2020, with the ability for the minister to defer the implementation date until 2022 at the commission's request.

The regime first requires the commission to determine ‘input methodologies’. These will set out the rules, requirements and processes for how the price-quality and information disclosure regulation will apply to the fibre network providers.

The commission says its proposed regime for fibre networks is largely based on Part 4 of the Commerce Act, which applies to energy networks and airports.

"The Commission intends to draw on its experience in developing and implementing this utilities-style regulation to inform its approach to fibre networks," it said.

Telecommunications commissioner Dr Stephen Gale said the new rules would need to have the right mix of predictability and flexibility to allow industry to best manage the legislated changes.

"Our aim is that the new regime provides confidence that fibre networks are operating efficiently and innovating to keep up with consumer demands for quality broadband services, at the same time making a competitive rate of return," he said.

“We will be working closely with stakeholders to develop this new regime. Our [invitation to comment] paper focuses on explaining the framework and our proposed approach as well as key issues we have identified that will be developed further through the consultation process."

The commission will be holding a workshop for interested stakeholders in early December to discuss key issues in the paper. Submissions on the paper are due by 21 December 2018 and cross-submission by 25 January 2019.

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