The Commerce Commission has issued an Open Letter initiating a programme of work looking at the evolution of the regulatory regime for fibre broadband services.
Telecommunications Commissioner, Tristan Gilbertson, says the new fibre regime is working well, but needs to keep pace with market developments.
"Maintaining the certainty required for ongoing investment in world-class fibre means having the right rules in place now and into the future – so we're launching a programme of work to ensure we keep the balance right."
Mr Gilbertson says this work will start with a review of the underlying framework of rules for fibre services – called the Fibre Input Methodologies (IMs).
"The Fibre IMs are still relatively new – so we're proposing a targeted review focused on three key issues: cost of capital, the rules for new capital investments, and the controls applied to Chorus. We also expect to identify opportunities for streamlining current rules and processes as we look across the IMs as a whole."
The Commission is proposing to review the cost of capital for fibre in parallel with the other sectors it regulates under Part 4 of the Commerce Act 1986 – energy networks and airports.
Mr Gilbertson says the Commission would then move on to look at other aspects of the fibre regime, which are subject to review, including:
- Deregulation – whether there is a case for winding back regulation of certain services;
- Form of control – whether a revenue cap on Chorus remains the best way of allocating risk and producing effectively competitive outcomes;
- Declared services – whether there is a case for reviewing existing declared services or declaring an unbundled fibre service; and
- Information disclosure – whether there is a case for targeted changes to information disclosure requirements.
"This work is critical to ensuring the regime remains well calibrated and continues to deliver for competition and consumers," says Mr Gilbertson.
The Commission is calling for views on its Open Letter, framing the IM review process, by 5pm on Tuesday 29 April 2025.
Views will be sought on the other aspects of the regulatory regime targeted for review at a later stage as the Commission's work programme develops.
Background
New Zealand's fibre networks were built between 2012 and 2022 by four regulated fibre wholesalers— Chorus, Enable, Northpower, and Tuatahi — in partnership with the Government under its Ultra-Fast Broadband initiative.
On 1 January 2022, the Commission implemented a new regulatory regime for fibre, as required under the Telecommunications Act. This recognises the natural monopoly characteristics of the infrastructure and is designed to promote consumer interests over the long term through three interlocking measures:
- Underlying input methodologies that provide certainty for regulated providers on how key regulatory matters will be determined.
- Maximum revenue and quality standards for Chorus, as the largest fibre provider, which constrain its ability to charge excessive prices and secure the quality New Zealanders have come to expect from their fibre services.
- Information disclosure requirements for Chorus and the other fibre providers that give the Commission and the public timely information to monitor outcomes, market performance, prices and quality for all fibre providers.
Together, these measures protect quality for New Zealand consumers, while also ensuring fibre providers have continued incentives to invest, innovate and find operational efficiencies.
The Telecommunications Act contains various review mechanisms designed to ensure the regime remains fit-for-purpose, including:
- Input Methodology reviews – we are required to review the Input Methodologies every seven years.
- Deregulation reviews – we are required to consider whether there are reasonable grounds for deregulating each of the seven regulated fibre services before the start of each new regulatory period.
