Commerce Commission releases rules on input methodologies for fibre broadband networks

14 Oct 2020

New Zealand’s competition regulator, the Commerce Commission, has released its first set of final decisions on the input methodologies that will apply to fibre fixed line access services, with new rules designed to safeguard consumers of fibre broadband. The Commission says the input methodologies are designed to incentivise fibre providers to innovate, invest, and improve their efficiency so that consumers receive high quality and affordable broadband services. They cover core areas including cost allocation, capital expenditure, returns to investors and quality, while a further decision on the Commission’s approach to the financial loss asset will follow on 3 November 2020. As with other regulated sectors, the input methodologies are designed to give fibre providers upfront certainty on the regulatory rules, processes and requirements that will be applied to their businesses, while also counterbalancing their incentives to maximise profits at the expense of consumers.

The Commission will now move into the second and final stage of the process for fibre regulation where it will use the input methodologies framework to set detailed regulatory requirements for each of the regulated fibre networks. For Chorus, regulation will take the form of a revenue cap that ultimately constrains the price consumers pay for broadband. Regulation will also set the minimum quality standards Chorus must deliver, including in relation to customer service, service availability and network performance. Chorus and the other local fibre companies – Enable Networks, Northpower and Ultrafast Fibre – will also be required to publicly disclose information about their performance, including in relation to profits, quality of service and expenditure. This will enable stakeholders, including consumers, to gauge how effectively the regulatory regime is promoting the long-term benefit of end-users.