NZ FTTH providers to get 10 year holiday from price regulation

Stuart Corner
Monday, 16 May 2011 19:44

IT Policy - Regulation

The New Zealand Government is to press ahead with plans to give operators of its planned fibre to the home networks a 10 year holiday from price regulation, despite opposition from a broad swathe of the industry and from almost every other political party.

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The regulatory holiday will be legislated by the Telecommunications (TSO, Broadband, and Other Matters) Amendment Bill now before Parliament that was referred to the Finance and Expenditure Committee), which has today tabled its recommendations.

It calls for a number of amendments, but critically recommends retaining provisions in the Bill that exempt providers of the urban area Ultrafast Broadband Network from regulatory oversight.

In its commentary on its recommendations the committee said: "To be able to offer prices that are competitive with the current copper network from the outset, those who bid to supply services through the UFB require some certainty that prices negotiated would not change during the period in which the fibre network is being built.

"In the bill as introduced, the Government proposed the imposition of a forbearance period, with the intention of providing the necessary regulatory certainty. During the forbearance period, which would last until 31 December 2019, the Commerce Commission would not be able to investigate the prices that were set for supplying services through the UFB. Price caps would be set in contract between Crown Fibre Holdings (CFH) and the local fibre company (LFC) at the outset of the forbearance period. The appropriate prices would have been determined through the competitive bid process to choose private partners for the Government in the UFB initiative, which is being administered by CFH."

The National Party-dominated committee has recommended passage of this part of the legislation largely unchanged, but the New Zealand Labour Party, the Greens and the ACT Party have all lodged opposing statements in the committee's report.

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