Initial submissions on the Government's review of the Telecommunications Act 2001 closed on 13 September. The effectiveness of New Zealand's existing policy framework for regulating telecommunications services is being examined, with a key focus on the transition from copper to the new fibre network which is being built and the regulatory treatment of each (the price of copper is regulated, while the price of fibre is not).
At the heart of the review is a controversial central Government proposal to override a Commerce Commission recommendation to cut copper wholesale pricing. As things stand, the current wholesale copper price (as set by the Commission) is higher than the price of fibre access, but the Commission's recommendation late last year was to reverse that, so that copper access would be cheaper than fibre access.
The Commission copper pricing recommendation wasn't what the Government had in mind when it passed the Telecommunications (TSO, Broadband and Other Matters) Amendment Act 2011 – Government policy has been that low copper pricing could stunt the uptake of the new fibre network. However, the Commission has said that rather than slow the transition to fibre, decreased copper pricing will not reduce the incentive for access seekers to upgrade to fibre if their intention is to differentiate their services from copper based services.
The Government proposal to override the Commerce Commission's recommendation on wholesale copper prices has sparked a strong reaction from both consumers and some telecommunications companies, including Vodafone, Orcon, and CallPlus. Vodafone's submission to the review describes the government's proposal as acting on a "whim to deliver unnecessary corporate welfare to Chorus, at the expense of all consumers who will pay more for telecommunications services, including those consumers who gain nothing from UFB for a substantial period, if at all".
As the owner of the copper network, Chorus shares the Government's view and has expressed concern that low copper revenues and slower migration to fibre will affect its ability to roll-out the fibre network around the country. In its submission, Chorus argued that "the copper pricing framework is threatening to undermine the key migration policy by shifting the price relativity", with Chorus proposing that copper pricing be frozen until 2020 to create "the best opportunity for UFB's success".
While this battle is interesting to watch, copper pricing is not the only matter under consideration. Innovation in the telco market - including greater industry investment in new technologies and timely consumer access to those technologies - and the possibility of deregulation in areas where there is sufficient competition are also included. Keep an ear out for further developments – and don't just focus on the, ahem, "chorus".