Commerce Commission opens fibre deregulation debate

Thursday, 14 December 2023, 12:06 pm
Article: Digitl

Commerce Commission opens fibre deregulation debate

New Zealand’s fibre regulation regime is less than two years old, yet this week the Commerce Commission began looking at deregulating fibre. It will address the questions of information disclosure and price-quality regulation. These rules affect Chorus. The other fibre companies have a lower regulatory burden.

While it may look like official indecisiveness, it is a simple case of following the rules. The Telecommunications Act requires the commission to consider whether it is time to start reviewing fibre deregulation before the start of each regulatory period.

The next regulatory period covers 2025 to 2028. Kicking off the, potentially lengthy process a year ahead of the deadline makes sense.

Changing competitive landscape

Telecommunications evolves fast. New Zealand’s competitive landscape has changed in the short time since the existing rules were developed.

The merger between 2degrees and Vocus New Zealand altered market dynamics. It’s early days, but it could have a significant impact by the time we reach the 2025 - 2028 regulatory period.

Meanwhile the arrival of 5G fixed wireless broadband means there is a now viable alternative to fibre networks in many parts of the country. This will increase as carriers move to standalone 5G. By 2028, the overwhelming majority of customers on the fibre network will have a second terrestrial fast broadband option.

Satellite competition

Although the emergence of low earth orbit satellites doesn’t appear to pose a direct competitive threat to fibre at this stage it does mean that most New Zealand businesses and households have at least three competing broadband technologies to choose from.

And again, satellite performance is evolving fast. Amazon says its planned LEO network will offer 400 Mbps downloads. That is competitive with the most popular fibre plan.

For now, the Commerce Commission says it is seeking stakeholder views on the framework it should use to assess whether there are reasonable grounds to investigate the deregulation of fibre services. That’s a long way from actually deregulating anything. In effect, these are talks about whether there should be talks.

Telecommunications Commissioner, Tristan Gilbertson wants to hear views from interested parties on whether there are any grounds for conducting a regulation review. If there are any grounds, then the Commerce Commission has to move onto conducting the review and then making a recommendation to the minster on which fibre services

Tuanz argues against deregulation

Tuanz CEO Craig Young says it is early to start discussing deregulation, but he says it is too soon to change the existing regime.

He says: "We’re at an early stage of the regulations, we don’t yet know how it is going to pan out. Yet now is not the right time to deregulate. Those rules were put in place for a reason, even though there are competing technologies, they are not the same as fibre.

“They are not as capable. Chorus has the lead. Fibre is the base service that most people will continue to use. It is still dominant.”

“Perhaps next time”

Young thinks by the time we get to the following regulatory period fixed wireless and satellite broadband will have mature to the point where: "There may be a case of relaxing some off the regulations and making it easier, but not yet.

“Information disclosure and price-quality regulation are the things that protect consumers and business users directly. This is why we strongly suggest they need to stay.”

It is not covered by Commerce Commission rules, but Chorus faces government imposed restrictions on its overseas ownership. This stems from the deal Telecom NZ cut with what was then Crown Fibre Holdings (now Crown Infrastructure) in 2009 to win UFB fibre contracts.

Today those restrictions limit Chorus’s ability to raise funds that could be used to extend the fibre network further into rural New Zealand. Now would be a good time for lawmakers to review that restriction, which seems excessively harsh considering one of the smaller fibre companies, Tuatahi First Fibre, is now overseas owned.

ComCom finalises 2023 Telecommunications Development Levy charges

There are no surprises in the Commerce Commission’s final decision on payments for the 2023 Telecommunications Development Levy. Once again Spark NZ, One NZ, Chorus and 2degrees will pay the lion’s share of the levy which this year sits at $11.25 million.

Money collected through the levy is used to pay for aspects of telecommunications that were thought of as government services when the sector was a state-owned monopoly. This includes relay service for the deaf along with improvements to the 111-emergency service. Part of the money pays for rural broadband services.

The levy is paid by any telco earning more than $10 million a year. As an aside, SpaceX’s Starlink service is close to the threshold and is likely to be included in next year’s levy.

Each telco’s contribution is proportional, which explains why the top four contributors pay close to 90 per cent of the total (87 per cent).

Spark hits million connection milestone with smart meter IoT

Spark says it now has a million IoT connections on the Bluecurrent electric meter network. Bluecurrent is the new name for Vector’s metering business. The company says 70 per cent of its IoT connections are in Spark’s CAT-M1 IoT network.

CAT-M1 is based on 4G mobile technology but can be upgraded to 5G at a later date without the need for a site visit.

Spark says CAT-M1 enables more flexible options for remote meter reading. This gives Vector’s customers real-time information on electricity which, in turn, improves operational efficiency. It also means power companies can do a better job identifying the location of faults or outages which saves money and can speed up recovery.

International Telecommunications Union opens 6G framework

Work has begun on developing standards and technologies for 6G mobile at the International Telecommunications Union. These should be ready at the end of this decade. The ITU is the United Nations agency that governs communications technologies.

The agency has set a target for 6G to offer peak data rates of 50 to 200 Gbps with users being able to get 300 to 500 Mbps on their devices. Other targets include an average latency of 0.1 to 1 millisecond and an ability to support users travelling at between 500 and 1000 kmh. The ITU wants to see 6G capable of a density of between 1 and 100 million devices per square kilometre.

It’s not just about improved performance. The ITU’s framework describes new capabilities including being able to pin-point the position of a device to within 10 to 100mm and a distributed processing capability that can handle AI workloads. There are requirements for improvements in sustainability and energy efficiency.

Making this happen will need more spectrum and large blocks of spectrum. The ITU is looking at the potential of extremely high frequency spectrum above 92 GHz, the millimetre band. Radio signals in these bands can be affected by humidity and rain, even over a short distance.

Mobile handset shipments lowest in almost a decade

Counterpoint Research says it expects phone shipments to shrink 5 per cent this year to a total of 1.2 billion. Although the research organisation says it expects sales to increase 3 per cent in the fourth quarter of 2023.

Apple is set to dominate those fourth quarter sales. This is the established pattern with the company launching new iPhone models in the run up to Christmas each year. Yet Counterpoint warns Apple faces pressure on its sales in the US from continuing high interest rates and more intense competition from Huawei in China.

In other news…

At Reseller News, Rob O’Neill writes “After years of pushing into the ICT services market, One NZ appears to be doubling down on telco again.” He says up to 50 jobs could be lost early in the New Year as the company reorganises. One NZ’s IT services and cloud operations are struggling to make a profit and appear destined for the axe.

SkyTV has increased prices again and will introduce advertising on its Neon streamlining service says the NZ Herald’s Chris Keall. Prices for Sky Sport Now are going up 11 per cent from $45 to $50 a month. The standard Neon plan is rising by the same amount to $20 a month. Sky’s basic Neon plan stays at $13 but users will now have to put up with advertising before shows start.

IBM took the wraps off its new quantum computing chip along with a computer that it says it hopes will become the building blocks of much larger systems. The company says it will have “compelling” quantum computers by 2033.

Carmaker Nissan’s Australia and New Zealand business is the latest high profile organisation to be hit by a cyber attack.

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Bill Bennett

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Auckland-based Bill Bennett writes technology and business stories that are directly relevant to New Zealand readers.

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