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.
Telecommunications Commissioner Tristan Gilbertson said the decision on input methodologies covers core areas including cost allocation, capital expenditure, returns to investors and quality – with a further decision to follow on the Commission’s approach to the financial loss asset on 3 November 2020.
The Commission says that, 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.
“I am grateful for the extensive engagement we have received from stakeholders as we have moved through this process over the past two years,” Gilbertson said.
“Input methodologies have never been set for fibre networks before – so this has been pioneering work for the Commission and the industry.”
The Commission announced that it 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 New Zealand’s largest telco, Chorus, The Commission has said that regulation will take the form of a revenue cap that ultimately constrains the price consumers pay for broadband - with regulation also seting 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 will also be required to publicly disclose information about their performance, including in relation to profits, quality of service and expenditure - enabling stakeholders, including consumers, to gauge how effectively the regulatory regime is promoting the long-term benefit of end-users.
“I look forward to continuing our work with the industry and other stakeholders to lock down these arrangements before the new regime commences on 1 January 2022,” Commissioner Tristan Gilbertson said.