Do regulatory changes to copper services matter

Do regulatory changes to copper services matter?

Simon Bridges, NZ Minster for Communications, recently announced changes to the way copper services will be regulated from 2020.

Key points in this release were:

  • As the copper network is essentially being replaced by UFB, it is appropriate that copper regulation be removed from 2020. It makes sense to focus on the services that most people will be using.
  • Wholesale prices for copper services in non-UFB areas will be inflation adjusted from 2020
  • To make sure people are protected, copper will continue to be regulated outside of UFB coverage areas. Safeguards will also be put in place to make sure that customers do not lose their copper landlines unless there is an alternative service available at a comparable price and service level.

In areas where UFB or other fibre is not available, Chorus will be required to continue supplying copper services at prices capped at 2019 levels (with inflation adjustments over time). This will ensure consumers continue to have access to basic services at competitive prices, even when alternative networks are not available.

The maintaining of regulatory oversight on copper services outside of UFB zones is an important factor. Without it, Chorus would have been able to make its copper services a more attractive proposition by reducing prices below RBI2/Wireless services on the basis that any return on existing infrastructure is better than no return. It also leaves Chorus without what would have been an unfair advantage in the RBI2 bidding process.

I give the Government a tip of the hat on this move. They have made an important distinction and got it right.

As for the UFB zones (a geographical sphere that will keep increasing as UFB2 kicks in), Chorus will be able to increase copper service pricing on the basis that it will both increase short term revenue and act as an incentive to move clients on to UFB which will hasten the process of the copper network shutdown (or rollback).

Brendan Ritchie

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