Original URL: http://www.theregister.co.uk/2011/05/18/kiwis_dump_regulatory_holiday/

Kiwis dump telco 'regulatory holiday'

Joyce dances on the public-private highwire

By Richard Chirgwin

Posted in Networks, 18th May 2011 00:45 GMT

New Zealand’s government has decided to abandon the regulatory holiday it had offered to companies building fibre broadband in that country, under its UFB (ultra-fast broadband) programme.

The government had proposed freedom from Commerce Commission price regulation to companies building networks as contractors to the government-owned Crown Fibre Holdings during the eight-and-a-half year network build.

Critics said this would allow the network builders to dictate wholesale terms until the “regulatory forbearance period” expired, leading in turn to higher retail prices for other retailers accessing the fibre.

New Zealand’s communications minister Steven Joyce has instead announced that the Commerce Commission will be allowed to regulate prices offered under the scheme. If it imposes significantly lower prices for wholesale access, the government will “wear the risk”, Joyce said.

For example, a lower return from operators to Crown Fibre Holdings might be managed by deferring repayments to the government.

In addition, Joyce committed the government and the Commerce Commission to considering investment and innovation in network rollout when looking at wholesale price regulation.

New Zealand’s broadband rollout comprises two distinct initiatives: the UFB, which covers 75 percent of households, and the Rural Broadband Initiative (RBI), which guarantees 5 Mbps or better to most of the remaining 25 percent of households.

The UFB is being delivered through a government-owned company, Crown Fibre Holdings, which in turn lets local contracts to bidders from the private sector. The regulatory holiday was designed to attract more interest from private bidders in the network build. ®