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Will NZ get it right?

New Zealand is moving towards “utility style” regulation for ultra-fast broadband (UFB) copper and fibre networks. Its main focus is on the application of price–quality regulation based on the ‘building blocks’ model (BBM).

The BBM is just one step towards the utility style regulation. New Zealand has the opportunity to also adopt utility style wholesale pricing which addresses its concerns about affordable anchor products while also encouraging adoption and use of broadband networks.

For more, see Economuse 2016-08-29

All submissions at

Submission to NZ regulatory review

The Ministry of Business Innovation and employment NZ is moving to the building block method (BBM) adopted by the ACCC some years ago.There are several ultra-fast broadband providers in NZ and one of them also has a copper network with no decommissioning deadline. The Ministry is seeking views on how this wholesale sector should be regulated from 2020.

My submission suggests that the BBM is just one step towards the utility style regulation that it wants. NZ has the opportunity to also adopt utility style wholesale pricing which addresses its concerns about anchor products, encourages adoption and use of broadband networks while avoiding the mistakes made by Canada and Australia.

The submission can be accessed here: NZ-2016

Time to test $300m pa for USO?

This one page Economuse draws attention to the $3oom pa paid to Telstra for the “copper continuity obligation”, which maintains fixed copper services outside the NBN fixed network footprint. It suggests that changes to the definition of the USO and the growing availability of mobile services mean that there may be savings possible in a renegotiated contract. See Economuse 2016-07-14

Productivity Commission – Submission on USO

The Productivity Commission is taking submissions on the policy for the universal service obligation (USO). Submissions are due by 21 July. The draft report is expected in December with a final report to the Commonwealth bu April 2017.

My thoughts on the future of the USO are expressed at length in my Occasional Paper for ACCAN (see my publications page). But, I have submitted some key point in this 3 page submission USO-Prod.Com.July-2016

The NBN and competitive neutrality

In my previous column, I said I would explain how the discount rate might be set for a company with neither debt nor equity. The NBN is not quite the same but the same solution was used for it both by the ACCC and the BCR. Combining that information with the BCR’s estimate of the economic loss that the NBN incurs in supplying fixed wireless and satellite services, I find that that there is some evidence that the NBN is breaching competitive neutrality – i.e. competing unfairly. This issue was first raised by the NBN’s competitors in greenfield fibre sites and the issue is likely to arise again.

The most logical solution, it seems to me, is to write-down assets (and the corresponding amounts in the ICRA) so that the overall internal rate of return becomes commercial.

For more, see Economuse 2016-06-06