Commissioner’s vital decisions loom
Telecommunications commissioner Tristan Gilbertson will need to decide this year whether Chorus should be forced to cut, or allowed to raise the wholesale price of ultrafast broadband.
He also looks set to release guidelines to ensure internet providers are upfront about the options facing the 30 per cent or so of consumers in UFB areas who could start to be forced off the copper phone network from September.
And he has a mystery to solve; why complaints about telcos continue to rise.
After nearly a year in the job and despite the battle ahead over broadband pricing, the former industry lawyer paints quite a glowing picture of the industry.
‘‘We are a world leader now in terms of the deployment, uptake and the affordability of nextgeneration networks – fixed and mobile – and we are a leader in terms of industry structure and regulatory design.
‘‘We have proved just how well a structurally-separated wholesale-only access model, combined with UFB as a coinvestment vehicle for driving change, can be.’’
Gilbertson, 52, knows from experience that he won’t be able to please everyone this year.
Next month, the Commerce Commission will release a draft decision on the price (currently $47.15 a month) that Chorus will be allowed to charge internet providers for its standard 100 megabit UFB service from 2022 onwards, under a new regulatory regime. The decision promises to be an echo of the telco battles of old.
‘‘Chorus wants a bigger number, the retailer providers want a smaller number,’’ Gilbertson notes.
Technology Users Association (Tuanz) chief executive Craig Young hopes the commission will be able to announce the wholesale price of UFB will come down.
‘‘One of the things that concerns me is the ‘digital divide’. Is that a low enough price to get people on to being connected? It probably isn’t,’’ Young says.
Chorus spokeswoman Holly Cushen responds that ‘‘as a consumer representative body, Tuanz’s desire for a lower-priced anchor service is understandable’’.
‘‘However, broadband prices in New Zealand are already competitive,’’ she says.
Already Spark is at loggerheads with Chorus, accusing it essentially of overestimating and loading too many corporate and other unrelated costs into the price calculation for the regulated service.
But as Gilbertson notes, Chorus is reasonably entitled to ‘‘a normal return on its investment’’.
Cushen says pricing for fibre also has to balance ‘‘Chorus continuing to invest to increase connections, promote uptake and develop new products to meet future customer demands’’.
The inputs the commission is having to consider are so technical, that Young argues the outcome may more resemble a judgment call that people will have to choose whether to trust or not.
And Gilbertson of course won’t be drawn on the likely outcome.
But he acknowledges the review is a massive undertaking ‘‘involving some of the most contentious issues in economic regulation’’, taking comfort from the fact nothing has been subject to legal appeals so far.
While the price/quality review of UFB may represent more risk than upside to Chorus, it may get cheer from another of the commission’s initiatives.
For several years, Chorus has sparred with Spark in particular over its marketing of its fixedwireless broadband service as an alternative to fixed-line technology.
It appears Gilbertson is about to lay down some firm ground rules for the whole industry.
Chorus will be allowed to start shutting down its copper network in areas where UFB is high from September, and Gilbertson is keen to avoid a feeding frenzy for uninformed, displaced customers during that ‘‘once in a generation shift’’.
‘‘We are becoming increasing concerned that customers facing decisions may be getting incomplete or inaccurate information that distorts their purchasing decisions,’’ he says.
‘‘What we don’t want to hear is customers being told their copper is being ‘taken away’ when that is not happening, or not happening yet.’’
Nor does it want to hear that customers are being told they have to switch to fixed-wireless, he says. ‘‘And we certainly don’t want to hear that customers are being led to believe that fixedwireless is a substitute for fibre because it is not.’’
The likely upshot appears to be a set of guidelines, agreed with internet providers if possible but imposed on them if not, setting out what they should do and what they can’t do in their marketing.
On the broader question of service quality in the industry, Gilbertson sees plenty of opportunity for ‘‘win-wins’’.
He says it is a paradox that despite ‘‘fantastic progress’’ in telecommunications and the fact ‘‘nobody wants an unhappy customer’’, the number of consumer complaints to the commission has doubled over the past five years.
Some of that might be explained by more complex technologies playing a bigger part in more people’s lives, but even allowing for that, the overall picture is not positive, he says.
The industry accepted it needed to up its game, he says.
And since 2018, with the latest tweak to the Telecommunications Act, the commission now had the tools to ‘‘make a difference’’, he says.
The commission began consulting in October with consumers to get to the bottom of what was going on, Gilbertson says. ‘‘The reality is that there is not an easy answer here. It is a combination of different factors and the drivers are probably different for individual operators.’’
But an overhaul of the Telecommunications Disputes Resolution Scheme looks on the cards, as do further steps to ensure consumers have more solid information, in what has traditionally been a marketingintensive industry.
‘‘We are a world leader now in terms of the deployment, uptake and the affordability of nextgeneration networks – fixed and mobile . . .’’
Tristan Gilbertson Telecommunications commissioner