Joyce defends UFB regulatory holiday at telco conference

It's the best option, minister tells audience

ICT Minister Steven Joyce staunchly defended the 10-year regulatory holiday granted to providers to the Ultra-fast broadband network during a speech at the Tel.Con 11 conference in Auckland this morning.

Referring to the decade of freedom from Commerce Commission scrutiny as “the regulatory forbearance period”, Joyce said “if you listen to the criticism of it, you’d think the new fibre network was just like the old copper one.”

With different providers utilising it, and legislation preventing them from raising prices during the regulatory holiday, the new network won’t be able to be used to extract monopoly rents, Joyce told the conference.

The continued presence of the old copper network will also provide an added incentive to keep UFB service prices down, he said, noting that if UFB providers price services above that of those offered on the copper network, there will be little incentive for users to switch networks.

Without a regulatory holiday, UFB service providers would face significant uncertainty, he said; the prospect of a Commerce Commission ruling overturning an aspect of the contract between the provider and Crown Fibre Holdings would make it very difficult for providers to price their offerings, he said.

An audience member, asking a question following Joyce’s speech, noted that a regulatory holiday is unprecedented in telecommunications regulation globally.

Joyce replied that there’s no established best-practice in the telecommunications industry for rolling-out and regulating ultra-fast broadband networks, so it’s a matter of doing what’s best at the time, with reviews of the regulatory environment every few years.

The audience member noted that there seems to have been little discussion of alternatives to the regulatory holiday while the policy was being formulated, to which Joyce replied by re-iterating the legislative prohibition on providers raising prices during the holiday period.

Conference chair Rosalie Nelson asked Joyce about the effect of the regulatory holiday should UFB network uptake prove slower than expected, and significant numbers of telco customers remain on the copper network.

“I don’t see that scenario happening,” he replied, while acknowledging that some customers would choose to remain on the copper network.

Joyce noted that during the regulatory holiday, the Commerce Commission will be gathering information and preparing the regulatory environment for the time when the holiday ends.