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Telcos oppose "toxic" law change easing restrictions on Chorus

Telcos oppose "toxic" law change easing restrictions on Chorus

Proposed telco law revives old regulatory arguments, prompting rivals to face-off against network operator Chorus.

The regulation of Chorus is being relitigated with predictable results

The regulation of Chorus is being relitigated with predictable results

Kordia and Vocus come out against changes to telco regulation that they believe would allow Chorus to compete more broadly in the market.

Kordia is opposing the elimination of restrictions on Chorus operating what are called level two services while Vocus is opposing a number of changes it describes as a "toxic combination" for competitors.

The changes, they say, remove restrictions on Chorus expanding its market into the fixed line wholesale market while it retains a monopoly on fixed line access.

"The combination of regulating only ‘entry level’ anchor services and removing restrictions on Chorus’ lines of business is a particularly ‘toxic cocktail’ for existing retail competitors," Vocus says in its submission on the Telecommunications (New Regulatory Framework) Amendment Bill now before Parliament.

"The current proposal would leave Chorus in the enviable position of being a large scale monopoly provider that has a guaranteed rate of return over the life of its assets, is able to exploit the advantage it has from its monopoly access into an expanding range of commercial access products as well as being able create a full range of fixed line telecommunications services, not just local access and backhaul, that use their monopoly access service.

"Chorus will be effectively retailing in ‘all but name’."

Vocus says there has been no consultation on the proposed easing of restrictions which, if passed into law, would allow Chorus to leverage its monopoly advantage in local access, in order to capture the currently competitive fixed line wholesale market.

Kordia agrees, saying in its submission the restrictions were included in the old regime to limit "scope creep" by Chorus and continue to add in a "meaningful and useful way" to restricting Chorus providing retail services - such removal would lower competition in telecommunications markets.

Chorus in its submission says the Bill is the culmination of the Telecommunications Act Review, which began in 2013 and should be implemented as soon as possible.

"A key policy decision, supported by all major stakeholders, is to move to a 'utility model' in 2020 when the first UFB agreements end," it says.

Furthermore, it aims to do so without shocks for consumers or investors and removing legacy regulation "where no longer required".

The Telecommunications Act review started in 2013 allowing time for robust consideration of the post 2020 framework, Chorus says.

The company is suggesting "timely implementation" of the new regime arguing that potential extensions to implementation should be reduced from 24 months to six months.

"Timeliness and quality regulatory decision-making are both critical and achievable," it says.

Chorus says the review was meant to achieve a regime that could adapt to changing technology and consumer demands and suggests additional amendments to better achieve that, including widening its scope to include Next Generation Access technologies.

Chorus also suggests removing "unnecessary legacy restrictions" to avoid barriers to new wholesale network customers using its network to provide services outside of traditional retail voice or broadband services.

"We have no aspirations to retail services, but the Bill doesn’t cater for the changing face of wholesale customers," it adds.


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