Broadband Network Access Regulation, New Zealand

The problem

Telecom New Zealand was worried that proposed regulation of the national fibre network would create market distortions that might undermine cost recovery and network investment.

The regulation would mandate network access for broadband internet providers at two different layers of network architecture, creating risk of inefficient price arbitrage between the two layers. This could distort competition and created perverse incentives for investment.

How we helped

Castalia helped Telecom prepare its position on access regulation. We documented the regulation of fibre networks globally and found that regulation mandating access at multiple layers in the service stack was less frequent than single-layer access regulation. We showed that mandating access at a single layer addressed the main economic bottleneck without running the risk of distorting competition. It also supported investment in expanding the fiber broadband network.

Impact

Castalia’s advice enabled Telecom to prepare well-informed submissions to the government showing that regulating access at a single layer would achieve competitive outcomes with less market distortions. Despite this, multi-layer access was regulated.