The Commerce Commission (“Commission”) gives public notice under section 179(2) of the Telecommunications Act 2001 (“Act”) that it is proposing draft amendments to its input methodologies for fibre fixed line access services (“fibre IMs”), as signalled in its amended notice of intention dated 19 August 2021.
Scope of the Amendments
During the process of determining the first price quality (PQ) path for Chorus Limited (“Chorus”) and the information disclosure (ID) requirements that will apply to Chorus and the other local fibre companies (LFCs) under section 170 of the Act, the Commission has identified certain circumstances where amendments to the fibre IMs are required to:
- implement its proposed approach for determining Chorus’ initial price-quality regulatory asset base (“initial PQ RAB”) and transitional initial price-quality regulatory asset base (“transitional initial PQ RAB”); and
- correct errors and improve the workability of certain provisions of the fibre IMs.
The proposed amendments would:
- provide for alternative methodologies with equivalent effect or substantially the same effect which may be applied in determining the financial losses;
- correct for the effect of tax losses;
- correct errors in the present value benefit of Crown financing formulae, as used to determine the financial losses;
- clarify other allocator types that may be applied by the Commission in determining the financial losses;
- correct errors in formulae for “UFB cost allocation adjustment cash flow”, as used to determine the financial losses;
- correct errors in formulae for “revenue date compounding factor”, as used to determine the financial losses;
- correct errors in Cost Allocation fibre IM provisions that specify requirements for operating costs and asset values that are not directly attributable to regulated FFLAS and UFB FFLAS;
- improve the workability of Asset Valuation fibre IM requirements in respect of the cost allocation process used to determine the “opening RAB value” of fibre assets at implementation date in Chorus’ transitional initial PQ RAB;
- clarify how certain Asset Valuation fibre IMs for ID are used to determine asset valuation inputs for Chorus’ maximum revenues for the first regulatory period;
- clarify the treatment of negative, positive, or nil values for the calculation of price-quality path forecast values for the financial loss asset; and
- correct an error in clause 3.2.1(4) of the Cost Allocation fibre IM for PQ paths.
Copies of the draft fibre IM amendments, and the supporting draft reasons paper, are available on the Commission’s website via the fibre input methodologies project page at https://comcom.govt.nz/regulated-industries/telecommunications/projects/fibre-input-methodologies and for inspection free of charge, or for purchase at a reasonable price, at the Commission’s Office at 44 The Terrace, Wellington (during ordinary office hours).
The Commission is seeking submissions from interested persons on the draft fibre IM amendments specified in this notice by 5.00pm on 16 September 2021, and following submissions, the Commission invites cross-submissions on these matters by 5.00pm on 30 September 2021.
Submissions on the draft fibre IM amendments can be made here: https://comcom.govt.nz/file-upload-form-folder/file-upload-form.
Dated at Wellington this 31st day of August 2021.