Telcos push for lighter touch as Government reviews sector rules

Wednesday, 13 August 2025

The regulatory review looks likely to be more of a tidy-up than an overhaul.

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Telecommunications companies have started to lift the lid on changes that they hope will flow from a review of regulations that the Government kicked off in June.

Chorus is advocating for the removal of a rule that prevents any one investor buying more than a 10% shareholding in the broadband network company, which is valued at just over $4 billion on the NZX.

One NZ, formerly Vodafone, appears to be seeking a slightly lighter hand from the Commerce Commission, which has been accused of being over-zealous in setting out how telcos should communicate with customers.

However, many in the sector are urging the Government not to risk throwing the baby out with the bathwater by unpicking any rules that underpin the market for ultrafast broadband.

Communications Minister Paul Goldsmith told The Post he didn’t necessarily feel the sector had been over-regulated in the past “but there may be things we can do differently”.

The cap on Chorus’ holdings could potentially be looked at, he said. “We are just working through those issues at the moment.”

Data released under the Official Information Act suggests the commission has continued to put more resources into policing the largely-tamed telecommunications sector than industries where competition now appears a more pressing concern, such as banking and groceries.

As of late April, the commission had a core team of 29 staff engaged in telco matters, 22 staff and contractors in its groceries team and 18 specifically engaged on matters related to the power sector, all on average salaries of about $140,000 a year.

The regulatory review was jointly announced by Minister of Regulation David Seymour, who has been leading the Government’s charge against red tape, and Goldsmith, who has primary responsibility for the telco sector.

It is due to be completed in October with any decisions that flow from it expected to be announced early next year.

“Not necessarily”; Paul Goldsmith’s response when asked whether he believed the sector had been over-regulated.

Its terms of reference make clear its focus is on identifying opportunities for deregulation but that tampering with the structural separation of wholesale fibre network companies, such as Chorus, from retail providers such as Spark, One NZ and 2degrees is out of bounds.

Chorus general counsel Kristel McMeekin said the review was a “timely opportunity to achieve a proportionate regulatory framework and removal of historic regulation that is no longer fit for purpose”.

The rules imposing a 10% cap on Chorus shareholdings which “add cost, uncertainty, and potential delays for prospective investors without offering any additional protections” were a good example, she said.

“These restrictions are an additional and unnecessary overlay to newer regulatory frameworks now in place, including the revised Overseas Investment Act and Takeover Code, which provide robust oversight of investment in Chorus.

“No other fibre or telecommunications infrastructure company has these restrictions,” she added.

Spark spokesperson Rachel Morton said it didn’t have a view on the ownership model of Chorus but had made a submission to the Ministry of Regulation on the wider review.

“One of the things we have asked for is a review of the Telecommunications Development Levy methodology which we believe is complex to apply and lacks transparency.

The Commerce Commission commits more resources to telecommunications than other industries, and it’s also the sector in which competition is often viewed as working best.

“On behalf of the industry, the Telecommunications Forum has identified less complex options for levying the sector which we support.”

The small annual levy — the existence of which isn’t up for review — is used to fund a variety of telco infrastructure, including some broadband services in rural areas and the phone relay service for the deaf.

One NZ spokesperson Nicky Preston said it had also responded to requests for information from the Ministry of Regulation.

The Government had a role to play in keeping markets competitive, she said.

“Telco industry competition has delivered huge benefits for New Zealanders including increased choice, quality of services, new technology and lower prices.

“There are several features of existing regulation that support good consumer outcomes, including wholesale access to fibre built under the ultrafast broadband initiative while restricting fibre companies from acting as a retailer.”

But there were opportunities to “streamline some existing regulations, particularly around reporting requirements and standardised service delivery”, she said.

The commission’s decision last year to prosecute One NZ over alleged Fair Trading Act breaches in relation to marketing claims for its Starlink-based text message service is understood to have raised eyebrows in the Beehive.

That case is due to go to trial in 2027.

The commission has also faced strong pushback from telcos over a 2023 initiative intended to make them display their rankings in customer service surveys on their websites and in their stores.

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