Expert report for Trustpower on the Commerce Commission’s Emerging Views on Fibre Regulation, 2019
The Commerce Commission was considering the framework to apply when determining the input methodologies (IMs) for providers of regulated fibre access services. Trustpower engaged Link Economics to prepare an expert report that was submitted to the Commission.
Our report discussed economic principles to guide the design of the regulatory regime and highlighted that the telecommunications market context meant that the principles adopted for regulation of other sectors under Part 4 of the Commerce Act were not sufficient for fibre regulation (regulated under Part 6 of the Act). We also considered whether an uplift in the Weighted Average Cost of Capital (WACC) would be appropriate. We concluded that underinvestment risks and consequences are likely to be much less significant for fibre services than for electricity distribution network services where an uplift is applied. We also commented on processes for ensuring transparent and robust treatment of cost allocation and discussed the potential for applying pricing principles to Local Fibre Companies (LFCs).