Overview

In December 2020 we published design phase outputs relating to the 2022 CSA transition process. The outputs included:

• strawman proposals developed by us in relation to price change mechanics, required regulatory changes, liability, security and insurance, and
• the outputs of co-design workshops between us and RSPs in relation to change management and Chorus’ relationship with end-users.

We included high level future state proposals for consideration as part of these outputs which were informed by the understand and design phase insights to date. The outputs also reflected the broader transition scope agreed with industry - in addition to those changes required to ensure the 2022 CSA is fit for purpose under the new regulatory regime from 1 January 2022.

We invited all RSPs to give us bilateral feedback on these outputs in late February this year. The intention of these feedback sessions was to test whether we had accurately reflected the positions reached in our co-design discussions and to understand what (if anything) remained outstanding for further discussion.

Summary of RSP feedback

Over the last few weeks, we’ve caught up with those RSPs who took up this invitation – there were only five of them. It was apparent from our discussions that we have varied levels of engagement from RSPs at this stage of the process; with some RSPs wanting a walk-through of the outputs with no feedback of substance, and thorough, substantive feedback on all matters under discussion from one RSP only. As a general note, we understand RSPs have not necessarily been able to prioritise this transition process. This is a concern in relation to achieving an effective 2022 CSA transition which is implemented on a timely basis.
 

More details about the RSP feedback we received is published on our dedicated 2022 CSA webpage.

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Reconsidering the appropriate scope

At the same time, we’ve had another think about how best to progress the transition to a new 2022 CSA, particularly in terms of scope. We believe it is worth reconsidering the merits of a narrower transition scope, which focuses on those changes required from a regulatory perspective.

The rationale for this re-think is summarised below:

• Time and resource to implement broader scope outweighs the value for us and RSPs in proposed changes
  We’re conscious the future state proposals we identified for consideration are high level. It will take considerable time and resource from us and RSPs to develop these high-level proposals into detailed agreed positions from which we can draft revised contractual provisions confidently. We are not convinced there is enough value in the proposed changes to make this cost and time worthwhile for us – and, we suspect, for RSPs.
   
• Early feedback from RSPs was that the existing contracts was largely fit for purpose
  We heard early from RSPs in this process that the existing terms were largely fit for purpose. At the understand workshop we were encouraged not to ‘throw the baby out with the bath water’. We understood industry was up for a broader scope if it delivered sufficient value to off-set the cost in time and resource to deliver implementation of those broader scope changes.
   
• Insights from this transition process to date suggest we should work on behavioural changes first before we consider any contractual changes
  The insights gained from our workshops on the top priority areas of change and direct end-customer relationships point to behavioural changes being needed. Given the nature of the pain points and solution ideas proposed, there is a risk that contractual changes at this stage would not necessarily resolve the underlying challenges identified. We believe the priority one solution ideas should be progressed separately from this transition process – as part of an internal pan-Chorus approach.
   
• There is implementation risk with the broader scope
  We’d intended to implement the changes proposed under the broader scope by agreement with RSPs. The Agreement Change mechanic under the existing contract requires (i) 75% of RSPs attending the relevant meeting to vote in favour and for those votes to represent at least 50% retail market share by reference to fibre services, and (ii) 60 Business Days’ notice to RSPs. As an industry we will run the risk of expending time and resources on changes which may not end up being implemented at all or in the time required if the voting thresholds are not reached.

Next steps

We’re now in the test and iterate phase of the transition process. We are hosting an all RSP feedback session regarding the proposal to narrow transition scope on Wednesday 24 March 2021, 10:30am-12pm.

We’ve already sent invitations to this session to those RSPs who have attended previous transition workshops. If you have not received an invitation and are keen to attend, please contact us on 2022csa@chorus.co.nz by 12noon on Friday 19th March.

Contact

For any queries please contact us at 2022csa@chorus.co.nz