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Telecommunications Act 2001

Fibre fixed line access services - Input methodologies - Input methodologies

177: Initial value of fibre assets

You could also call this:

"How to work out the starting value of fibre internet equipment"

Illustration for Telecommunications Act 2001

The initial value of a fibre asset is calculated by taking the cost of constructing or acquiring the asset, and then adjusting that cost for depreciation and losses. You need to consider the cost incurred by the fibre service provider, minus any capital contributions they received from others. The cost is also adjusted for depreciation and impairment losses, which means the asset's value decreases over time.

When calculating the initial value, you must look at the cost of the asset as at the implementation date, and consider any financial losses the provider incurred in providing fibre services. The Commission determines these financial losses, taking into account any returns on investments the provider made, and any financing costs they incurred.

The initial value of a fibre asset includes costs incurred by the provider in meeting specific requirements of the UFB initiative, and for both standard and non-standard connections, as defined in section 155ZU. A fibre asset is an asset used to provide fibre fixed line access services, and can be constructed or acquired by a regulated fibre service provider.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS131977.

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Part 6Fibre fixed line access services
Input methodologies: Input methodologies

177Initial value of fibre assets

  1. The initial value of a fibre asset is calculated by—

  2. taking the cost—
    1. incurred by a regulated fibre service provider in constructing or acquiring the fibre asset, net of specified capital contributions; or
      1. if the fibre asset was owned by Chorus before 1 December 2011, recorded by Chorus for the fibre asset in its published general purpose financial statements as of 1 December 2011; and
      2. adjusting that cost for accumulated depreciation and impairment losses (if any) recognised by the regulated fibre service provider (ignoring any accounting adjustment for Crown financing), as at the implementation date, under generally accepted accounting practice in New Zealand.

        1. Each regulated fibre service provider is treated, as at the implementation date, as owning a fibre asset with an initial value equal to the financial losses, as determined by the Commission, incurred by the provider in providing fibre fixed line access services under the UFB initiative for the period starting on 1 December 2011 and ending on the close of the day immediately before the implementation date.

        2. In determining the financial losses under subsection (2), the Commission—

        3. must take into account any accumulated unrecovered returns on investments made by the provider under the UFB initiative; and
          1. in respect of any Crown financing provided in connection with those investments, must refer to the actual financing costs incurred by the provider (or a related party).

            1. It is not the intention of subsections (2) and (3) that regulated fibre service providers should be protected from all risk of not fully recovering those financial losses through prices over time.

            2. To avoid doubt, the initial value of a fibre asset determined under this section includes the costs incurred by the provider in relation to the asset—

            3. as a direct result of meeting specific requirements of the UFB initiative; and
              1. for both standard connections and non-standard connections.

                1. In this section,—

                  accumulated unrecovered returns means the sum (adjusted to reflect the present value, as calculated in the manner that the Commission thinks fit, at the implementation date) of the unrecovered returns on investments for each financial year, or part financial year, that starts on or after 1 December 2011 and ends before the close of the day immediately before the implementation date

                    fibre asset means an asset that is—

                    1. constructed or acquired by a regulated fibre service provider; and
                      1. employed in the provision of fibre fixed line access services (whether or not the asset is also employed in the provision of other services)

                        specified capital contribution—

                        1. means a capital contribution received by a regulated fibre service provider from 1 or more of the following:
                          1. an access seeker:
                            1. an end-user:
                              1. any other person, as determined by the Commission; but
                              2. does not include any Crown financing

                                standard connection and non-standard connection have the meanings set out in section 155ZU.

                                Notes
                                • Section 177: inserted, on , by section 24 of the Telecommunications (New Regulatory Framework) Amendment Act 2018 (2018 No 48).