Appeal for a level playing field was doomed to failure

By Richard Braddell

WELLINGTON - "It has elements of a David and Goliath plot; the virtuous underdog battling the sinister corporate super-power for the good of the little guy," a former journalist, Todd Bridgman, opens a Master of Commerce thesis on the efforts of new entrants to win the hearts of policy makers in their dispute with Telecom on number portability.

Even while number portability is almost universally seen as a pre-requisite to effective telecommunications competition, the new entrants did much worse than they might have, and that was because they portrayed their case in terms that could not dislodge a definition of the debate put up by Telecom and also the Business Roundtable, he says.

According to Mr Bridgman, the argument put up by new entrants, one of equity based around the game metaphor of the level playing field, was doomed to fail, colliding as it did against the rational face of economic efficiency espoused by Telecom; one in which the interests of the consumer hardly get a mention.

Indeed, it is blanket acceptance of these views that have defined the terms of the debate in telecommunications and seriously undermined its quality, he argues. Telecom's narrative, according to Mr Bridgman, portrays new entrant investors as people who make calculated decisions on facts, not on whether the playing field is level or fair.

The new entrants, meanwhile, have couched their case in exaggerated arguments about consumer demand for number portability. Most consumers probably don't know what portability is, although if it was explained to them that it lets them take their numbers with them if they change telephone company, they would mostly support the idea.

But it was not these "stories" that proved fatal to new entrants in getting movement on number portability, but acceptance of a third dominant story. Mr Bridgman argues that the new entrants' case fell down because they accepted the argument that light handed regulation is far preferable to intervention a story subscribed to almost universally, as he notes, even by this journalist. "How can you credibly complain of a heinous crime when you don't want the police to come in and solve it?" Mr Bridgman asks.

Mr Bridgman has done his legwork well, interviewing representatives of all the main corporate players, interest groups, officialdom and media. The outstanding exception was Communications Minister, Maurice Williamson.

He finds surprising the dogged acceptance of the third story by parties as far removed as Clear Communications, TUANZ, Telecom and Winston Peters if only because New Zealand stands alone in countries that have not chosen a more interventionist or regulated approach.

Not that other countries have enjoyed universal success in more interventionist approaches. Nevertheless: "I'm left with the impression that while the use of international comparisons is sufficient to argue against heavy handed regulation, they carry little weight when arguing for it," Mr Bridgman says of New Zealand attitudes. Mr Bridgman is not alone in thinking that dislike of regulatory intervention is founded in a fear of regulatory creep and in the aversion therapy of the Muldoon years, but he sees it resulting in ready and unquestioning acceptance by bureaucrats attracted to the more "neutral" arguments based on economic efficiency and rationalism.

"I'm not really certain what a level playing field comes down to in economic terms," one Ministry of Commerce official told Mr Bridgman. And yet, ministry officials knew as early as 1992 that arriving at number portability through market consensus would be difficult.

A former official involved in regulatory issues, named as Mr X, said anxiety to clean up the regulatory environment had intensified to the point where the priority was to eradicate it rather than assess its merit.