Between the lines: Telecom, Clear not the only question

With the world title bout between Clear and Telecom ending in a draw on Tuesday, there is reason to question the value of yesterday's proposed reform of telecommunications. After all, if Clear can get the environment it needs, then all must be right with the world.

The argument will, and already has been, made. But it is simplistic. Whether Clear has got what it wants or not is of little interest unless it impinges on the benefits to the economy and consumers. And the telecommunications inquiry is not alone in being of the view that industry bottlenecks related to Telecom's control of the fixed wire network have already cost consumers and the economy many millions of dollars.

Yesterday, the inquiry's Cathie Harrison was careful to avoid an invitation to vilify Telecom, instead pointing out the obvious - that its primary duty to its shareholders may not always coincide with what is good for everybody else.

And while the importance of the Telecom-Clear agreement should not be understated, there are still issues needful of timely resolution. On that count, the inquiry's recommendation that the stupefyingly protracted negotiations on number portability be completed next July is to be welcomed.

That the inquiry is also looking forward is of key importance. One striking recommendation, which is new from the preliminary report in June, is that Sky's digital set-top boxes be included for specification, with the intention that the same box be available to access other content providers.

It is crucial for the industry to debate the issue because the humble television set will increasingly become the gateway for the internet and voice as well as video. If the dominant digital content provider, which at this point is Sky, has exclusive control of its own boxes, it will be much harder for competing providers because subscribers will be reluctant to invest in extra decoders.

New Zealand is not alone in grappling with this issue. And while the standard for a digital box, which ultimately will become integral to all new televisions, will be driven from much larger markets, a guideline that prevents one player from locking up his or her control is vital.

All that said, the inquiry's recommendations, such as the wholesaling of Telecom services, represent a radical change, even if they are still much more light-handed than the median in the OECD.

But the inquiry's final recommendations are by no means the last word. Communications Minister Paul Swain might consider hiding under his desk, given the lobbying he will face before the Government's policy is announced in December.

How much will that change from the report? A lot, Telecom will be hoping. But to veer too sharply after such a review could make the Government look stupid.