Telecom welcomes regulatory freedom on resales

Telecom, which is fighting to get a share of the government's $1.35 billion fund to roll-out high-speed internet, is set to get the freedom to set the terms for its resale services.

The Commerce Commission is of the opinion wholesale broadband services, business data services and bundled resale services shouldn't be subject to legislation which would require the regulator to determine terms and conditions, including price, if Telecom and its wholesale customers can't agree, due to their low take-up rate and the availability of other services.

Where there's limited competition and significant take-up, Telecom's resale services will continue to be regulated, the commission said in its draft report.

Telecom said the decision sent an important deregulatory signal to the market.

Telecom group general counsel Tristan Gilbertson said Telecom had long been concerned about the multiple layers of conflicting and inconsistent regulation making New Zealand one of the most over-regulated markets in the world.

"New Zealand has become disconnected from international best practice. The commission's decision is an important first step towards a more targeted regulatory framework focused on true economic bottlenecks. It's a welcome sign of a maturing regulatory regime."

Resale regulation was introduced in 2001, with a requirement that Telecom resell all retail level services to competitors, but has since been overtaken by multiple layers of more detailed regulation, including local loop unbundling.

"The commission's view is that regulatory intervention in telecommunications markets should be scaled back in areas where we consider there is effective competition, or when alternative services are available to access seekers," said Telecommunications Commissioner Ross Patterson in a statement.

"Regulation should not impose or maintain burdens which are unnecessary, and it is the commission's objective to reduce regulation of telecommunications markets as effective competition develops."

Telecom has put forward a proposal to carve out its network business as it seeks to off the regulatory cost of upgrading its copper network, while fighting for government money to roll-out fibre around the country.

The company said it would respond to the draft report in due course.

The shares dropped 2 per cent to $1.99 in trading yesterday.

with NZ HERALD ONLINE