Telecoms group seeks a commissioner for sector

By RICHARD BRADDELL

WELLINGTON - The Telecommunications Users' Association has rejected heavy-handed regulation as the solution to long-standing friction in the telecommunications industry.

Instead, it has called for continued self-regulation under a commissioner of telecommunications who would report to Parliament.

In its submission to the Government's telecommunications inquiry, Tuanz said the commissioner should work on creating a telecommunications industry council made up of senior executives from companies, allied groups such as internet service providers and user groups, including Tuanz itself.

The commissioner would either chair the council or have a leading role in prioritising issues, and could recommend regulated solutions to the Minister of Communications should the council be unable to reach a solution.

Procedures for binding arbitration would be available should the parties so elect.

Arguing that New Zealand was too small to replicate British and Australian regulatory structures, Tuanz instead said the Commerce Commission should retain its present role as the ambulance at the bottom of the cliff, but should operate under a beefed up Commerce Act which would include proposals to lower the threshold for dominance.

But while the tenor of Tuanz's proposals was in favour of light-handed regulation, it still established as a priority that Telecom's local network should be unbundled so that competitors could attach their own facilities directly to its copper, thus bypassing Telecom exchanges.

While it can be argued that unbundling will discourage the construction of alternative networks, Tuanz said that should not be the case.

"Much of Telecom's local loop is relatively old and those companies such as Telstra Saturn who are looking to invest in new networks are likely to add a level of technical sophistication which will lift the attraction of the new network to users significantly above the incumbent's," Tuanz said.

The bigger risk was if a local loop was not unbundled it could encourage inefficient duplication of Telecom's loop which would ultimately cost users.

Regardless, Tuanz said Telecom should offer wholesale prices to new entrants who could then offer niche products and services.

In cellular, Tuanz noted that while Telecom and Vodafone competed fiercely for new customers, there was little competition for ongoing business, a situation that could only be remedied by the entry of one or more new operators.

Tuanz also regarded the Kiwi share as anachronistic and possibly detrimental to residential phone users due to its enshrining of Telecom's right to raise rentals in line with the movement in the consumers' price index.