US expert calls for clearer rules over networks

By RICHARD BRADDELL

WELLINGTON - New Zealand needs rules so that interconnection disputes that have dragged on for a decade between Telecom and Clear can be resolved, says the chief of a United States policy think-tank.

Larry Spiwak, president of the Phoenix Center in Washington, said everyone needed to know the rules of the road, but for that to happen clearly defined rules had to be put in place.

He said, however, that the unbundling of the local telephone network, which is being sought by Clear and others, was more complicated and might not produce the results intended.

In New Zealand, unbundling - or opening the network to Telecom's competition - would allow those competitors direct access to Telecom's local copper network, enabling them to supply services directly rather than reselling Telecom.

A year ago, the issue seemed well off the regulatory agenda, but a recent report by international consultants Ovum - commissioned by the Ministry of Commerce - found that while the economic case for unbundling in New Zealand was neutral, other factors outside the terms of reference could tilt the balance in its favour.

The issue will be considered in more depth by the Government's upcoming telecommunications inquiry.

Mr Spiwak, who is in New Zealand as a guest of Telecom, said he had been a public advocate of unbundling in some countries, but in the United States it had obstructed rather than encouraged the building of alternative infrastructure.

Only 0.2 per cent of local lines had been unbundled, despite its being legislated for nearly four years ago.

In this country, local loop unbundling was not necessary because of the high level of foreign participation in the New Zealand industry, most recently evidenced by Telstra Saturn's plans to spend more than $1 billion building local networks.

"What you are striving for is good market performance ... and to do something just because the US is doing it or the UK is doing it ... What's going on over there is irrelevant," he said.

Given the Government's goal of cost-efficient, timely and innovative telecommunications services, the debate needed to move away from regulating copper local loops and toward infrastructure building.

While Telstra Saturn expected to cover only two-thirds of the country, Mr Spiwak said wireless and satellite might be a better alternative to unbundling in remote areas.