Hard cheese in the telco business

By PETER GRIFFIN

There's an old advert for Mainland cheese screening on TV again. It's about two old-timers who have known each other all their lives but are only just becoming friends.

"Good things take time" is the ad's catchline. That phrase went through my cynical mind last week as Telecom's rivals revealed they had asked the Commerce Commission to look at the issue of number portability - allowing customers to take their phone number with them as they switch phone companies.

In the world of telecoms regulation, there is one certainty - everything takes time. In New Zealand it takes longer than ever. Seamless number portability is a fundamental of competition in most other countries. The Aussies have had it for years. In November, US regulators will enforce number portability for 140 million mobile phone users. They have also had fixed-number portability for years.

At the moment, the telcos charge one another for transferring customers. TelstraClear effectively pays $17.50, and then half a cent per call minute, for every customer it wins from Telecom - and vice versa. The reality of the market means the arrangement penalises TelstraClear.

There is no number portability, full stop, for mobile customers - even though we are a nation of avid mobile-phone users.

Despite lengthy discussions, the industry body the Number Administration Deed (NAD) committee failed to make any progress - mainly due to Telecom's obstinacy. Now the issue will be fed into the regulatory machine.

When will we catch up with the rest of the world? God knows. Last week the commission also said that after three months of mulling over a request from CallPlus it would proceed with looking at the telco's interconnect pricing with Telecom.

In theory, CallPlus' request should get the stamp of approval in record time. The commission has already been here with TelstraClear and has a precedent to work from even if the details of CallPlus' request are slightly different.

Despite missing several of his deadlines, Telecommunications Commissioner Douglas Webb is generally regarded as having moved quickly through most of the cases thrown at him.

You certainly can't claim that Webb and his 15-strong team have been sitting around twiddling their thumbs. There have been stacks of discussion papers to hand out, convoluted draft determinations to write up, conferences to organise and preside over.

The processes and formalities may be moving fast overall, but there has been nothing and will be nothing for months - maybe years - to come that lowers the price of telecoms for consumers and businesses.

Maybe the commissioner should have undertaken an intensive programme of fast-tracking. I'm sure the only opposing voice to a bit of autocratic decision-making would have been Telecom's.

The carrier, not surprisingly, thinks the process is moving along way too swiftly.

"In New Zealand we are much faster to decide on any decision compared with other countries. We also have much less room for review or appeal after any decision is made," Telecom's wholesaling chief, Tim Lusk, told IDG news last week.

June 30, we're told, is D-Day for Webb. He promises to have a swag of decisions set in stone - or lumpy concrete at least - by that date.

There will be a final ruling on the discount TelstraClear will receive on services it gets wholesale from Telecom. A final ruling on interconnect pricing between the two carriers will also be handed down.

CallPlus' interconnection application will be subject to a draft decision, all going well. And TelstraClear's application to resell many of Telecom's residential services will get its draft determination.

The commissioner also expects to decide the cost of the Kiwi Share - something Telecom's competitors have been anxiously awaiting, as they will be helping to foot the bill. According to Telecom, it will be around $408 million a year.

The likes of CallPlus, Worldxchange and ihug sit on the sidelines trying to finalise their budgets for the new financial year, while regulatory decisions that will steer the future of their businesses undergo lengthy gestation periods.

Meanwhile, the Commerce Commission's anti-competitive case against Telecom over the 0867 dialling prefix for internet calls sits in limbo. CallPlus joined the commission over the issue, which has been bubbling away for five years and effectively put i4free, Callplus' internet provider, out of business.

Ultimately, the Commerce Commission is just following to the letter the rules laid out by the Telecommunications Act.

The legislation is now 13 months old but is already looking too inflexible for Webb's needs. While the commissioner can act alone, there is little scope to make sweeping, rapid decisions, which is exactly the mandate he needs.

Much has been made of the back-room negotiating that went on between Communications Minister Paul Swain and Telecom as the act and the new shape of the Kiwi Share were hammered out back in 2000.

Government documents shed little light on Telecom's alleged arm-twisting, but it shows the Government backed down on at least one issue.

A briefing paper the minister released under the Official Information Act shows he had more in mind for the Kiwi Share Obligation (KSO) than what is now enshrined in the Telecommunications Act.

"While Telecom and the Crown agreed in December [2000] that internet calls are covered under the KSO, there was no agreement to exclude other data. The Government would be giving up its rights if it limits data to the current internet."

In the end, "data" was limited to the current internet, meaning low-speed dial-up access is the bare legislated minimum. Data services such as voice over internet protocol (VoIP) were excluded from the KSO. Who knows where else Telecom got its way.

Every other country has tried this type of regulation, discovered its flaws, re-legislated and undertaken a second wave of regulation before New Zealand even crossed the start line.

Our race to better competition is turning out to be a sweaty marathon rather than a clean sprint.

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