Dialogue: Right to roam benefits us all

By ERNIE NEWMAN*

Regulatory oversight of national roaming among cellphone operators will bring great benefits to New Zealand users.

It is not some kind of "home invasion", nor do its proponents necessarily have some bias towards Maori interests, as former Minister Maurice Williamson claims (Business Herald, November 1).

National roaming means an established mobile operator, such as Vodafone, allowing a new entrant's customers to connect on its network when they are outside the areas where the new entrant has coverage of its own.

Without it, no new entrant could enter the market unless it had the finance to cover the entire country with cell sites before opening its doors. So this ability to have one's customers roam across a competitor's network during a staged rollout is pivotal to competition.

Mandating roaming gained the support of last year's Ministerial Inquiry. The Telecommunications Users Association (Tuanz) has supported it in the interests of competition and user choice. But after extensive lobbying from the established cellphone operators, the Government initially excluded it from the Telecommunications Bill.

Then, from left field, came niche mobile operator Econet Wireless, armed with a pocketful of spectrum it bought through the recent 3G auction and an alliance with Maori interests.

Econet made a persuasive case to the Government, the Select committee and Tuanz that mandatory roaming was pivotal to its business case - and, indeed, to that of any new entrant. Econet was happy to negotiate a commercial deal with Vodafone, but concerned that without regulatory scrutiny in the background it would face pressure to table its business plan in unnecessary detail or face undue delay - either of which could cripple its roll-out.

Tuanz - and more importantly, the Government - accepted the argument. So Econet and subsequent budding cellular entrants will have official shepherding through this critical commercial negotiation process.

Incumbents Vodafone and Telecom NZ are not happy. True, there are valid issues about property rights. Mr Williamson - echoing the analogy drawn by Vodafone's John Rohan - compares the requirement with the Government requisitioning a spare room in one's home to give to welfare beneficiaries.

But the analogy is inappropriate. This is not somebody's residence. It is a strategically crucial industry with a proven propensity to anti-competitive outcomes. If we have not learned from the difficulty of getting competition into local loops such as Telecom's, then we should have learned from Bill Gates.

In telecommunications there is an absolute expectation by users that any telephone they pick up is capable of connecting to any other telephone on a public network, in New Zealand or elsewhere. So before any new telephone company, fixed-line or mobile, can start its business its first call must be on its major competitor to negotiate interconnection arrangements.

The propensity for this process, with its inherent imbalance of negotiating power, to result in interminable delay and frustration has been well proven. Ask TelstraSaturn or Clear in New Zealand, or the carcasses of numerous failed "alternative telcos" around the world.

The mandating of national roaming will do no more than ensure a light-handed, independent scrutiny of the negotiations to make sure the established operators do not act anti-competitively. Joint location of cell sites will also avoid unnecessary duplication.

All mandated roaming does is put a fence at the top of the cellular cliff to replace the ambulance at the bottom.

In any commercial activity there must be a balance between the property rights of the trader and the rights of the customer to the benefits of an open and competitive market. A pre-emptive but light-handed approach to ensuring this has to be healthy for the market and vastly better than resorting to litigation years later.

The cellular operators should not feel their legitimate interests are threatened - the Government has done the community a service by restoring mandated roaming into the legislation.

* Ernie Newman is chief executive of Tuanz.