ComCom report on telco resale released

Commission seeks submissions on whether Telco Act should apply

The Commerce Commission has released a draft report into whether the services that Telecom provides to other telecommunications companies to be resold should remain subject to the Telecommunications Act 2001.

In a statement to the NZ Stock Exchange, the Commission notes: "Retail services such as residential lines and broadband services are offered by Telecom to wholesale customers to resell at a discount to the retail price – these are known as resale services, and are currently provided commercially by Telecom’s wholesale division. Resale services are subject to the Act so that wholesale customers, in the event that they are unable to agree commercial terms with Telecom, have the ability to ask the Commission to determine the terms and conditions (including price) for supply of these services by Telecom.

"The Commission’s preliminary view is that wholesale broadband services, business data services and bundled resale services should no longer be subject to the Act given their low take up and the availability of alternative services.

"The Commission’s preliminary view is that in areas where there are limited alternatives to Telecom and a significant take up of specific resale services (such as residential and business lines and smart phone services, like Call Minder), these services should remain subject to the Act to provide assurances that the service will continue to be provided by Telecom if commercial negotiations were to fail.

“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 Dr Ross Patterson. “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.”

Submissions on the draft report are due by 5pm on Thursday 23 September 2010.

The draft report can be downloaded from the Commission’s website at www.comcom.govt.nz/resale-services-investigation. Telecom has responded to the initiative with a statement saying it welcomes the move.

The statement quotes Telecom group general counsel Tristan Gilbertson as saying: “This decision sends an important deregulatory signal to the market at a time when significant investment will be required to deliver next generation fibre access networks."

The statement continues: "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 current resold service price list extends to over 6000 items, despite the fact that competitors now have regulated access to individual network elements, which enable them to build their own competing services, making resale regulation in its current form unnecessary. Telecom supports the Commission’s decision to effectively roll-back resale regulation subject to ongoing protections for local access and calling services.

“With this decision, the Commission has recognised the importance of rolling-back some of the early interventions in the market, in light of subsequent developments and rapidly increasing competition,” said Mr Gilbertson.

Telecom has long been concerned about the multiple layers of conflicting and inconsistent regulation that have built up over the past decade making New Zealand one of the most over-regulated markets in the world, the statement says.

Gilbertson continues: “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.

“We will participate in the Commission’s conference on this matter and will respond to the draft report in due course.

“We look forward to the Commission’s final report and the rolling back of outdated and unnecessary regulation," he says.

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Tags telecommunications actCommerce Commission

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