'I'm an economist, not a lawyer,' says new telco commissioner

Part one of Q and A with Stephen Gale, who was began as telco commissioner last week

Stephen Gale was appointed telecommunications commissioner replacing the incumbent Ross Patterson two weeks ago. He began in the role last Thursday and the following day held a number of media interviews, including with Computerworld journalist Stephen Bell.

In part one of this Q and A, Gale discusses his priorities, explains the difference between him and his predecessor Ross Patterson and distances himself from the Commerce Commission investigation into Sky TV and the telcos.

Why did you apply for the position?

Well, there’s just so much going on, isn’t there? It’s clearly an exciting role and a very important sector. It seemed attractive and there are so many interesting variants on the components to it, from levies to pricing to how the fibre networks roll out. And it sort of matched my background.

Levies?

The particular one replaces the TSO. That’s a tricky one; it follows on from the TSO but it has to expand to capture IP, and because there’s money at stake, it’ll be closely argued as to who’s liable and how the cost is shared out. That’s a process we’re right in the middle of now.

When are you expecting it to be complete?

It’s got to be done by the end of the year, I think: as you know, we’ve collected the first round, because for that we could just use the previous allocations.

And on the pricing side, what are the priorities?

To finish the process that’s now been going on for a year and that’s still got a month to go – the local phone-line. I mean the local loop – not always that helpful a name - or the last mile. It clearly is a hugely important price, for the value of the companies and as a reference point for UFB.

Will you get involved over supposedly favourable terms extended to Chorus over paying for the last link into the premises?

No, I think that’s a contractual issue between the government, Crown Fibre and the fibre companies.

So what skills are directly transferrable from what you have been doing, and what might you have to bone up on quickly?

I think from a background in regulation and from experience in competition proceedings, mergers, etcetera; the thing that’s common is you have two well-resourced parties… if there are two parties who want to merge, they’ll be arguing very strenuously that they be allowed to do it; other parties quite often will be saying no, no, don’t let them. Part of the work is saying, which of these arguments are credible and which of them are just what you’d expect that party to say.

And it’s the same here at the wholesale level; you’ve got access seekers and the network owner and they’ve got very strongly worded arguments as to which way our benchmarking exercise should be undertaken. We have to take a view and sift through those submissions and come to an answer we think runs down the middle. The legislation is reasonably specific, but benchmarking’s still an approximate process.

What will be the big differences from your career to date?

The thing I’ll have to bone up on is the technology, to some degree; I don’t have a strong background in telecommunications engineering.

Why did you get it ahead of Ross Patterson and 42 others?

It is that combination of competition and regulation. We are charged with looking after customers by fostering competition and protecting competition. The ways you do that are firstly to make the monopoly bits of the network available on an even-handed basis; for example, Chorus’s contribution; but the investment side of that is focused a bit more on the new investors; you really don’t want to make any sharp unexpected movements that frighten off the new investment that’s crucial to UFB.

Do you think that you’ll bring a different perspective from Ross Patterson?

I’m an economist and he’s a lawyer; our instincts will be slightly different, but I don’t think the decision-making process will be different. Either way, we have to seek legal and economic advice; we have a substantial expert staff; there’s a group of Commissioners working with me; and the decision-making process, as you know, is hugely public, with submissions and cross-submissions and protracted hearings – so I don’t think there’ll be an observable difference.

There’s a feeling in the media that there were reasons why Ross Patterson didn’t get on with the present government and that you might be more politically or philosophically inclined to their way of seeing things.

I don’t know why Dr Patterson wasn’t simply reappointed. I couldn’t talk about that. I just saw it as a fresh competitive process.

It does surprise you that he wasn’t reappointed?

It doesn’t surprise me or not surprise me; it just seems a decision was made to reopen it to a new competitive process; he was an applicant and so were quite a few others.

You expect to get the same degree of flak from some quarters as he did?

Very much so.

And preserve your independence?

I think that is absolutely vital.

In an interview on Morning Report last week you disclaimed responsibility for content. But do you see SkyTV’s monopoly impinging on your role at all; won’t it skew the competition at a network level?

The concern has obviously been expressed on many fronts, but I think the first question that arises is ‘have they broken the law?’ and the relevant law would be the Commerce Act. That inquiry’s under way and I’m not involved in that any more. I was - as the preliminaries were developing, I was in the relevant part of the Commerce Commission. But the Telco Act doesn’t grant any powers to deal with content; so it really is out of my jurisdiction.

And it doesn’t affect competition at the network level?

If it does, it has to be dealt with under the Commerce Act.

Were you aware of this reservation that Clare Curran has raised that the job description was wrong: did you spot that?

I spotted it in the job description; but I think the upshot of that’s really up to the [Ministry of Business Innovation and Employment] to decide whether that’s a flaw.

If they found it was a flaw, what could happen? They won’t revisit your appointment, surely?

I’ve really no idea what the possibilities are.

Part two of the Q and A with Stephen Gale now online here.

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