Opinion: A tale of two telco industries

Telecommunications Carriers Forum CEO David Stone compares and contrasts the telco industries on both sides of the Tasman

Last month I attended CommsDay Summit in Sydney and it was clear that there are significant differences in approach and attitude between our two industries. In part this is a function of the different regulatory regimes that apply in our two countries. This in turn has led to a raft of different behaviours by the respective industries. So the end result is quite different evolutions of similar issues. Let’s look at a few.

1. NBN v. UFB/RBI

I won’t go into the fundamental differences as these are well known. Rather I want to look at the different political environments in which the two initiatives are being delivered. In New Zealand the Labour opposition is suggesting that the government needs to be more generous in its funding of Ultra Fast Broadband rollout.

In Australia, the opposition are claiming that National Broadband Network is far too expensive and are threatening significant reductions in scope if they win power at the next election. This has been going on for a number of years now and Malcolm Turnbull, the opposition spokesman on communications was the star attraction of Day Two.

Interestingly his rhetoric, while still fiercely against the NBN as it currently is, is significantly less strident than previously. Now he is talking about reductions in scale and relying on a FTTC (Fibre to the Cabinet) rather than FTTH (Fibre to the Home) solution . This political uncertainty, particularly in the light of the fragility of the Gillard government, must be pretty destabilising for the NBN project. At least there are no similar threats here.

2. Consumer protection

My counterpart John Stanton, CEO of Comms Alliance, spoke on Day One about where they had got to with the revised Telecommunications Customer Protection (TPC) Code. After intense industry consultation and several iterations, it has gone to the Australian Communications and Media Authority (ACMA) for approval. Chris Chapman, CEO of ACMA, in a separate address, indicated that while the latest version met many of the criticisms raised about earlier drafts, there were still several items that did not meet ACMA’s requirements and the threat seemed to be that ACMA would reject what the industry had put forward.

A failure to have ACMA accept the TPC Code would be seen as the death knell for industry co-regulation. The industry’s position has not been helped by the Australian Communications Consumers Action Network (ACCAN), a government funded body which took part in all the working parties that created the draft, then voted against it.

You have to put this in context. The Telecommunications Industry Ombudsman (TIO) receives over 300,000 complaints a year. A large number of complaints stem from the industry’s practice of offering value bundles which have proven to be remarkably confusing for consumers.

In any event the TCP Code in its current form represents a significant imposition of constraints upon the industry.

There is a lesson here for New Zealand. While our TDRS complaints scheme receives about a thousand enquiries per year, most are resolved before they constitute complaints that need external resolution. There is no room for complacency as similar constraints could be applied in New Zealand.

3. Huawei

The differences in approach between the two governments were starkly evident when Alexander Downer spoke on Day One. Downer is on the Huawei Australia board and is a former Foreign Minister. He gave a packed audience a lesson on geo-politics and his key theme was the need to accommodate China rather than contain it.

For its part, Huawei, the major sponsor of the Comms Day Summit, maintained a dignified silence. New Zealand’s response is much more aligned with that advised by Downer.

4. NBN Co v. CFH

One of the more interesting issues raised at the conference was the role of NBN Co. NBN Co is, like our LFC’s, limited to operating at Layer 2 or below. Yet press advertising by NBN Co seems to portray it as an RSP. This is causing a degree of angst among the Australian industry. One can only hope that Crown Fibre Holdings is not looking to model itself too closely on NBN Co.

Conclusions

On balance I would rather be in the industry in New Zealand than Australia. We do not suffer the constraints and costs of tight imposed regulation and industry self-regulation is still seen in New Zealand as the preferred approach. We also have much greater certainty about the eventual form our fibre rollout will take.

David Stone is Telecommunications Carriers Forum CEO

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