ICT minister Steven Joyce just got a taste of how hardball the telecommunications market can be, with the announcement of a new telecommunications industry group to promote common telecommunications interests.
And one key point will be ensuring that investors in the government's new fibre network achieve a reasonable rate of return on their investments.
"We will stand shoulder to shoulder on that point," says Telecom CEO Paul Reynolds.
Reynolds says telcos will all argue that an infrastructure investor should be able to work within a regulatory framework that enables a reasonable rate of return.
"We are the people investing the money," Reynolds says.
The ICT industry now has a new three letter acronym, TIG, as in the Telecommunications Industry Group representing major telecommunications providers. Reynolds sat alongside Vodafone CEO Russell Stanners, Kordia's Geoff Hunt, FX Networks' Murray Jurgeleit and Woosh's Rod Inglis at the TIG's Auckland launch today.
Introducing the group, Stanners said telecommunications is a key industry and there are lots of common concerns and views about what has to be done. The group, basically industry CEOs who have met three times before today's announcement, will be appointing a CEO and staff for TIG, Stanners says.
He says TIG will promote the industry and showcase what it can do.
"At this time we think it is appropriate the industry has a voice," he says.
Hunt says the companies involved "compete furiously" but also buy services from each other. He says they can "collaborate where it makes sense".
Reynolds says it has been an unbelievable year for the industry and carriers have had to work together in ways they never have before. A common voice is good for New Zealand, he says.
The new group comes at a time when business interests are seeking to rein in the regulator, the Commerce Commission. The commission is in a state of flux, with new leadership and an absent Telecommunications Commissioner.
Stanners says areas of common interest include partnership in the government's planned network rollouts, the Resource Management Act, and the use of technology.
Jurgeleit says the government's broadband plan is shifting competition from the network infrastructure layer to the services layer. He says this will move competition onto a new level.
Stanners says industry players are looking for "regulatory certainty".
Asked how the group would avoid having conversations that could lessen competition, Inglis says the group would remain silent on issues invoilving regulatory intervention.
Jurgleit says the 40 or 50 tier two ISPs in the market "do a hell of a lot to keep players honest". He says there are too many players for a cartel to form in the services layer.
The group will meet monthly, according to a media release announcing the formation of the group. Stanners is the inaugural chair.
TelstraClear appears to be one notable absentee from the list of members. To date, Callplus, Citylink, FX Networks, Kordia, Telecom (Group), Woosh, WorldXChange, Vector and Vodafone have all joined TIG.
“This group won’t slow competition in the market. This year, more than ever before, we will fight for every customer in a market that’s more competitive than at any time in New Zealand’s history. The aim of this group is to help us all work together where we can for the betterment of our customers — the people of New Zealand,” Stanners says in the release.
Ernie Newman, CEO of user group TUANZ, says TIG is an "interesting development" that he will be watching closely as it develops.
He says most TIG members are also TUANZ members and he has an excellent dialogue with the CEOs of those companies.
Asked if it was a threat to competition, Newman says he doubts it as most CEOs are aware of their obligations under the Commerce Act.