Opinion: Towards a new, contestable Kiwi Share

It is now time to turn to cracking the last, and perhaps the hardest, regulatory nut: the TSO

Looking back over the last few months I am excited by the number and frequency of new product and technology launches and the level of fresh investment that we are seeing in the sector.

Many of the recently announced investments are a direct result of the 2006 regulatory reforms, and from the perspective of someone who has had a hand in implementing them, this is immensely satisfying.

It is now time to turn to cracking the last, and perhaps the hardest, regulatory nut: the TSO (Telecommunications Service Obligation). Formerly known as the “Kiwi Share”, the TSO was designed almost 20 years ago to ensure that a privatised Telecom would continue to provide a basic telephone service at an acceptable price and quality to New Zealand consumers.

The desire to protect consumers was front-and-centre in the original TSO policy. However, that desire was driven by an even more fundamental need: to ensure that New Zealand citizens could participate fully in society.

It’s hard to imagine living life without access to a telephone service of some kind. For many in our community a phone service is their only connection to the outside world: it is their means of doing business, of getting the services they need, of staying in touch, of staying safe.

This underlying need remains as important to the TSO policy as when it was first designed. However, the competitive and technological landscape has changed so significantly in the last 20 years that we now need to redesign the TSO from the ground up.

Some very significant questions need to be asked and answered: what telecommunications services are required to participate in society? How do we ensure that those services are provided? Where do they need to be provided? And by who?

The Telecommunications Carriers’ Forum (TCF) has spent the last few months considering these questions and thinking about new ways in which the policy objectives of the TSO could be delivered.

It is clear that whatever else happens, the TSO needs to be redefined in technology neutral terms. The current TSO is wedded to the fixed-line copper-based analog-telephony paradigm, which suits no one going forward. A redefined TSO needs to allow the most appropriate technology in the circumstances, whether it is copper, fibre, wireless or satellite. And a “voice service” should be just that — we shouldn’t care how its delivered providing it is up to scratch.

In many areas of New Zealand the increasingly competitive environment is “doing the job” that the TSO was originally designed for. Where there are two or more providers of services to consumers we are seeing a range of packages and calling options that provide much more than the current TSO requires — often for a lower price. We are also seeing a strong move to the use of mobile for voice services, with pre-paid options providing the financially disadvantaged with a better ability to control costs. In areas where competition is clearly doing the job one has to question whether a TSO obligation is still needed.

While the reach of competitive networks continues to grow, it is clear that there will continue to be areas of New Zealand where it is difficult and inordinately expensive to provide service — areas that might not otherwise get service from anyone. These areas must be the focus of a redesigned TSO.

Finally, the TCF considers that the telecommunications market is now sufficiently diverse and competitive to open the TSO to a contestable process. Contestability helps bring many of the benefits of competition to the difficult to reach areas of New Zealand. This is a radical change, and not without its challenges, but one that the industry is fully behind and committed to making work.

Chivers is CEO of the Telecommunications Carriers Forum (TCF)

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Tags regulationsNetworking & Telecomms IDTso

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