FORUM: ComCom in from the cold

Telco Commissioner given full oversight into UFB network while pushing ahead with demand side study

So the Commerce Commission is to have full oversight into wholesale pricing of the Ultra Fast Broadband after all. The Telecommunications Amendment Bill will pass through to its next stage with the regulatory forbearance period removed and in its place are “contractual mechanisms” that will somehow manage to ensure the Commission’s involvement, while at the same time satisfying the bidder’s need for price certainty.

When asked if it was an embarrassing back down, ICT Minister Steven Joyce replied: “Not at all, I’m determined to get the project built and do it in a way that’s sensible for the government, sensible for investors and sensible for consumers.”

You can read about the politics around the decision, which we covered on the day of the announcement on the Computerworld website (rough summary: Maori Party the deciding factory, Labour grumpy and everyone else giving cautious approval).

The rhetoric from Joyce appears to be that the change is more in name, than in deed. And certainly Telecom didn’t seem fazed. In a statement CEO Paul Reynolds noted that the change appeared to adopt a standard contractual approach to Public-Private Partnership arrangements.

Telecommunications Commissioner Ross Patterson is keeping a sensible and dignified silence on the matter.

My guess is that the UFB network will be built, it will have sharp wholesale pricing for the first eight years, and it will be a patchwork of copper and fibre that, when the time comes to unbundle in 2020, will cause the industry more grief.

But there will be fibre passing 75 percent of New Zealand premises and, give or take a few months, it will be completed in 10 years. And that is what Joyce has set out to do. It’s what he promised and — come hell, high water and MMP politics – it’s exactly what he will achieve.

Patterson meanwhile is rocking ahead with a study into what will inhibit the uptake of high speed broadband networks. The terms of reference (TOR) released last week include a proposal “to identify the factors that may affect the uptake of high speed fibre broadband services in New Zealand – including home wiring, network neutrality, peering, IP interconnection, data caps and content – and to assess whether any of the those factors are likely to amount to a barrier to entry or expansion in to the telecommunications market.”

The key word in all of that is “content”. It will not please Sky TV chief executive John Fellet, who in the company’s submission to the draft TOR for the study, rails against the Telecommunications Commissioner poking his nose in.

“If the reference to content arrangements is retained, then the draft TOR should acknowledge that content arrangements relating to broadcasting cannot be considered, as broadcasting is specifically excluded from “telecommunications” under the Telecommunications Act 2001,” Fellet wrote.

But, as was proven last week, legislation can change. Ministers in ruling parties can be convinced by minor coalition parties to alter deeply entrenched policy decisions.

And while the final TOR document emphasises the “non-regulatory nature” of the study, I can’t help being reminded of a recent discussion with a telco insider who, when told that the Commissioner’s interest in the demand side of broadband networks wasn’t an investigation, merely a study, he replied “Yes, but we all know where those lead.”

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