UFB changes risk undoing competition - InternetNZ

Submitters may only get 10 minutes each to present to select committee

Changes proposed in the Telecommunications Amendment Bill “risk undoing many of the achievements of the past ten years in building a more competitive telecommunications market, delivering better prices and services for New Zealand consumers and businesses”, says InternetNZ in its submission on the bill.

InternetNZ is intending to provide an oral presentation to the Finance and Expenditure select committe, which is considering the ammendment bill. It is understood that the timetable for oral presentation of submissions, scheduled for Wednesday and Thursday this week, will be very compressed, allowing no more than 10 minutes for each submitter’s presentation as well as questions and answers.

Committee Clerk Meipara Poata said today it is impossible at this stage to say how many sessions will be allocated to the presentation of submissions, (currently there are two, totalling three-and-a-half hours) nor how many submitters will present; both of these matters are in the hands of the committee and not even the chairman can comment unilaterally, she says. Deadline for the committee to report back to Parliament is May 16.

Internet NZ submission

Concerns raised by InternetNZ in its submission include the 10-year period of “regulatory forbearance” for the Ultrafast Broadband network. This prevents the Commerce Commission regulating the network for 10 years, substituting what the bill’s promoters call “regulation by contract”. This is an inaccurate description, says InternetNZ. “Rather, regulation is being avoided, via the forbearance, and replaced by contractual arrangements.”

The regulatory forbearance section of the bill should be omitted and replaced with a “special access undertakings regime”, says InternetNZ. This it sees as providing “binding undertakings to be agreed between the Commission and a Local Fibre Company that could specify price and non-price terms over an agreed period, with the Commission monitoring and enforcing them.

“While such undertakings were in force, the Commission would not be able to initiate a schedule 3 review that could lead to it independently regulating such terms on the fibre infrastructure.”

In areas of the country where Telecom is chosen as the partner in UFB there will be “competition based on a single network owner”, says InternetNZ. “While there will be two infrastructures (copper and fibre), they will be owned by the same party, which has no interest in competing away its own profits between copper and fibre.”

Moreover, the copper and fibre networks would work under different regulatory regimes, making for a very complex system, likely to lessen competition and raise prices to the end customer, InternetNZ says.

It recommends tightening the current bill’s definition of “equivalence” to a true “equivalence of inputs” standard, similar to the way in which Telecom Wholesale has to consume copper local loop services provided by Chorus, which are identically provided to Telecom Wholesale and to every other market player.

The current text of the bill, InternetNZ says, puts in place “an erosion of equivalence requirements and less rigorous separation between layers of network services”.

Under the Telecom structural separation proposals provided for in the Supplementary Order Paper to the bill (which is longer than the bill itself), Chorus 2 would be “agnostic” between retail providers, but not between its layer 1 and layer 2 customers, INZ says – “it would have the ability and incentive to discriminate, leaving competing players with the unfair access problems they faced before operational separation began to deliver equivalence after 2008.”

“A poorly managed structural separation which does not correctly allocate assets and services between new business units, or which undoes the Equivalence of Inputs bedrock to separation, could lead to a worse situation for access providers and thus [for] consumers than the status quo,” the submission says.

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