Next-gen network could sidestep regulation

The NGN might well be used by Telecom as a way of getting around the regulation of today's network

Telecom may say it has modeled its plans for separating out its retail, wholesale and network elements on that of UK telco BT, but they are actually markedly different, says lawyer Michael Wigley.

In particular, Telecom’s proposals substantially ignore the IP-based Next Generation Network (NGN). This will come into being unregulated and might well be used by Telecom as a way of getting around the regulation of today’s network and enable it to preserve its dominant position.

“Unless the NGN is part of a regulatory solution an incumbent can simply side-step existing regulation, via the NGN, given the large changes it brings about,” Wigley told New Zealand Computer Society members at a breakfast meeting last week.

“It will avoid existing control of its monopoly by ‘re-monopolising’ elsewhere.” Failure to deal with the NGN in its declared plans, “except in a minor way”, is a telling feature of the Telecom proposals, he says.

This is in marked contrast to the BT restructure, where the next-generation network was a key part of the discussions.

“Further, Telecom continues to keep its NGN plans to itself, contrary to the position in the UK. The regulator there has been very strong on the need for BT to share NGN details and plans, and to coordinate [with its competitors].”

The framework that the new Act imposes on the Telecom restructure is “very high-level” and there is still scope to include the NGN in the coming exercise of refining the structure, balancing the need for market coordination with the need to encourage investment in the new network.

The Ministry of Economic Development “will need to bring in people from outside”, he says. And a budget of about $2 million will be needed to do a good job. “That might sound like a lot of money, but telecommunications is an $8 billion business.”

We must be careful of arguments that strong and costly regulation is not needed in “a small country” — a well-managed telecommunications sector is as crucial to New Zealand as it is to the UK.

So many aspects of telecommunications regulation are in train at once, says Wigley. The worry is that some important aspects, such as the Commerce Commission’s mobile services review, have “flown under the radar”, sparking little public or media attention.

The commission has concentrated on inter-network competition (encouraging the growth of a third mobile network) and has regulated roaming and co-location, but failed to assume the power to determine price, says Wigley. “This makes the service unregulated in practice.”

The growth of a third physical network is desirable as an eventual objective, he says. But, encouragement of intra-network competition, by requiring Telecom or Vodafone to provide wholesale access to its network, would provide an easier entry to the market for a third operator.

Wigley has worked for InternetNZ and assisted the society in its submission to the select committee on the Telecommunications Amendment Bill.

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