ComCom says costs too high for smaller players

Telecomms Act submissions include pleas for a cheaper, faster system to resolve access issues

The Commerce Commission says small ISPs find the process of getting a telecomms determination expensive.

In its submission to the government's review of the Telecommunications Act, the commission says the overall cost of seeking a determination may be inhibiting smaller players from seeking a regulated solution.

”[Their] costs include the commission’s costs (which are recoverable from the parties), professional fees of lawyers, economists and other experts, and the direct and indirect costs associated with the necessary commitment of management and staff time," the commission says in its submission. The commission charges $20,000 for any company seeking a determination.

“Small players are likely to wait for a larger player to seek a determination from the commission, continue negotiating with reduced leverage, and may well settle for a commercial agreement on terms less advantageous than would have been available had they been in a position to seek a determination from the commission.”

InternetNZ's submission also supports that view.

“The [Commerce] Commission only gets significant involvement from Telecom, TCL and, to a lesser extent, Vodafone and BCL," InternetNZ says.

“Involvement of others is much lower. The nature, quality and length of the larger players’ submissions self-evidently reflects considerable expenditure in terms of time and cost. This is well beyond the resources of other stakeholders ranging from the public (the very target of the Act by way of the section 18 Purpose Statement), through to smaller players such as ISPs."

The Commission claims the telco environment has become considerably more complex since the act was passed in 2001. At that time there were only a few providers and interconnection agreements were a “bilateral” matter.

In the new multilateral environment, where several access seekers are likely to be seeking similar arrangements, more transparency of information among the parties is needed, the Commission says, so arrangements can be more quickly reached and there is greater assurance of consistency.

“Telecom has on occasions advised the commission of its intention to pass through major terms and conditions of particular determinations to other parties, but the commission is unable to compel it to do so, nor to ensure that any departure from those determined terms is reasonable and consistent with the development of competitive markets. Any pass-through in commercial negotiations is not transparent, and in practice the commission is unable to ascertain whether other operators receive terms consistent with those determined by the commission.”

There has been difficulty with the enforceability of “access codes” developed by the Telecommunications Carriers’ Forum and these should be made enforceable, the Commission recommends.

While InternetNZ agrees with the government's stance that commercial agreement is preferable to regulatory determination, an early commercial agreement with an upstream provider just to get a service up and running may shut the access-seeker out of subsequent rearrangement of conditions on a regulated basis, under the Act’s Section 22(a). This may need reform, says the submission.

Both InternetNZ and the comission support the “reference model” approach suggested by the Ministry of Economic Development’s working paper, where the basic principles of the service, including pricing, will be sketched out first by the provider alone or with the help of the Commission and provided to all potential access seekers so only the detail needs to be settled by individual negotiation. This, the society says, would ease the burden for smaller parties.

InternetNZ is naturally interested in the ISP side of the telecomms business. Among questions of particular significance are number portability, whether ISPs are liable for a share of Telecommunications Share Obligation payment and VoIP arrangements.

The society also comes out in favour of compulsory mediation when other forms of negotiation are clearly making no significant headway.

The Telecommunications Users Association (Tuanz) bemoans delays and asks for the Commissioner’s determinations to be made more enforceable. However, it sees the potential for further delays in the “reference offer” concept. “Typically, access providers seek to establish reference offers or similar undertakings at levels significantly above their best wholesale price or even above the retail prices available to large customers. The Commerce Commission would need to be vigilant in approval of any such offers in a number of respects.”

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