Bouquets and brickbats for the inquiry

Is it an eight-out-of-10 for the future or a blunt instrument from the past? Your view on the telecommunications inquiry's final report probably depends on your place in the industry.

Is it an eight-out-of-10 for the future or a blunt instrument from the past? Your view on the telecommunications inquiry's final report probably depends on your place in the industry.

Two incumbents, Vodafone and Telecom, have assailed the report's recommendations as heavy-handed and unnecessary, while the Telecommunications Users' Association (TUANZ) is giving it an eight out 10. Clear Communications has broadly welcomed the report, even though it does not recommend Clear's favoured path of unbundling the local loop.

Telecom's general manager of government and industry relations, Bruce Parkes, says the report "disappointingly misses a great opportunity to lead New Zealand forward in the digital age

"The Inquiry report starts with sound objectives but many of its recommendations fall well short of delivering on these in this dynamic industry," Mr Parkes said. "Indeed, the inquiry panel seems intent on introducing old-style, heavy handed regulation of telecommunications which is 10 years out of date,"

Parkes appears to hold some hope that the government won't act on all the inquiry's recommendations, pointing to the less onerous regulation proposed for the electricity industry and saying that Telecom looks forward to "sitting down with the government to work on sensible ideas for the future of telecommunications."

Parkes says establishing an electronic communications commissioner as proposed "would be a highly retrograde step for New Zealand where competition is flourishing and major investment is being made in exciting new communications technologies. The report has failed to make any convincing case for a new bureaucracy dedicated to intervening in a highly competitive industry."

As evidence of progress, Parkes cites "comprehensive new agreements" reached over recent months by Telecom with Telstra-Saturn, Vodafone and Clear.

Vodafone's view is that the cellular phone market isn't broken and there fore doesn't need fixing, says communications manager Mark Champion.

"A heavy handed regulatory solution won't create a more vibrant industry and it could discourage investment and may even dampen down the real competitive strengths," says Champion. He hopes to see the government "take on board" some of the issues raised in the Inquiry's report and moderate it appropriately.

"We also believe it would make more sense for the Commissioner to work out of the Commerce Commission if only for consistency's sake." Champion would like to see New Zealand avoid the problem Australia has encountered of having a number of independent regulators making decisions on competition at odds with each other.

"The government's got to sit down now and make some choices as to what it implements." Champion says the spectrum auction proves there are numerous players trying to get into the cellular market and that competition will be fierce in the years to come.

"We don't believe mobile will be limited to voice, you've got customer care services to offer and a huge range of mobile data products yet to come onto the market."

Ihug director Nick Wood, whose ISP has already branched into telephony, says the inquiry's recommendation the Telecom should be required to provide wholesale access to its local loop is a good thing.

"It's the logical conclusion, because there's no point in building a whole new network," says Wood. "But I don't know how this will help Telstra-Saturn's plans, because with someone being able to buy stuff at good wholesale prices they can implement services now and there's no reason to build a whole new network.

"I think the biggest problem is that once you get a customer it's really hard to lose them - so time-to-market will be the issue, rather than the best long-term solution. If you go and build a big new network but everyone's already signed up, why would they move? They wouldn't even move for free ISPs," says Wood.

Chief executive Ernie Newman says the report in general is "better good than bad" although he is disappointed the report doesn't push for unbundling of the local loop.

"We are pleased that they have left the door open on this and on the Kiwi Share option." Newman is also unhappy that end users are not invited to participate in the industry Forum, which will be made up of telcos.

"It makes us into second-class citizens a bit, but if that's all we've got to moan about then it can't be too bad."

Newman is also happy to see two levels of regulation as that allows the Commissioner to get to "the big issue, which is Telecom's local loop, before they get diverted on to other things".

Television New Zealand is delighted with the inquiry's decision to take a broad view of the industry as one of electronic communications rather than simply telecommunications.

The report recommends "a single regulatory framework covering all electronic communications" - effectively chiming with TVNZ's submission that access to converged televison and data platforms should be considered alongside access to telecommunications networks in any legislation.

TVNZ spokesman Liam Jeory says a broader view of electronic telecommunications was "always there in the terms of reference - the only difference was that we argued, rightly as it turns out, that they should consider convergence. When this issue was dealt with in Europe and Australia, they absolutely considered it. We're now basically operating in the same realm that the EU and Australia are operating in."

Jeory says the inquiry's decision is important because "for the future, as far as TVNZ is concerned with distributing its signals, it [affects] the terms under which it distributes them. What the telecommunications inquiry does is cement in place by its recommendation that there be a fair, open process whereby one can get access through conditional access systems to your services, come of which may be complementary and some of which may be competitive.

"It cements the principle of fair and open access - and for those with first-mover advantage not to be able to use their services in a way that either denies competition or hinders the development of others."

Nick Wood, whose Ultra high-speed Internet product comes with an optional digital TV service, is less sure about that part of the report.

"I haven't quite figured out what that means - the designation of Sky's set-top box CA (conditional access) system. That kind of worries me - does that mean that everyone's going to be stuck using it? Or do they give it to everyone to use for free? Obviously we don't want Sky in any position of control, or everyone to be forced to use a certain CA system. Everyone can build their own services."

Wood notes that in Australia regulators have declared that access most be provided to digital broadcast networks, but not set-top boxes in homes.

"At the end of the day, Sky put the box in, it's their cost, why should they have to share it with everyone?"

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