Regulation would benefit users $372m annually , says researcher

The man who wrote the telecommunications inquiry's appendix on the 'costs and benefits of regulating electronic communications services' says there is a direct benefit in regulating the industry.

The man who wrote the telecommunications inquiry's appendix on the "costs and benefits of regulating electronic communications services" says there is a direct benefit to be seen from regulating the industry.

"If you reduce a product's price you see two gains: people buy more and people who already buy the product get it for less. That's what we see here," says John Small, director of the Centre for Research in Network Economics and Communications at the University of Auckland.

The first gain, new people buying the product, would net the economy around $44 million a year. The savings made by those already using the product amount to a staggering $328 million a year.

"We took the wholesale price that's built into those services and took a generous estimate of the costs of providing that and the difference between those two was the price we modelled." Small then applied that to the "billions of minutes of services" to achieve the end result.

"We had access to data from both Telecom and Clear which was incredibly useful," says Small, who says the final report is more of a refinement of our existing system than a replacement.

"It's based on negotiation still, which is important, but with an independent Commissioner to act in a disputes resolution sense if needed." Small says having a full-time Commissioner who will understand the industry from the inside out is "well worth while" and should lead to an acceleration of the decision-making process in the telecommunications industry.

Small's team won the contract to produce the report after earlier working on submissions to the issues paper that preceded the draft version of the report.

"I then made a personal submission on the draft report and they came back and wanted to extend the earlier contract to this." Small describes it as a "challenging task" but a good process to be involved in.

TUANZ chief executive Ernie Newman believes many people will be interested in the appendix's numbers.

"When they talk about the consumers having lost the benefit of that over the last several years, well it sticks it to [former Telecommunications Minister] Maurice Williamson a bit," says Newman.

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