Telecomms report backs more regulation

The Telecommunications Inquiry's draft report favours moving away from a hands-off approach to a more regulated system - but not unbundling of the local loop.

The Telecommunications Inquiry’s draft report favours moving away from a hands-off approach to a more regulated system - but won’t call for the unbundling of the local loop in New Zealand.

“The Inquiry accordingly favours industry self-management with a regulatory underpinning” says the draft report into the future of New Zealand’s telecommunications environment

The inquiry would launch an “Electronic Communications Industry Forum” (ECIF) to better manage common industry problems. However, if ECIF cannot force a solution to any given problem, an Electronic Communications Commissioner (ECC) will also be appointed to oversee the process and to break any deadlocks.

The Commissioner would:

  • make recommendations to the minister;
  • would only intervene when requested to by one of the parties in any stalled negotiation;
  • develop, in conjunction with the forum, standards and codes of practices for the industry.
The inquiry has decided not to push for the unbundling of the local loop, opting instead to champion the call for “wholesaling” of the service.

“The mandatory wholesaling of Telecom’s local loop was supported in most submissions,” says the draft report, which defines wholesaling as: “a company making available some of its services at a discounted or wholesale price to other service providers”.

“The Inquiry is not convinced that unbundling offers significantly greater benefits to those that could be achieved through Telecom being required to wholesale its local loop service (including its xDSL service) at an efficient price.”

The report says unbundling is more costly than wholesaling and is “a relatively heavy intervention”.

The inquiry believes the local loop itself may soon be replicated by other providers using newer technology, such as fixed wireless networks such as Clear’s proposed LMDS network or Telstra Saturn’s fibre loop in Wellington.

It also says that while unbundling has been mandated around the world, it has only recently been implemented and it’s too soon to judge its effectiveness.

It notes that wholesaling of high-speed data services, such as DSL, puts the entire market’s development in the hands of Telecom.

“The Inquiry acknowledges this concern. It notes, however, that there appear to be incentives on Telecom to roll out xDSL services rapidly.”

Competition from other local loops, like Telstra Saturn in Wellington, and pressure from the new commissioner are seen as fundamental to this drive, along with the additional pressure of a code of practice requiring a certain timeframe for such rollouts.

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