Beware hidden costs of rulings: Wireless firm

Walker Wireless managing director Bob Smith has expressed concern about the hidden costs of getting a determination from the telecommunications commissioner.

Walker Wireless managing director Bob Smith has expressed concern about the hidden costs of getting a determination from the telecommunications commissioner.

Smith, addressing the telecommunications commissioner’s conference in Wellington late last month, says there is potentially a lack of transparency, “which could mean we are clocking up costs without realising it, to get a determination”.

This would work to the detriment of small new entrants, he said, because the financial and personnel resources of incumbents like Telecom, TelstraClear and Vodafone were so much greater.

“We are hopeful that the implementation of the [Telecommunications] Act and the commissioner’s role will be straightforward and not costly”.

Smith has separate concerns about the apportionment among telcos of the costs of the telecommunication service obligation (TSO), the replacement for the Kiwi Share. The shared TSO funding could well constitute a “tax on new entrants” and thus be anti-competitive, he says.

He suggests the TSO “should disappear, or be focused on infrastructure rollout for the new world. “Investment should be directed at going forward; not at re-engineering the old copper network so it can cope with 14.4kbits/s [nationwide]. We have listened to economists debating [finer theoretical and definitional points] but we’re concerned with the practical matter of cost”.

Tuanz head Ernie Newman suggested to the commissioner and colleagues that there could be “a tension between predictability and the optimum outcome” of a complaint to the commissioner. If the complaint process was entirely standard and predictable, it may miss the best result that a more flexible process would find.

With regard to pricing principles, Tuanz urges the commissioner to look overseas at other longer established national telecommunications regulators and take lessons from their experience, Newman said.

“Often we get the impression that New Zealand’s horizons on these matters extend no further than Canberra.”

Commerce Commission delegate Paula Rebstock said she found it hard to see how telecommunications was significantly different from any other sector that ran a network, for example the electricity industry.

Newman replied that the “any to any” structure of the telecomms network is unique. Any phone caller or data user will want communication with other users no matter who their provider is, and this requires complex interconnection arrangements, he said.

“When I use electricity, as long as it comes out of the socket I don’t care where it comes from.”

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