Telecomms referee eyes big job

Figuring out how telcos will share the responsibilities and costs of interconnection are top-of-mind issues for new telecommunications commissioner Douglas Webb.

Figuring out how telcos will share the responsibilities and costs of interconnection are top-of-mind issues for new telecommunications commissioner Douglas Webb.

Webb says the formulation of the new telecommunications service obligation (TSO) scheme will be among his first priorities.

The government implemented the TSO to replace the Kiwi Share obligation, under which Telecom was required, among other things, to provide free local calls for residential customers.

The Commerce Commission has to make a determination of the costs of the TSO within 60 days of the issue of Telecom’s annual financial results in the second half of this year. But the evolution of TSO terms will take longer; early December, Webb says.

“The detail of how to determine the cost is still being worked on,” he says. “There are a good many factors, both price and non-price, to be taken into account.”

Access debates between telcos, such as the TelstraClear and Telecom negotiations, are matters for the parties to sort out, Webb says. In accordance with the specification of his duties in the Telecommunications Act, he will wait for the parties to decide there is no further mileage in discussions and come to him.

“I’m aware of the power of negotiation,” he says, but notes that negotiation can be distorted by unbalanced market power of one party or the superior possession of information.

“We must recognise that negotiation may not always produce an optimal result, so we have to have some mechanism for dispute resolution.”

There may be a role for the commissioner to step outside pure resolution and offer advice to disputing parties if asked, he says.

“If the parties thought there was value in talking to me and to the commission, I’m sure we’d be very willing. But I’d have to be cautious [about being seen to be helpful to one side or another] because of where we might go further down the road.”

Webb’s other priorities will be dictated by the parties in the industry who wish to bring matters to his attention, he says. But formation of an “industry forum”, provided for in the Telecommunications Act, has not yet been substantially considered.

The fundamental desirable features of a telecommunications environment are to spread the availability of competitive telecommunications to the benefit of the user and to bring increased investment into the field, he says. These objectives are partly in conflict with each other, he says, as too hard a driving down of prices by competition and his own determinations may lower margins and discourage investment. The objectives therefore, have to be carefully balanced.

Webb started the job at the beginning of this month, and at the time of speaking with the media last week had been in the job for five days. But since his appointment in December, he has had time to think about and examine the Telecommunications Act and talk to other commissioners in the Commerce Commission, who have been preparing the ground. “There’s quite a large work programme there already,” he says.

Webb has spent 11 years out of New Zealand working for the World Bank in Washington, but has now substantially caught up with the progress in the environment since then, he says. “It’s obviously a much more complex and deep market than the one I left in 1991. There are all kinds of niche services.”

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