The Fletcher inquiry into telecommunications came to the conclusion that not having any industry-specific regulations had damaged New Zealand's telco sector by not encouraging speedy resolution of disputes and by not preventing the incumbent, Telecom, from obstructing new competitors in their attempts to get started.
Government's response was to accept the majority of the report's recommendations and to produce the Telecommunications Bill, which included a couple of wool-pulling clauses that sent us scurrying for dictionaries and legal comment. For a heady moment there I thought clause 35 on page 62 meant that the new law regulates every telco network except the one we all talk about -- the local loop. Saner minds and several re-readings prevailed and I realised all that was excluded was local calls -- since they're price capped.
Now the bill (with local calls included) is back from its public submissions round and from the select committee, which I think has done a bang-up job of dealing with the nitty gritty. Anyone who can read, understand and then analyse the Baumol-Willig rule has, if not my gratitude, certainly my appreciation.
This time round the bill has a lot of what the inquiry recommended but the original bill took out.
There are two lists of recommendations -- the first contains changes the entire committee could agree on and the second has recommendations that fragmented along party lines. Quite how they'll be implemented is unclear at the moment -- will the government push ahead with all the recommendations or will it bargain some away in favour of others?
And what of the recommendations themselves?
Taking the unanimous list first, they certainly seem to strengthen the bill. The new commissioner will indeed be based at the Commerce Commission but when it comes to telco matters they will be in the driving seat. There was previously some concern that any decision that required all three commissioners (Commerce has two, plus the one for telecomms) would see the telco specialist marginalised. The report makes it clear that there must be a telecommunications commissioner and that the seat should not be left empty under any circumstances.
The reporting schedule for the commissioner has also been tightened up. Now the commissioner will work to a much tighter deadline when ruling on disputes, which can only be a good thing. I'm still trying to work out just what the new appeals clause will mean -- one of the big problems in Australia is that as soon as their equivalent commissioner made a ruling, the incumbent telco, Telstra, immediately appealed and dragged the whole thing back to the courts. The committee has recommended parties be allowed to appeal an "initial determination even though a price review determination may be pending".
Of the other, non-unanimous clauses, some are good and some are rightly opposed.
A mandatory review of whether or not the local loop should be unbundled has been suggested with a 24-month time frame. National and ACT members oppose this while government party members are all for it. The Greens would like to see it done right now -- forget the review, let's designate it as a service right away. I think we should see how wholesaling goes first and then reassess the whole thing in two years' time.
Then there's the question of co-location of cell sites and mobile roaming. Cell site co-location is a great idea -- one tower with lots of companies' gear hanging off it instead of lots of towers each with only one company's equipment. Mobile roaming would allow users of one network to be automatically switched to another if they go beyond the reach of the first network. This could be tricky, given the incompatibility of our two mobile networks, and National and ACT oppose the designation of these services at all (the telcos have to reach a decision quickly or the commissioner will step in and set prices). We have a duopoly position in mobile telecommunications. Customers can't switch readily between providers because of the technology and they have no ready competitors. And Vodafone in particular won't be too pleased to have spent the money building a new network only to be told now it has to sell space on it to newcomers.
Best of all, the committee has pushed to have carrier pre-selection made a designated service. Carrier pre-selection means you can choose to have your toll calls with whichever carrier you like without having to dial any prefix or additional numbers. That's always been nonsense in my opinion -- a cheap way of putting people off switching to a competitor.
The next step sees the bill back in parliament and with a bit of luck we'll have a whole new ball game this time next year.