Telco Bill contains flawed clause say telcos

New Telecommunications Bill clause questioned by industry players

Industry submissions on the government's new Telecommunications Bill are focussing on one clause that may give Telecom a monopoly on residential local calls, but Telecom says the clause is too "elastic" and needs tightening up.

The clause relates to whether Telecom has to wholesale its local-loop activities if they are aimed at residential users.

Paragraph 35 of Part Two of Schedule One says the bill’s provisions only apply to Telecom’s “non price-capped retail service ... offered by Telecom to end-users by means of its fixed telecommunications network”. According to Clear Communications, that would exclude residential local loop users because local calls are free to residential callers under the Kiwi Share arrangement.

That means any company that wants to use Telecom’s local loop to offer broadband connectivity, such as DSL, to residential users cannot demand Telecom offer its network at wholesale prices.

“We will be taking this further with the select committee as we are concerned about the ramifications of this clause,” says Clear’s public affairs manager Ralph Little.

The Telecommunications Bill is the government’s attempt to introduce a telecommunications regulatory regime. Until now the government has not regulated telecommunications in particular, preferring to allow telcos to fight out any disagreement in court under the existing Commerce Act.

The Labour government agreed to call an inquiry into the way telecommunications works in New Zealand after being voted in and did so last year. The Inquiry team reported back to government late last year and government, in the guise of telecommunications minister Paul Swain, agreed to implement a raft of changes, including the introduction of a commissioner to oversee the telecommunications regime.

But Telecom itself is also concerned about the clause, although for the opposite reason.

“Our understanding is it’s intended to exclude residential customers,” says Bruce Parkes, Telecom’s general manager for government relations. He says that wouldn’t rule out a broadband provider wanting to use the local loop.

“Our reading is that it’s about anything that is a retail service. Anything except the basic residential POTS [plain old telephone system] line we would be obliged to resell.” Telecom says the clause is too “elastic” and should be tightened up or more clearly focussed.

“We think it’s far too broad in its definition. If you take it to its logical extreme we would have to resell Xtra or toll calls or even esolutions.” Parkes says these services are already in competitive markets and having Telecom forced to resell services in those areas wouldn’t change anything.

“Anyone can set up an ISP if they want.”

The bill is currently before the select committee which will begin hearing submissions on the bill shortly.

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