Minister's spin on telecomms changes 'preposterous'

Hindsight as the police, IBM and Treasury well know, has been in surplus over the past week. Truths apparently not evident to the parties involved with Incis over the past five years have been widely brandished in the media. It is, of course, much easier to be right after the fact.

Hindsight as the police, IBM and Treasury well know, has been in surplus over the past week. Truths apparently not evident to the parties involved with Incis over the past five years have been widely brandished in the media. It is, of course, much easier to be right after the fact. The same might be said of Communications Minister Maurice Williamson’s announcement of new information disclosure rules which will oblige Telecom to provide twice-yearly separate financial statements on its local loop and 0800 businesses, and to disclose the net economic cost of complying with the Kiwi Share obligations. This opening of Telecom’s books will have a significant bearing on future interconnection negotiations. It will make it easier for competitors to enter the market and might keep some old enemies out of court. It’s easy to say now that we might have a better telecommunications environment had such rules been introduced in 1991, when the minister first promised to facilitate competitive entry into telecommunications markets. We can’t know that. But Williamson’s spin on the changes has verged on the preposterous. They do not, he says, "represent a departure from the current light-handed regulatory environment, but seek to make the current regime more effective". That didn’t stop a minister who once styled himself as "hands-off Harry" touting his government’s decisive action while "after nine years in opposition, the best [Labour] can come up with is yet another enquiry". The truth is, provisions like those announced last week have repeatedly been rejected as unnecessary by Williamson over the past eight years. Indeed, the new disclosure rules are in some respects more onerous than those in the model proposed in a Ministry of Commerce discussion paper in 1995. Under that model, the kind of disclosure regime announced last week could only have been invoked by the governor general on the advice of the Minister of Commerce. It was dismissed by Williamson at the time as an "unpleasant" prospect for all concerned. The 1995 paper was summoned in the midst of Clear Communications’ bitter interconnection dispute with Telecom. One of the key difficulties in the original legal dispute was establishing the true cost of Telecom’s Kiwi Share obligations and the profitability or otherwise of its local loop services. The authors of the paper admitted they were unable to obtain sufficient information to calculate the cost of Kiwi Share obligations, but concluded on the basis of American studies that the real cost to Telecom might be "much smaller" than Telecom contended. They also suspected Telecom’s local monopoly supported its other services. Any action on the discussion paper was forestalled when Telecom shifted its position sufficiently to strike a deal with Clear which was eventually signed in March 1996 — five years after Clear first sought to interconnect. While Telecom and Williamson heralded the deal, Clear CEO Andrew Makin warned it was "not the definitive agreement". He was right. Clear and Telecom will probably still be in legal dispute over the agreement when it comes up for renegotiation next year. Telecom has, unsurprisingly, dismissed the new disclosure rules as an expensive waste of time. But it has itself this year made an issue of Kiwi Share obligations. It says it cannot possibly be expected to extend the Kiwi Share’s free local calling to data calls; and it touted its obligation to deliver 111 calls when it forced Internet users on to a new number range on pain of per-minute charging. It does not seem unreasonable that Telecom should be asked to provide evidence in support of such pleading. Given the path we have taken, we are unlikely to be able to embrace the exciting prospect of "opening up the copper" as are the Australians and the British. Ihug has plans to leap into DSL services in the open Australian market; undercutting DDS charges to businesses and even using already-installed telephone copper to network commercial buildings. But not here. For the foreseeable future, the only DSL service likely to be available in this market will be tied to Telecom international bandwidth, Telecom IPNet dial-up, Telecom local service and Telecom’s accounts department. In that context, the numbers Williamson brandished last week as an example of the success of light-handed regulation — 15th out of 29 OECD countries for national residential call charges — look decidedly average. Rusell Brown is @IDG’s news editor. Contact him at russell_brown@idg.co.nz Letters for publication can be emailed to cw_letters@idg.co.nz.

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