The government took a significant move towards regulation of the telecommunications market yesterday in announcing it would require Telecom to provide separate financial accounts for its "local loop" business and to disclose the costs of complying with Kiwi Share obligations (KSOs).
The changes to the information disclosure regime are designed to give other companies more bargaining power in negotiating interconnection agreements with Telecom. Communications Minister Maurice Williamson insists the changes "do not represent a departure from the current light-handed regulatory environment," but merely seek to make the current regime more effective. Other telcos, however, are likely to see this as a significant step towards the regulation they need for full competition.
"Anything that makes the disclosure rules more robust is welcome," says Clear Communications public affairs manager Clayton Cosgrove, "because they've been inadequate to date. We've still to see how it'll pan out but if we can get full disclosure things will be better."
In addition to the separate financial statements and KSO cost disclosure, Telecom must now disclose information on its 0800 service and any documents relating to interconnection agreements. International service costs need no longer be disclosed, because "international calls are now competitively provided," says Williamson in a faxed Question and Answer response to enquiries about the new rules.
The changes will come into effect on 1 January 2000 and the first set of financial statements and KSO information will be available for companies negotiating interconnection agreements which will expire at the end of 2000.
Accountants, however, can be "very clever at manipulating data," says Clear industry and regulatory affairs manager Grant Forsyth, so the changed rules may not yet be enough.
In most countries, says Cosgrove, "local service costs are decreasing [because of competition]. Yet Telecom can raise its prices in line with inflation." The answer to that, he says, is to unbundle the local loop and provide proper competition. "We're always being accused of being Muldoonist and wanting intervention but we're not. We're pro market - it's Telecom that's anti-competitive." Clear just wants the basic policies necessary for competition to flourish, he says.
Not every telco is keen on regulation, though. Teamtalk managing director David Ware describes the announcement as "a big yawn". He can't see it making a great deal of difference "because we know how much things cost, really," so he can negotiate well enough.
This may be a first step towards more intervention by government, he says, "but as a general rule we're happy with the way things are. Let's just get on and do what's important - looking after our customers."
The telecommunications market isn't a level playing field, he says, "but there's no point in using a crowbar to level it. Everyone involved came in with their eyes open and knew what they were taking on." Regulation may have some advantages, he says, "but that's not how Teamtalk wants to play the game.