Telco monopolies cost us $250m a year, says TUANZ

Dead-weight losses arising from monopoly rents in telecommunications are costing the taxpayer up to $250 million per year. This is the figure presented by both Treasury and Ministry of Commerce officials in papers obtained by industry watchdog TUANZ. The papers also show there is a growing consensus among government officials that while the Commerce Act functions to prevent anti-competitive behaviour, it does not promote competition.

Dead-weight losses arising from monopoly rents in telecommunications are costing the taxpayer up to $250 million per year.

This is the figure presented by both Treasury and Ministry of Commerce officials in papers obtained by industry watchdog TUANZ. The papers also show there is a growing consensus among government officials that while the Commerce Act functions to prevent anti-competitive behaviour, it does not promote competition.

It is clear from the papers that there is a divide between officials on whether to make any statement regarding the traditional pricing structure, and whether any changes to the regulatory environment are needed. One of the major concerns within the telecommunications industry is that the regulatory powers of the MOC are unsuitable under the current market conditions.

TUANZ intends to pressure the government into changing the Commerce Act and has announced that it will be holding an international symposium on competition law in November. “New Zealand businesses are falling behind their international competitors in key areas of telecommunications performance,” says TUANZ executive director Grant Forsyth.

“The Ministry of Commerce last year concluded that New Zealand is failing to achieve best practice standards in business, mobile, and leased line services.

“Materials obtained from the Ministry of Commerce and Treasury under the Official Information Act shows that the current regime is costing the country somewhere between $50 million and $250 million each year in deadweight losses in the form of monopoly rents. These are defined as half the monopoly profits earned annually within the industry in sectors where there is no effective competition,” says Forsyth.

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