Commerce Commission final decision on Spark voice resale due

Report due 22 December

The Commerce Commission is due to release on 22 December its final report on the regulation of Spark’s retail voice services. This follows release of a draft report in September in which the Commission recommended the service be deregulated, saying there were n sufficient competitive alternatives available.

This is almost certain to be its final decision: most of the submissions to the draft report supported it. However the Commission’s proposal that there should be a 12 month transition period produced conflicting views in submissions to the draft report.

In the draft report the Commission said:“We believe that RSPs have alternative wholesale inputs that they can use to provide retail voice services to their customers. However, to provide RSPs with time to consider other wholesale options, we recommend a transition period for omitting the Resale Services from Schedule 1 of 12 months from the date on which the Order in Council is made.

It said this would allow RSPs time to forward the investment in the business systems needed to use other wholesale inputs; to adapt to the use of new wholesale inputs; to migrate customers; and renegotiate new commercial contracts with Spark for the provision of resale services.

In its response to the draft report Spark argued that no transition period was necessary. Vodafone, Vocus and Trustpower all called for a longer transition period.

Trustpower wanted two to three years. Vocus acknowledged that IP voice services provided viable alternatives to resold PSTN voice, but argued that the costs and challenges of migrated to these services should not be underestimated.It called for a transition period longer than 12 months, saying“Many RSP’s may want to migrate, and based on our experiences to date this is not a trivial exercise, particularly in parallel with UFB ramp up.”

Vodafone made only a brief, one page, submission to the draft in which it said: “We consider that a 12-month transition period recommended as the Commission's preliminary view should be considered as a minimum.”

Spark, however, argued at length for immediate deregulation saying any transition period would be unlikely to add much in the way of certainty, bargaining power, or stability to the industry because the resale local access and calling service has already not been subject to a regulatory determination for close to ten years.

“Spark has no commercial incentive to terminate the wholesale agreements it has in place today for resale services,” Spark argued.

“Conversely, it is highly unlikely that regulation could be justified and implemented within the transition period. In other words, with the Order in Council to remove regulation in place, there would be no real prospect of regulation within the one year window so no real benefit to imposing such a lengthy notice period.”

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