Commerce Commission puts mobile markets under scrutiny

The Commerce Commission has launched a study of New Zealand’s mobile telecommunications markets to

The Commerce Commission has launched a study of New Zealand’s mobile telecommunications markets to deal with what it says are a number of potential competition and regulatory questions that have been accumulating for some time as a result of fixed-mobile convergence, driven by evolving technology and evolving consumer preferences.

Commissioner Stephen Gale has written to the mobile service providers and other interested parties for their views on the scope of its proposed study, prior to finalising the scope, sequencing and timetable of the study.

Gale said he expected the study to: identify consumer preferences and how they appear to be evolving; identify how mobile providers are responding to that evolution in consumer preferences and to technological shifts in how mobile services can be delivered.

It would also “consider the impact of these trends on the performance and development of mobile services, including any obstacles to market development and any current or emerging competition effects; and consider, to the extent we might identify any relevant issues, how our regulatory tools could be applied for the long term benefit of end-users as a result of fixed-mobile convergence— both technically and as a result of evolving consumer preferences.”

 Spark’s general manager regulatory affairs, John Wesley-Smith, welcomed the move but called for the study to be completed expeditiously saying such initiatives created uncertainty among the investment community, noting the review would be taking place “at a critical time for mobile network operators as we start to consider the large investments in sites, spectrum, backhaul and core infrastructure that will be necessary to deliver world class 5G services over the years ahead, in comparable timeframes to the countries that New Zealand benchmarks itself against.”

Wesley-Smith said: “Investors both here and overseas have many choices globally about where they put their money. It would be in no-one’s interest for there to be a repeat of the regulatory uncertainty we’ve seen played out on the fixed side of the New Zealand telecommunications sector over the past decade.

“We would caution that unnecessarily broad market studies may create a perception of regulatory uncertainty for investors, especially where there is no obvious market failure or policy concern to explain them.

“We will be asking the Commission to consider early in its process whether it can identify any genuine indicators of market failure that might justify further investigation given the level of competition and significant investment programmes already in place.”

He said further regulation should not be necessary. “We have three world class networks delivering prices that are well below OECD averages and three mobile network operators that are ploughing significant investment into an intensely competitive market.”

The Commission’s initiative follow a letter to Gale from communications minister Simon Bridges in June (on the same day that he announced Gale’s re-appointment for another five year term).

In the letter Bridges noted that submitters to the review of the Telecommunications Act had raised concerns about the effectiveness of regulation at the wholesale level, particularly with regard to the provision of mobile virtual network operator services.

“In other countries, these services are an important part of the mobile "ecosystem", and the widespread availability of such services has led to better outcomes for consumers,” Bridges said.

“In light of the concerns that have been raised, I would encourage you to review the mobile market in the near future, to test whether competition is working effectively.”

 

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