Did he jump or was he pushed? Industry worried about Webb’s departure and regulatory future

Webb will forever be remembered as the "backflipping commissioner"

Telecommunications commissioner Douglas Webb’s decision not seek re-appointment when his term expires in March has prompted questions as to whether he was pushed or simply read the writing on the wall, after he was hung out to dry by Prime Minister Helen Clark recently.

Webb was appointed as New Zealand’s first telecommunications commissioner in March 2002, as part of a gradually tightening, but still light-handed regulatory regime, as compared to overseas. A lawyer with over thirty years’ experience, Webb came from the legal department of the World Bank into the fray that is New Zealand’s telecommunications regulation.

Although he stated at the recent Auckland Tel.Con conference that one of his major achievements had been to avoid a repeat of Telecom’s barrage of legal challenges in the 1990s, Webb will forever be remembered as the “backflipping commissioner”, after he did a volte-face on his draft determination in 2003 that recommended unbundling of the local loop. Instead, Webb recommended improved wholesale terms for competing providers, but instituted a crippled regulated broadband service for them, so as to preserve Telecom’s incentive to invest in its Next Generation Network.

Leaving industry observers stunned by this regulatory reversal, Webb’s actions were finally deemed unsatisfactory in 2005 when Telecom missed its self-imposed wholesale broadband customer numbers target.

Webb had traded off local loop unbundling against Telecom improving terms and conditions for ISPs seeking wholesale access to broadband services — in the hope that it would be a speedier solution than unbundling. However, Webb’s compromise ended up being a complex and convoluted solution that satisfied no one. He had to issue a clarification in 2004 to explain that Telecom’s commercial proxy service was not the same as the regulated variety. This was after confusion in the industry led on providers believing it was. Two years on, no provider has succesfully applied for and been able to implement the regulated service that Webb had accepted in lieu of unbundling.

The then Minister of communications, Paul Swain, wanted to reject Webb’s recommendation and have him reconsider unbundling. Swain was backed in this by the Ministry of Economic Development. However, the Cabinet overruled Swain and Webb’s recommendations were enacted in law.

Trying to patch up the regulatory failure that manifested itself in 2005, present communications minister David Cunliffe introduced a comprehensive regulatory package that included the local loop unbundling that Webb had rejected in 2003. Some weeks after this Prime Minister Helen Clark indicated Webb no longer had her support, by criticising him in strong terms.

Cunliffe’s office has issued a terse statement thanking Webb for the work he’s done since 2002, saying he has done an excellent job in defining the Commissioner’s role and developing regulatory processes. Notably, however, Cunliffe didn’t highlight any particular achievements during Webb’s tenure.

IDC senior telecommunications analyst Chris Loh says Webb commands “broad industry respect” will be hard to replace. Despite going against unbundling in 2003, Loh says, Webb has developed immense experience of the telco sector. It is hard, he adds, for anyone not in Webb or Cunliffe’s shoes to imagine the complexity of telco regulation. However, Loh also recognises that Webb was responsible for delaying unbundling of Telecom’s last-mile services.

However, Callplus CEO Martin Wylie, for one, is not happy to see Webb go.

While Wylie says Webb has “made some bad calls”, by permitting Telecom to delay competition, he also recognises the Commissioner has had his nose rubbed in it. Losing the experience that Webb has ganed over the last few years is a concern, Wylie says.

Keith Davidson, executive director of InternetNZ, agrees that Webb’s departure isn’t positive.