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Posts Tagged ‘Commerce Commission’

Breaking news… ComCom does its job

Posted by Clare Curran on May 21st, 2012

It appears that there are some significant barriers  that stand in the way of Kiwis getting access to fast broadband and which could impact on our economic future. Cost and what they will actually get are the two main issues. Lack of competition will affect both.

The Commerce Commission draft report has just been released into the barriers for New Zealanders to want to or be able to connect to ultrafast broadband. The DomPost reports that:

The Commerce Commission says connection costs and the lack of availability of video content – such as might be delivered by better online television services – are the two main factors that could dissuade consumers from connecting to the $3.5 billion ultrafast broadband network.

I haven’t read the report yet. But I hope it makes clear that there are concerning competition issues which could scuttle New Zealand’s highway to the future. Competition issues that have been ignored by the present government and are likely to bite them.

It also appears that rural Kiwis are being left further behind, with their ability to be connected to even basic broadband remaining a major issue, let alone getting access to fast broadband.

Finally there’s some good analysis to establish the facts of what the important issues are for NZ to grapple with.

I will have more to say later today

Here’s the report

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Filed under: broadband, broadcasting
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Amy Adams scorecard… part 2

Posted by Clare Curran on May 21st, 2012

It’s been almost six months since the election and Amy Adams being appointed Communications and IT Minister following on from Steven Joyce.

Yesterday I posted on Adams’ activities since being made Minister. Opening ultrafast broadband (UFB) cabinets around the country has been a major activity. It hasn’t yet translated into people connecting to broadband. This is likely to become a serious risk for the government next year when the rubber meets the road on just how many people are connected to fibre.

Enthusiastic PR launches are one thing. But when it comes to addressing the serious competition issues which will impact on the uptake of the UFB by consumers, arguably one of the biggest issues in her portfolio, Adams has taken curiously contradictory views.

Back in February, at a Commerce Commission-organised conference , an issues paper on demand for faster broadband, entitled “Content and Willingness to Pay.” said bundled pay TV services had been a key factor in speeding fast broadband uptake overseas.

Much of the conference focussed on the role played by  Sky TV which has made its MySky (and pending TVNZ joint venture) igloo boxes fibre-capable. But, as as has been reported, with its satellite business bringing in fat profits, there’s little motivation for it to provide content-over-fiber – at a price that would get households jumping to upgrade from copper. In the meantime, it was argued by many, Sky’s deals with internet service providers were a barrier to allowing other content providers fair access to the New Zealand consumer.

At that time Adams brushed aside concerns and  poured cold water on the prospect of regulation mimicking her predecessor Steven Joyce and saying:

While I will be closely monitoring issues that might limit uptake or the effective implementation of faster broadband, I expect industry to show leadership in resolving such issues.

Where that does not occur, I’m more than prepared to step in, but I’m also aware that regulation can be a blunt tool. It is my view that in most cases, industry-driven solutions are better for industry and customers, and are more enduring. One such example is content.

… I will signal now that I’m cautious about reaching for regulation as a solution at this stage when it is still too early, in my view, to anticipate how the competitive content market will look in a UFB environment.

There have also been calls for a single regulator for broadcasting and telecommunications to deal with issues of this kind, but I’m equally sceptical about the benefits of shaking up the regulatory structure to deal with an issue that has yet to form into a clear shape and which the markets may yet solve. The Prime Minister has used the expression of it being a solution in search of a problem and I share that view.

Last week the Commerce Commission gave the green light for Sky and TVNZ to progress the Igloo joint venture,  which has been described as Sky Light. But it also interestingly announced a surprise investigation into Sky TV’s content partnerships with internet service providers.

Cuirously Adams had this to say on Twitter:

ComCom inquiring into Sky’s control of content market. Always my view that was within their jurisdiction so good to see will be looked at.

I wasn’t the only one to scratch my head over this statement. Not only did it contradict her earlier statements which were that it was no business of the regulator to look into the content market. But she delivered the view on Twitter with no other accompanying statement. Changed her tune?

Tom Pullar Strecker writes in the DomPost about this today. It could be that the government has finally woken up to the fact it has been on the wrong side of this issue. It could be that Adams doesn’t understand the implications of what she said. Seems a bit confused at best.

It’s more likely she’s under instructions from Steven Joyce to change her tune because he sees the writing on the wall for regulatory change.

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Filed under: broadband, broadcasting, comms & IT
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Amy Adams scorecard… part 1

Posted by Clare Curran on May 20th, 2012

It’s been almost six months since the election and Amy Adams being appointed Communications and IT Minister following on from Steven Joyce.

One of the first things she did in her portfolio was to refuse to release much of the Briefing to the Incoming Minister from her department, MED. The industry, the public and the opposition were refused access to the whole of her proposed actions and workplan for the first six months of this year. I took a complaint to the Ombudsman which, because of their enormous workload, has taken sometime to process.

I am hopeful we’ll soon get to see some of that workplan. In the meantime, here’s an appraisal.

Since 10 February 2012,  Amy Adams has issued 15 releases announcing the ultrafast broadband is coming to this region or that region; there will be exciting new broadband services in rural NZ, etc etc…

However, when I asked the Ministry before the Commerce Select Committee recently  just how many schools had been actually connected to ultrafast broadband, the answer was” around 34″. Amy Adams doesn’t seem to have been up to much except travelling around the country announcing that ultrafast broadband is coming.

When you look a little closer, it’s going to be quite a while before most places see anything change. Her announcements are merely PR exercises to make it appear that Steven Joyce’s great broadband scheme is on track. The big test will be how many people actually connect because they can a) afford it and b) it’s worth their while to make the change due to interesting new content and services.

Many schools I speak to are deeply sceptical because of the cost involved in making the transition which is largely being foisted onto their operating budgets and the resourcing of teachers and students through ICT training and access to digital devices.

In the last six months, Adams has made just three other announcements. One around spectrum, one on Mediaworks and one on the 111 service. It’s a bit underwhelming. So far, she appears to be the Minister for opening UFB cabinets.

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Filed under: broadband, broadcasting, comms & IT
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Does the Commerce Commission have what it takes?

Posted by Clare Curran on March 27th, 2012

Twelve days ago the Commerce Commission announced an investigation, under Section 47 of the Commerce Act, as to whether the new pay TV platform Igloo, a deal between TVNZ and Sky, breaches merger rules.

It was, on the face of it, a show of independence from our competition watchdog, which states its core purpose as achieving the best possible outcomes in competitive and regulated markets for the long-term benefit of New Zealanders. Not monopolies, or big business, but New Zealanders.

Labour encouraged the Commerce Commission to extend its investigation beyond section 47, which deals only with acquisitions. We believe it should encompass all relevant parts of the Commerce Act, including section 27, as to contracts and arrangements substantially lessening competition.

Particularly relevant is the market power that Sky already has as it also owns Prime, a free to air channel, something many countries do not allow to happen. And it’s not only the possible stranglehold that Sky has on content delivery via the traditional broadcast distribution networks, but also via the  internet. This isn’t under investigation. Yet. Some might argue it should be.

The Commission’s investigation is not public. But it’s significant. The big question is will it use the opportunity to have a good look at the state of competition in the broadcasting (or video content) sector. In particular, whether the New Zealand consumer is being best served by the dominance of one or two large players in how they can receive video content via their TV screens and how that dominance is likely to flow on when we all start to connect our televisions to the internet via ultrafast broadband.

In many other countries consumers are able to command choice of providers of overseas content. In New Zealand we have Sky.

In Australia there is currently fierce debate over the  rules that keep major sports events on free-to-air TV. Communications Minister Stephen Conroy is introducing a law to ensure the biggest games are accessible to all viewers. This is an extension to the existing anti-siphoning legislation in Australia. There is no such equivalent here and we are nowhere near even having that discussion.

We take what we’re given and if we complain we are told that there’s plenty of content on line. Consequently some consumers download their favourite shows and movies from the internet and watch on their computers, bypassing the bigger screen. Often illegally, as some shows aren’t available here via legitimate means. Most of our internet service providers now have deals with Sky.

There are two important issues at play. One is the issue of competition and encouraging other players in the market because that can only be good for consumers. The other is a cultural issue. That’s what anti-siphoning laws are really about – ensuring people get access to content that is cultural in nature and about who we are as NZers. That’s invariably sport.

There’s been a bit of discussion in the media in recent weeks about the alleged stanglehold that Sky has on our video content market. Chris Barton wrote in the NZ Herald that “suddenly internet providers all over New Zealand are providing unmetered plans for Sky’s video content. You can download unlimited data – as long as it’s Sky”.

Sarah Putt has written extensively in Computerworld on these issues with this piece and last week with this piece which took aim at the detail of the contracts between Sky and the ISPs.

The big question is whether Sky’s exclusive deals have the effect of preventing other contracts to provide online audiovisual content that compete against Sky. The Igloo deal with TVNZ is a means for the pay TV provider to capture another market at a lower entry price which can potentially be upgraded to a fuller service. Given the convergence of the internet and broadcasting environments this positions TVNZ and Sky to potentially dominate the market in coming years and could prevent other existing and new players providing competition.

The Igloo deal could just be the tip of the iceberg if it means that competitors like Netflix or Hulu can’t enter our market and do deals with internet service providers like Telecom, Vodafone, TelstraClear or Orcon because they’ve been locked out of the market by exclusive clauses in the contracts they have with Sky. Sky denies this.

A couple of year’s ago the dominance of Vodafone and Telecom in our telecommunications mobile phone market was challenged by new entrant 2 Degrees which invested millions, yet found itself squeezed out by the Auckland-centric monopoly of Vodafone and the Southern monopoly of Telecom. A broad alliance of consumer groups including students and farmers forced Commerce Commission intervention.

Labour consistently called for more fair competition in that market. Since then, the competition in the mobile phone market is  more robust, the consumers are getting a better deal and all three players are operating in the market.

Not so in the broadcasting space. We are about to lose TVNZ7, our only public broadcaster. TVNZ has become aggressively commercial and since its recent deals with Sky, has made a conscious decision to back away from calls for greater competition. Some might say they’ve been bought off.

Mediaworks (TV3), which is struggling, but still manages to produce quality content on a shoestring budget, is a voice for greater competition. Along with the ISPs and countless industry commentators. Recently some prestigious overseas commentators expressed surprise, even horror, at the skewed and monopolistic nature of our broadcasting, or content sector.

Last month Carleton University professor Dwayne Winseck told the Commerce Commission’s conference on the demand side of the fast fibre networks in Auckland that New Zealand was viewing its telco market through “rose tinted glasses” and needs to get real about data caps, peering issues and the dominance of Sky TV.

I don’t know about rose tinted glasses. I think it’s more that our head is buried firmly in the sand.

The recent articles in Computerworld including interviews with Sky CEO John Fellet pretty much confirm that the contracts between Sky and some telcos restrict net neutrality and arguably stifle competitors, but the Telecommunications Act might be read as excluding content considerations unless it’s video-on-demand. So the concern is to make sure that different parts of the Commerce Commission don’t expediently assume that the hot potato of audiovisual content markets is the other’s problem to deal with.

How the Commerce Commission treats this issue is important. There’s a lot of pressure from the big guns, particularly Sky, to keep our heads stuck in the sand. It seems the government concurs. The new ICT Minister is following Steven Joyce’s lead (instructions?) by insisting there’s no problem and we should continue to allow the skewed market to have its way.

They should be mindful of the metaphor of the boy who stuck his finger in the dyke.

In the meantime, many New Zealanders, frustrated by the lack of quality and up to date content through legal channels are increasingly turning to downloading via the internet.

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Filed under: broadband, broadcasting, comms & IT
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Does Steven Joyce know the answers?

Posted by Clare Curran on August 4th, 2010

Note: My question is at 1 min 10 secs

Steven Joyce today ducked a question in parliament on why his government’s decision to regulate mobile termination rates contradicts its plans to provide its new fibre network with a ten year regulatory holiday on the pricing of fibre.

Was it because he didn’t know what to say or because he just didn’t want to raise attention to the contradiction. It’s the first time I’ve seen him actually stumped.

The question put to Mr Joyce in the House today was:

Given his logical decision to regulate on MTR, what is the basis of his illogical decision to give a regulatory free pass to the coming new fibre networks

In ruling out the question Speaker Lockwood Smith also refused to allow the following question:

Given the Government’s conflicting role as an investor and regulator of the new network, how will New Zealanders who take up fibre know that you are putting their interests first?

I think New Zealanders, who want ultrafast broadband and want a new network which delivers benefits for them using $1.5 billion in taxpayer’s money, would like to know the answers to both those questions.

Labour is glad the Minister decided today to regulate on mobile termination rates. But we’re not glad that the government could now derail the goal of affordable and accessible broadband services for New Zealanders with news that Local Fibre Companies, the private public partnerships set up to manage the $1.5 billion broadband project, will enjoy a 10 year regulatory holiday locking out the Commerce Commission from reviewing prices for fibre available to New Zealand consumers.

Instead, fibre prices will be set by commercial contract to be negotiated with Crown Fibre Holdings (CFH), the entity set up to evaluate the bids to run the network, and proofed against review by the regulator for ten years – a situation that applies to no other network industry in New Zealand.

There is a real of a lack of transparency, confused governance and increasing uncertainty about how the decision is being made to spend $1.5 billion of taxpayer money. All the players are saying this. Industry commentators are saying it.

That’s why Labour has called for the Commerce Commission to have an independent oversight role.

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Filed under: broadband, comms & IT
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Broadband too important to muck around with

Posted by Clare Curran on August 3rd, 2010

Let’s see how much of this you agree with this.

New Zealand needs high quality ultrafast broadband. In principle, the goal of delivering this to New Zealand businesses, schools, hospitals and homes is the right goal.

Delivering high quality UFB is a core infrastructure priority for governments throughout the world and is in line with the US, Australia, Europe and many Asian countries. New Zealand is not leading, we are following many other countries in delievring on this goal.  It is likely to take (at least) 5-10 years to deliver.

Delivering high quality UFB is a complex undertaking to get good outcomes for our country. It requires transition for existing players. Including Telecom. But transition is about the whole industry not just Telecom and it’s a great pity that what happens with the UFB project and how it will be delivered, seems to be all about Telecom.

There is a view that Telecom is currently the most vulnerable telco in the world. I’m not sure about that, but it is important that Telecom can survive the next 3-5 years and make the transition. But it shouldn’t be able to demand the terms.

The next ten years are unknown territory for telecommunciations in New Zealand. The industry is poised to change forever and to become about fibre rather than copper.

Transition will likely require some changes to existing legislation, in particular the Telecommunications Act 2006.

Crown Fibre Holdings, the body charged with making a decision on the UFB contract, is an infrastructure company. It has no ability to determine a vision, no policies and no strategic element.

Telecom’s statement yesterday wanting to ‘integrate the UFB (overseen by CFH and a ‘co-investment’) with the Rural Broadband Initiative (a grant scheme being driven by the MED) and funded by the new look Telecommunications Service Obligations (overseen by the Commerce Commission) shows what a confusing regulatory alphabet soup the Government’s cornerstone broadband policy is becoming.

We need clear orchestration of all the elements in this process. It’s complex and it needs flexibility and transparency. It’s taxpayer’s money. That’s why it’s time to change the governance process.

And that’s why today I called for Telecommunications Commissioner Ross Patterson to be given an independent oversight role in the government’s ultrafast broadband (UFB) scheme.

Communications Minister Steven Joyce should now consider changing the governance process for the UFB decision and to involve the independent Commerce Commission ensure public confidence in the process. At the very least Steven Joyce should remove himself from decisions about Telecom’s requests for variations to its operational separation agreement with the government.

Dr Patterson has sufficient credibility and experience within the industry to bring independent oversight and objectivity into the process and to be mindful of New Zealand’s long term interests in developing our future in broadband.

Otherwise there is likely to be a cloud over the broadband decision. Whatever the outcome, how can the public have confidence that Telecom is not somehow holding our country to ransom with its bid to secure as much value for its shareholders as possible in securing the broadband contract?

“New Zealand’s interests are paramount, not the Telecom shareholders and the government should recognise this.

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Filed under: #OpenLabourNZ, broadband, economy, infrastructure
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New Zealand, not vested interests paramount on broadband

Posted by Clare Curran on July 5th, 2010

We don’t appear to be getting much closer to a workable solution on how to roll out ultrafast broadband to the nation.

Every person I speak to, every event I go to, is consumed with doubts, questions and concerns.

The biggest issue is what role Telecom, or a split of part of Telecom, will play in the rollout.

Because there’s a closed tender process underway there is no ability for a public discussion led by our government to be had on this issue.

Telecom is trying to work out how to structurally separate and qualify to get a large piece of the action on the UFB rollout. They don’t want to go down this track without some certainty as to how it will radically change the company.

The government wont give them certainty because there is a tender process underway.

The conundrum, as was pointed out succinctly last week on an InternetNZ blog post is this:

…there is a chicken-and-egg problem on the separation front. Telecom as a vertically integrated firm can’t participate directly in the UFB. But Telecom probably can’t make the economics of separation work unless it has some kind of assurance that its separated network business will be a lead player in the UFB.

Here’s some other views being put out there:

New Zealand needs fibre and we need it soon. We cannot wait much longer to have a comprehensive plan. It’s been almost two years and the government is in a quandary.

That’s not good for NZ, nor for the industry.

It’s not in New Zealand’s interests for Telecom to be run into the ground and excluded from the biggest network build for the next generation (or more).

But it’s not in NZ’s interests for Telecom to be in a position to bully the government or the country into it participating in a way that’s about its own vested interests. New Zealand’s interests are paramount.

There’s all kinds of speculation about what discussions have been occurring with Telecom over the last 19 months.

Tom Puller-Strecker in today’s DomPost is attempting to get to the bottom of this. As usual Joyce is keeping all his cards close to his chest. Does he have something to hide?

There are concerns that the level of private investment available for UFB is not enough to make it work. The government has shifted the goalposts on its tender to allow local fibre companies to provide Layer 2 services as well as Layer 1 on the fibre network.

Layer 1 is the fibre cable in the ground or strung over poles, while Layer 2 lets the supplier add the electronics at both ends of the fibre and means retail providers can use it immediately and supply products to end users.

Essentially this is changing the terms of the tender. The industry seems to welcome it as a sensible move. But there’s a number of issues that lie behind the recasting of the tender which raise more questions.

The small amount of public discussion that is occurring indicates that the debate is shifting to a question of whether $1.5 billion is going to be enough to deliver on the government’s objectives (taking into account the 1:1 private investment). How will reshaping the tender affect this? It doesn’t appear clear to the bidders.

Questions about the role of the Commerce Commission and their ability or otherwise to regulate these networks in the public interest.

And if, as Joyce has said, the government hasn’t ruled out taking an equity stake in Chorus, what would that company look like? And could we end up with an unregulated monopoly that is largely privately owned? Who’s interests will that serve?

Internet NZ’s two concerns are very valid.

They warn against:

  • making policy deals or regulatory deals behind closed doors
  • changes to the current tender process that undermine the efforts people have gone to in making bids

What’s in the way is the closed tender process and the inability for frank public discussion to occur. What does the government think? What does Steven Joyce want?

Whatever happens, we must make this about New Zealand’s interests. And we must make sure that there is an open access network and that real competition can occur.

Telecom needs to state its intentions to the nation. But the government needs to be more upfront. This is public money. And it’s the nation’s network.

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Filed under: broadband, comms & IT, economy, infrastructure
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Time to be a good corporate citizen

Posted by Lianne Dalziel on July 12th, 2009

I have written to ING on behalf of the people who have written to me about the settlement offer which has as its deadline tomorrow despite the fact that the Commerce Commission investigation under the Fair Trading Act into the two funds (DYF & RIF) is a long way from concluding.

I had expected that the government would intervene in this matter as part of their consideration of moratoria however I was advised late last week that this was not going to happen. ANZ has ensured that the release, which people have signed in accepting the ING offer, does not extend to any complaints lodged against them by the end of July with the Banking Ombudsmen. I believe ING should do the same with respect to matters before the Commerce Commission.

If the Commerce Commission investigations show that there has been wrongdoing on the part of ING or any other party covered by the release, then those that sign up to the current offer should not be precluded from benefitting from the results of any prosecution or settlement that might follow such a finding. I believe ING should adjust the terms of the release accordingly. The reason for writing to ING is that I don’t believe ING should be able to essentially get away with its statutory obligations simply through the timing of their offer.

I have advised them that I am fully prepared to develop a private members’ bill in order to ensure that these rights are not taken away from such individuals, and given that many MPs have been receiving similar heart-wrenching letters to the ones I have received, I am sure it would get a fair hearing in Parliament. However I actually don’t want to go down this track because I think it should come from ING and I hope that they step up to the plate tomorrow.

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Filed under: parliament, select committee
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Keep an eye on the Commerce Commission

Posted by Clare Curran on June 24th, 2009

Rodney Hide’s appointment as Associate Minister of Commerce  (responsible for the Commerce Commission) was announced very quietly. Mark Berry’s appointment as Commission Chair received more attention because of his background.

In the telecommunications area of the Commission’s work (which I am spokesperson for) I’ve been paying attention because of the important regulatory reforms driven by the previous Labour Government (and former Minister David Cunliffe). The role of Telecommunications Commissioner has been vacant for more than nine months (because the commissioner Dr Ross Patterson has been on medical leave) and there has been concern consistently expressed to me within the industry about the vacancy given the number of telecommunications issues that require attention. Dr Patterson commands widespread respect and many have been speculating why the position has remained vacant so long. I understand he has fulfilled the terms of his medical leave (and has done for some time) and the question needs to be asked what would be holding up his reappointment? A political reason maybe?

Last week I asked Commerce Minister Simon Power a series of questions in the Commerce Select Committee to try to clear things up. The story only seemed to become more opaque. And today’s NBR takes it further. I think the government has to tell us what’s going on.

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Filed under: comms & IT, regulation, select committee
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