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Posts Tagged ‘regulation’

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
9 Comments

A welcome review

Posted by Chris Hipkins on June 13th, 2010

Last week Internal Affairs Minister Nathan Guy announced a tightly focused review of the Films, Videos, and Publications Classification Act 1993 to reduce the cost burden on industry. I think this makes a lot of sense. A few months ago I spoke to someone working in the industry and was surprised to learn how crazy and outdated some of the regulations in this area are.

For example, if you’re importing a bunch of DVDs, you have to manually place a classification label on them, even if the classification label has already been printed on the packaging. Removing this compliance cost could save film and video game importers up to $2.4 million a year.

It’s important to note that while the review will look at timeframes around classification, with many feeling it takes too long, the classifications themselves are not up for review. Overall, this review looks like a pretty sensible thing to do. I’m interested in any comments…

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Filed under: Consumer Affairs, censorship
9 Comments

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
3 Comments

Joyce overkill

Posted by Clare Curran on June 11th, 2009

I’ve been musing overnight on how quickly Communications Minister Steven Joyce moved yesterday to quell any prospect of axing free local calls or a possible takeover of Telecom by overseas interests and scrapping of the Kiwi Share. The possibility of those things were raised by me in a release yesterday. But they didn’t come out of my imagination, despite what Mr Joyce might say. They came from a Cabinet paper, prepared by none other than National Deputy Leader Bill English, and posted in an obscure place on the Treasury website. The paper outlined a wide ranging  review across New Zealand’s regulatory framework. The review is beginning to create alarm.

The paper says (among many other things) that Treasury will lead a review of the Kiwi Share and the Telecommunications Service Obligation (TSO).

The Kiwi Share requires government approval for any shareholder to acquire more than a 10% stake in our major Telco. The TSO limits rises in phone line rentals to the rate of inflation and guarantees “free” local calls.

Now I realise that a Cabinet paper does not constitute government policy. But let me quote two paragraphs from it:

TSO: The TSO framework makes available telecommunications services for which subsidy costs are recovered through levies on the telecommunications industry. Potential improvements to the TSO framework which address contentious issues for the industry were identified in the TSO review by the previous government. Further benefits could be identified by a wider review that considers abolishing the TSO framework to eliminate costs for the telecommunications industry and increase competition.

Kiwi Share: The historical Kiwi Share requirements for ownership written into Telecom’s company constitution makes acquiring a major Telecom shareholding more difficult than acquiring a shareholding in a New Zealand public company generally. Scrapping the Kiwi Share requirements would potentially open up opportunities for capital injection into Telecom from foreign shareholders.

A couple of points. Firstly, if the government is ruling out changes to free local calls and foreign ownership caps then what else is the review about? Is it about  encouraging more competition in the market so that the consumer (no matter where they live) has access to a cheaper service that is of a guaranteed quality (ie includes an emergency service and single telephone directory listing etc)? And more efficiency, transparency and contestibility. How would the TSO levy be calculated? and how would it contribute to a rural strategy?

Now there’s a question! A rural strategy. It appears this government doesn’t have one. For delivering broadband services anyway.

And if this is a fair dinkum review then wasn’t Mr Joyce pre-empting the outcome of his own government’s review by saying unequivocally yesterday that free local calls and foreign ownership restrictions will remain? Because if you read the two extracts above (from the cabinet paper) then surely those things were up for discussion.

I reckon they got spooked.

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Filed under: comms & IT, regulation
14 Comments

Back to the 90s?

Posted by Clare Curran on June 8th, 2009

The end of free local phone calls. Foreign ownership of  Telecom. Scrapping the Kiwi Share, which currently requires government approval for any shareholder to acquire more than a 10% stake in our major telco. No it’s not the Labour opposition scaremongering. It’s proposals contained in a Cabinet paper, prepared by Bill English, posted on the MED website, which says Treasury will lead a review of the Kiwi Share. It’s creating some consternation out there. And when you look across the Tasman and ponder what happened when the Howard Government sold it’s majority in Telstra offshore, you have to wonder  why you would want to create a monster on our shores.

I raise this because it is becoming pretty clear that the National Government is intent on a creeping dilution of our regulatory framework and our regulatory body the Commerce Commission and it’s time we started talking about it.

The previous Labour Government put a lot of effort into strengthening our regulatory framework after the devastation of  the 1990s. In 2008, reforms to strengthen our legislation were supported by the National opposition.

Now it seems, in 2009 we are seeing some worrying signs of a weakening of that position and a shift towards the right wing approach to regulation.

In an opinion piece in the NZ Herald on 18 March, Fran O’Sullivan raised questions around the resignation of Paula Rebstock as the chair of the Commerce Commission and what the new approach to regulation would be.

She said “The Rebstock resignation does provide an opportunity for reform. But it is important to make sure it is soundly based. Not simply to suit the commercial objectives of individual companies.”

The concern I’m hearing is that we could be moving into a policy vacuum in regulation. One very worrying sign is the government’s silence on the reinstatement of the Telecommunications Commissioner. This is an extraordinarily important position at a time when stability and knowledge is required in a fast changing sector with huge reforms underway.

The telecommunications industry makes up just 3% of our GDP but this is growing and is one of the fastest growing industries in this country, as well as across the world. This is a time for strong leadership and for a transparent and robust regulatory approach. Labour understood this. It seems National doesn’t.

And I challenge this government to tell the New Zealand people why they’ve waited nearly six months to tell us what they’re going to do about the Telecommunications Commissioner position?

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Filed under: comms & IT, regulation
3 Comments

Regulation in NZ

Posted by Trevor Mallard on May 26th, 2009

Cactus Kate is generally not my cup of tea. This is however worth a read.

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Filed under: mt albert, national, regulation
10 Comments