Heavy-Handed Inquiry Report Disappointing

The Telecommunications Inquiry report disappointingly misses a great opportunity to lead New Zealand forward in the digital age, Telecom General Manager, Government and Industry Relations, Bruce Parkes said today.

“The Inquiry report starts with sound objectives but many of its recommendations fall well short of delivering on these in this dynamic industry,” Mr Parkes said.

“Indeed, the Inquiry panel seems intent on introducing old-style, heavy handed regulation of telecommunications which is 10 years out of date,” Mr Parkes said.

“Throughout the Inquiry process, Telecom provided valuable information and made constructive proposals. We look forward to sitting down with the Government to work on sensible ideas for the future of telecommunications,” he said.

“The Inquiry panel’s proposed Electronic Communications Commissioner would be a highly retrograde step for New Zealand where competition is flourishing and major investment is being made in exciting new communications technologies. The report has failed to make any convincing case for a new bureaucracy dedicated to intervening in a highly competitive industry.

“Surely such a regulatory approach has been well and truly overtaken by events in the marketplace—and this includes comprehensive new agreements reached over recent months by Telecom with Telstra-Saturn, Vodafone and CLEAR.

“This industry has shown it can resolve issues itself. We need a system that lets industry players sort out commercial issues, with the Government only intervening as a last resort,” Mr Parkes said.

“This sort of moderate and sensible approach has been taken by the Government in the electricity sector,” Mr Parkes said. “That model makes regulation a last resort and uses the existing expertise of the Commerce Commission rather than creating a new regulator with all the bureaucracy and costs that this would involve.”

Mr Parkes said Telecom would vigorously resist any attempts to legislate a new Kiwi Share arrangement, as proposed in the Inquiry report.

“The Kiwi Share is a contract between Telecom and the Government. We have stuck by the contract over the past 10 years and, in fact, gone far beyond its basic requirements. We are willing to renegotiate the Kiwi Share and look forward to both parties to the contract sitting down and finding a fair solution,” he said.

“But we will not accept a proposal for suddenly making the Kiwi Share an open-ended obligation on Telecom, with potential for the costs to mount steadily over time.

“The real issue now is not whether Telecom has met its Kiwi Share obligations, but how New Zealand works to overcome an emerging digital divide and who will pay for any uneconomic upgrading of rural networks,” Mr Parkes said.

“We have told the Inquiry panel, and people throughout New Zealand, that it will take new investment of around $500 million to upgrade service to rural customers so they have Internet speeds equivalent to what is generally available in cities,” he said.

“We and others have consistently highlighted the need for a broad-based funding mechanism that can support such upgrading. The major international telecommunications companies who operate in New Zealand should make a fair contribution alongside Telecom to servicing high-cost customers.”

Mr Parkes said Telecom was ready at any time to sit down with the Government and others to move forward on this and all other issues raised by the Inquiry report.

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