Peter Nowak: Decisions hamper broadband uptake

Douglas Webb has got to go. With a decision the other day by Communications Minister David Cunliffe to send proposed regulation on mobile termination rates back to the drawing board, the writing is on the wall.

Webb, as Telecommunications Commissioner, is in charge of setting the rules under which telcos operate.

It's now overwhelmingly clear he's doing a poor job, and New Zealand is suffering as a result.

Webb has thus far screwed up two very big decisions. The first was in December 2003, when he flabbergasted everybody by deciding not to force Telecom to allow rivals such as TelstraClear to access its local loop, or copper phone lines, into homes and businesses.

Even the Government was stunned by Webb's decision. In a recent interview with industry magazine TUANZ Topics, Jim Anderton - who sat on Labour's policy committee in the 80s when Telecom's future was being debated - said: "If you'd taken a ballot around the cabinet table, it would have been probably 19-1 in favour [of unbundling the loop]."

That ratio would be consistent with the rest of the world. Every other OECD country, with the exception of Mexico, had already decided to go with unbundling.

But Webb's baffling decision meant a continued monopoly by Telecom in the broadband business, and the country wallowing at the bottom of OECD rankings. This isn't just a matter of national pride - technology that was supposed to connect us with the rest of the world has thus far not materialised, and broadband internet access remains expensive and slow.

Now he's messed up a proposal to lower the cost of making phone calls to mobiles, which at least one estimate pegs at an extra $90 million out of New Zealanders' pockets a year.

When Webb tabled his recommendations to Cunliffe in June, he made it clear that he didn't want to dissuade telcos from investing in new technology. But shockingly, he decided to punish Telecom for doing just that by including its new third-generation (3G) network under the proposed regulation.

Cunliffe's main reason for sending the proposals back to Webb was to have another go on this point. The minister said it would be reasonable to expect a new proposal from Webb by the end of the year, but by that time there could be a new Government and a whole new set of rules.

In the meantime, prices are going to remain high - with no real prospect of coming down.

Diplomacy from Cunliffe in regards to Webb is to be expected, and he's not likely to say a bad word about him in public. But a proposal by the minister the other day to change the commissioner's powers indicates a possible lack of faith.

Currently, the minister is handcuffed by the Telecommunications Act and is unable to make real decisions without the approval of the commissioner. To make any significant changes, the minister would have to amend the act through Parliament - which is exactly what's happening.

At the same time as sending termination rates back to Webb, Cunliffe proposed a change to the act that will allow the minister to accept, reject or call for reconsideration of parts of a commission recommendation.

In other words, if the commissioner screws up part of an issue, the minister can fix it without having to go through the whole process again.

Webb has talked tough on Telecom, recently threatening the company with increased regulation. But Telecom is laughing at him - at last week's earnings press conference, chief executive Theresa Gattung chortled at the suggestion of increased regulation.

Webb recently promised a big decision soon on a TelstraClear application regarding the unbundling issue. Even if he completely reverses his position of a few years ago and calls for immediate unbundling, it's too little, too late.

The job of Telecommunications Commissioner is a tough one, and as the saying goes, somebody has to do it. It's clear that person should not be Douglas Webb.