Mixed Xmas for telcos

RICHARD BRADDELL previews the Government's telecommunications policy, due out tomorrow.

Followers of television's West Wing may detect an element of "putting out the trash" in tomorrow's release of the Government's telecommunications policy: just before Christmas, thus leaving little time for considered criticism.

The policy, whatever it is, will not please everyone. While Clear Communications is likely to go unsatisfied in its pursuit of local loop unbundling - the practice increasingly adopted overseas, which forces the dominant telecommunications company to rent local telephone lines to competitors - there will be much in the policy that will not be to the liking of Telecom or, possibly, Vodafone.

Although it is not his portfolio, Finance Minister Michael Cullen has already signalled that the wide-ranging recommendations of the Hugh Fletcher-led inquiry will have their limits.

The proposed independent electronic communications commissioner seems likely to be less independent than imagined; Dr Cullen indicated in mid-October that the Commerce Commission would be the vehicle for any regulatory changes.

In a curiously worded statement which industry gossip says may have come at the instigation of the Prime Minister Helen Clark, Dr Cullen noted that Communications Minister Paul Swain had always been sceptical about the value of industry-specific regulation.

The statement was prompted by the weakness in Telecom's share price, which has again been testing new lows this week.

In Parliament's question time, Dr Cullen subsequently went on to say he did not favour an industry-specific regulator, although he did not suggest how that would affect matters that might be designated for regulation under the inquiry's recommendations.

But while the proponents of an independent commissioner argue that the Commerce Commission is an enforcement and adjudication body and not the facilitator the industry needs, some expect there will still be a commissioner - housed within the commission.

That structure would be similar to Australia's competition regulator, the Australian Competition and Consumer Commission, which operates a discrete and robust telecommunications body within its walls.

One of the key areas of interest will be how the Government handles the Kiwi Share. The inquiry's view was that Telecom should bear all the costs, rather than just its own share, and should in future foot the entire cost of network upgrades as technology evolves.

That approach has been criticised, if only because it gives Telecom little incentive to improve services in rural areas.

While local loop unbundling is almost certainly off the agenda for now, it may only be a matter of time before New Zealand follows Australia, the US, UK and Europe in adopting rules that enable competitors to attach their own equipment to Telecom lines, thus enabling them to sell their own products rather than just reselling services Telecom already offers.

But without local loop unbundling, the Government looks on thinnish ice if it adopts the inquiry's recommendation and requires existing cellular operators to provide access to new entrants while they are getting their own networks up and running - even if for only a short time.

It would be surprising, though, if the Government did not take up the inquiry's recommendations on number portability, given that the numbering administration agreement has lived up to worst expectations.

The inquiry has recommended that the industry conclude a portability agreement by July 31 or face regulation.