Telstra in call for transtasman harmony

By GREG ANSLEY

This is no small achievement: Rosemary Howard, an Australian, can remember with absolute clarity where she was and what she was doing the day the closer economic relations agreement was signed with New Zealand.

How many New Zealanders, from a nation that takes far more notice of such relations than its much larger neighbour, can say the same?

"It's a personal passion of mine," Howard told the Business Herald.

"I've always cared about CER, and I remember where I was back in 1983 when CER was put in place and it was about the two countries growing up and doing things together."

There is of course more to care about now, as Australia's largest and majority state-owned telecommunications carrier is up and running in New Zealand and locking horns with Telecom, its transtasman equivalent.

This is what Howard, Auckland-based chief executive of TelstraClear, was doing across the Tasman last week, repeating the series of CER briefings with Australian business heads that ran in New Zealand's three largest cities two weeks previously.

Ahead of her went a briefing paper on telecommunications regulation, handed earlier by Telstra chief Ziggy Switkowski to Trade Minister Jim Sutton and his Australian counterpart, Mark Vaille.

The paper contains Telstra's vision of a harmonised transtasman telecoms market, building on the success of the broad integration of the two economies, the memorandum of understanding on the harmonisation of business law, and the regulatory lead taken by the transtasman mutual recognition agreement.

It also holds up Australia's national competition policy as an example of what can be done by shifting away from generic law and regulation to sector-specific regulation.

In this case the focus is obviously on telecommunications, which Telstra has been assured will appear on the agenda of Friday's 20th anniversary meeting between Sutton and Vaille in Sydney, albeit as a sideline to the major focus of biotechnology.

In brief, the paper argues that although New Zealand was much faster off the mark in liberalising its telecoms sector, Australia has moved ahead in several key areas.

New Zealand's generic, minimalist regulation, Telstra argues, has allowed Telecom to exercise rigid market dominance. Howard says this has, for example, meant the country remains all but alone in the OECD in its lack of mobile and local number portability, local loop unbundling, and a whole sale digital subscriber loop.

Australia has taken a more regulated approach, with a slower, but more heavily-armed regulator - able to impose fines of up to $A10 million a day ($11.18 million) - which has allowed, among other advances, Telecom-owned AAPT to eat its way into its rival's home market.

Telstra argues the results demonstrate the need for change: Telstra's home market has been besieged by rivals and the group's market share has been cut; in New Zealand, there have been few new competitors, and Telecom remains dominant.

Its suggested remedies include:

* The inclusion of telecoms in the existing programmes of business law harmonisation.

* A requirement for each country to give due regard to harmonisation with the other when new laws and regulations are being considered.

* Each nation be given a voice in the formation of the other's telecoms policy, with pooled resources and coordinated policy development between the Ministry of Economic Development and Australia's Communication and Information Technology Ministry.

* Greater cooperation in telecoms regulation between the Commerce Commission and the Australian Competition and Consumer Commission.

* Telstra also suggests the Telecommunications Carriers' Forum could introduce codes similar to those developed by the Australian Carriers' Industry Forum to boost industry self-regulation.

The benefits of harmonised regulation and greater competition, Howard said, had been demonstrated in Australia and internationally, and in areas of New Zealand where the two carriers competed directly.

For example, the $10 reduction in monthly charges where Optus cables passed 200,000 homes in Wellington and Christchurch.

She said broadband was another area of huge potential for New Zealand, a country that despite one of the highest rates of internet penetration in the world had one of the lowest broadband penetrations in the OECD, largely due to cost and lack of competition.

A study by Australia's Broadband Advisory Group pointed to the scale of potential gain: its "conservative" estimates of the value of deep broadband penetration forecast an annual gain to the Australian economy of $A12 billion to $A20 billion.

"If you extrapolate that to the New Zealand economy, you're talking about a $4 billion lift in the New Zealand GDP," Howard said.

But beyond the vested interest and the frustrations of a newcomer whacking away at the big kid on the block, Howard believes CER must take a new leap forward into the 21st century - preparing the way for any future free-trade deal with the US, or global reform of trade in services.

"In 1983 CER was world-leading, innovative stuff, just like women getting the vote in New Zealand in the 1890s," she said.

"But today, the EU has leapfrogged in front of Australia and New Zealand.

"It's easier to do business across Europe than across Australia and New Zealand.

"We need to catch up and leapfrog that and get back on the front foot.

"I think our economies are too small not to do that."

Howard believes New Zealand cannot afford to slow the pace of reform - especially in telecommunications, the "refrigerated shipping of the 21st century" - because it must send clear signals on the openness of its economy to competition in services.

Without an open, competitive services economy, New Zealand would not be able to attract the global investment it needed.

Reluctance to change would also impact on its chances of negotiating a free-trade deal with Washington.