Radical changes challenge to telcos

By RICHARD BRADDELL

The ministerial inquiry into telecommunications has stuck with its view that the industry, along with other electronic and broadcast communications media, should be placed under the oversight of a single electronic communications commissioner.

In its report to Communications Minister Paul Swain, made public yesterday, the inquiry stuck with the mantra that industry solutions are to be preferred and encouraged.

But it also supported a structure in which the electronic communications commissioner can recommend regulatory intervention to the minister where necessary.

And in contrast to comparable reforms of the electricity industry announced by the Government on Tuesday, the electronic communications commissioner would be distinct from the Commerce Commission.

The justification, according to lawyer Cathie Harrison, one of three members of the inquiry panel, was that the Commerce Commission was an enforcement body while the commissioner's role was one of facilitating industry solutions and promoting self regulation.

Furthermore, Commerce Commission members were part-time, whereas a fast-moving industry like telecommunications demanded the commissioner's full-time involvement.

The Hugh Fletcher-led inquiry is one of the most comprehensive of its type, running for seven months of private and public consultations.

Although the inquiry provided draft legislation that would facilitate its recommendations, Mr Swain flatly refused to comment on how the Government might respond, other than to set a December date for the announcement of its policy and the legislative changes that might accompany it.

But Ms Harrison said the development of draft legislation had helped to focus the three-person team, which also included Australian competition regulator Allan Asher, on the impact of the detail of its proposals.

In response to industry demand, she said the inquiry had gone for a two-tier approach to regulation.

The first was "designation," involving price-setting by the regulator.

The second was "specification," a lighter-handed approach in which the Government could establish broad principles without resort to price control. It would give the Government more flexibility, Ms Harrison said.

The inquiry has taken a firm line on several issues. While it has avoided any definitive conclusion on local loop unbundling - which would enable players like Clear to essentially take over lines to customers out of Telecom exchanges - it has set a July 31, 2001 deadline for the industry to conclude an agreement on number portability.

If not, number portability would join a range of services related to Telecom's fixed-wire network, which the inquiry says should be designated immediately.

These include interconnection with other carriers, data tail or leased-line access to competitors, both of which would be done using cost-based principles.

Wholesale services offered by Telecom would also be designated, but priced at the lowest observed retail price, less the costs Telecom avoided by not supplying the service itself.

A report commissioned by the inquiry said the economy could achieve savings of $44 million annually, while consumers would save $328 million.

With regard to the Kiwi share, the inquiry said its obligations on Telecom to provide a limited monthly rental and free local calls should be better defined and embodied in legislation.

The meaning of ordinary residential telephone services should also be allowed to evolve over time, depending on the level of service that is technically capable of being supplied without resort to enhanced technologies such as broadband ADSL.

Telecom shares closed down 24c at 571c.