Telecommunications enforcer walks a fine line

By PETER GRIFFIN

He holds the potential to be a peacemaker and deal-broker for a bickering telecommunications industry, but a few days into the job as telecommunications commissioner, Douglas Webb just wants to get his feet under the table.

The 55-year-old former managing counsel for the World Bank took up the new position on Monday, after arriving back in New Zealand from the United States the previous Friday.

First priority, said Webb, was sorting out telecommunications service obligations (TSOs) provided for in the Telecommunications Act 2001, which was passed in December and largely dictates the commissioner's role.

"The TSO issue is pretty high on the list because it has a timetable which is triggered at June 30 - the end of Telecom's financial year."

The new act does not specifically cover Telecom's Kiwi Share obligation - the cost of providing basic telecommunications and internet services nationwide - but introduces the obligations and a process of calculating them.

Webb will not only examine whether Telecom complies with the obligations, he will determine how much of a loss the company makes in meeting them - an issue that has generated fierce debate.

Telecom claims it loses about $180 million a year providing services to unprofitable customers, but a 1998 report commissioned by Clear Communications argues that the Kiwi Share imposes no cost on Telecom. Instead, says the report, it is a source of monopoly profits of $116 million from providing residential local access.

In December Telecom sparked a cynical response from its competitors when it told them they were expected to pay around $36 million to help to cover its losses.

Webb said the extent to which other carriers contributed would be calculated according to provisions in the act. The process was expected to be finished by the end of the year.

"That issue will get bundled up [with the TSO] unless there is some pre-existing contractual obligation to contribute. What they have to contribute will be subject of the determination we make."

Webb arrives well aware of the tensions between the country's largest telcos, Telecom and TelstraClear, which have been unable to settle a dispute over network interconnect arrangements but are less than enthusiastic about the commissioner intervening.

He had yet to meet Theresa Gattung and Rosemary Howard, the chief executives of Telecom and TelstraClear respectively, but intended to do so soon.

"They haven't come and talked to me about [interconnection], which could mean that they are talking directly to one another or that they're not talking at all.

"It isn't a matter for me to chase around after them."

Further down the line, the contentious issue of local loop unbundling would receive his attention. A mandatory review was at least a year off.

"We'll be considering other technologies and considering how essential [local loop unbundling] is."

Working within the Commerce Commission, Webb has the power to work with other commissioners or independently.

The commission had a budget for telecommunications-related issues of just under $2 million for the year ended June 30, but that is likely to increase as the commission's responsibilities have increased under the new act.

Webb said he would be well resourced, as long as there was not a deluge of interconnect disputes demanding his attention.

"If a significant number of determinations walked in the door early on, then we could be stretched."

Webb spent much of the 90s working for the World Bank, advising Governments on telecommunications regulation reform. That brought him to countries such as Bangladesh where, at the time, infrastructure was largely restricted to the capital, Dhaka.

"In some environments I've worked in, the notion of independence of agencies from the industry or Government is a novel idea. This is a much more promising context to think about," he said.

Webb said a priority was to ensure the commissioner's role gained a credible reputation of even-handedness.

"It's a fascinating period - seeing how the regime will influence the parties either directly or indirectly. There's an inherent tension between the freedom of the parties to negotiate on one hand and public interest on the other."