Telco Amendment Bill talking points

We got our chance today to talk about InternetNZ's views on the Telecommunications Amendment Bill and the Telecom-specific SOP (Supplementary Order Paper) before the Finance and Expenditure Committee.

Being last could have been a good thing. After several sessions spread over two days, clearly there were some questions that came up several times that we could have provided good answers. We had the right team there, people who really know the details. Without any commercial or hidden agendas.

But it wasn't to be. Being last turned out to be a bad thing- getting a hearing but most of the Committee, with one honourable exception, were more keen to wrap things up than really engage.

A missed opportunity both for the Committee and us.

Which leaves me a bit frustrated.

Anyway, here's my speaking notes. I normally never write speaking notes but this was an exception as we wanted to make the most of our time and effectively communicate the team's thoughts. This was what I intended to say but skipped over a few parts to free up the maximum time for questions (which of course turned out to be a futile hope).

Notes for Select Committee TAB, SOP 17th March 2011

1. Intro Vikram, Jordan, David. Michael W available if legal advice required.

2. Team has considerable in-depth knowledge. Can provide Committee commercially and politically neutral answers. Therefore limiting our presentation to maximise time for questions.

3. About InternetNZ: not for profit, membership based, protect & promote the Internet for NZ, management of .nz

4. This Select Committee did a great job in 2006 to get op sep right. Need to do it again. Unfortunately TAB and SOP move NZ backwards from a competition-based regulatory framework that risks undoing benefits to Kiwis over the last 10 years.

5. Our written submission & others have spoken about the regulatory framework in relation to fibre. Won’t repeat that. Instead will focus on what hasn’t been spoken about- the regulation framework in relation to Telecom’s copper assets. Important because now and next few years it will be the way that most people and businesses get broadband.

6. Combined effect of TAB and SOP is to create a regulatory framework for Telecom that is hugely more favourable than current op sep commitments:
  a. Integrate most of Telecom Wholesale into Chorus to form Chorus 2
  b. Significantly diminish open access by diluting the Equivalence of Inputs and non-discrimination requirements
  c. Increase prices for urban users by averaging UBA and LLU prices
  d. Dilution of the penalties regime
  e. Commerce Act authorisation giving them extraordinary ability to impede competition
  f. Free reign to decide their own separation details regarding where services and assets sit
  g. Strengthening market dominance by being monopoly supplier of both copper and fibre infrastructure with divided regulatory oversight

7. All of this while excluding public inputs and consultation.

8. Consequence is windfall profits for Telecom while Kiwis pay more for broadband every month.

9. So what do we want?

10. If possible, put SOP on hold until negotiations with UFB bidders complete. Let submitters make more detailed analysis available to you in the meantime.

11. Will not delay fibre rollout as Telecom has said it takes many months to complete demerger and fibre rollout need not be delayed until demerger complete. Remember, there is more than one way for Telecom to participate and their bid proposed structural sepn as their choice.

12. If you must proceed now, three key things:

13. First, scrap the regulatory holiday. In any case without bipartisan support won’t give certainty. With 30 year time horizon for these investments, impossible to predict future regulatory needs.

     If it still continues, absolutely need to amend the penalties regime for breaches of the undertakings so that it is consistent with the penalties that apply today and allow for termination of the regulatory holiday for repeated breaches of the undertakings.

14. Second, change the SOP so that it is the Government which determines the elements of structural separation. Not Telecom. This is how operational separation was done and the government needs to control this in the public interest.

15. Third, require mandatory consultation with the public and Commerce Commission on separation details such as services and assets split, sharing arrangements with ServTel, and the undertakings that Chorus 2 would have to create.

16. Finally we note that Telecom CEO Paul Reynolds agreed that Chorus 2 would be delivering services to an Equivalence of Inputs standard. This is something we have always strongly supported and we welcome Telecom’s agreement to this point.