Controversy continues on Telecomms Bill's second day

Woosh’s Rod Inglis struck a controversial note right at the beginning of the Finance and Expenditure Select Committee’s hearings on the Telecommunications Amendment Bill. Picking up his theme of the outdated nature of the Vodafone 3G solution adopted for rural broadband, He said “there’s not even a consideration in the bill of what pricing for 4G might be."

“Do you think that’s inadvertent or by design?” asked committee member and former ICT Minister David Cunliffe. The MED people who had advised on the legislation “come out of Telecom and the old copper era”, Inglis replied. “They’ve gone for the safe option.”

Cunliffe had a good “patsy question” style – the kind of question an MP asks his own side, knowing what the reply will be. “Do you think the level of consultation has been enough, and does this add to or detract from the risk of the project” he asked Inglis. Naturally Inglis’s replies were “no” and “it’s added enormously to the risk.”

He may sound like a poor loser, he said; but he “just wants the best solution for New Zealand.”

Orcon CEO Scott Bartlett, backed by owner Kordia, objected to the bill’s averaging of the local-loop unbundling price between urban and rural links. Until now it has been possible to charge different scales and forced averaging will disadvantage Orcon customers on copper. Like other submitters he made the point that copper LLU will still be a big factor in the near-term future of broadband service.

Cunliffe weighed in in support again, saying the planned restructuring of Telecom amounts to “local-loop rebundling” and nullifies advantages of the competitive environment that had been “hard fought for”.

On regulatory forbearance Bartlett gave the practical example of a “loyalty” discount offer made by Telecom in 2009 which the Commerce Commission held discriminated against resellers of Telecom capacity who had invested in LLU; this shows ComCom supervision is essential, he said.

TesltraClear CEO Allan Freeth read a stern opening statement alleging the company had not been consulted fairly. “We were given less than a week to prepare [for the hearing] and only now do I learn we have more than 10 minutes to speak.” The UFB process will result in less choice for the consumer, winding back what TC has been battling for since the Clear and Saturn days of the 1990s, he said.

“I contend this whole process is a farce,” he said; “a charade to enable this government to pass legislation to protect its investment in a flawed [broadband] scheme.”

He is not, he insists, opposed to the UFB scheme, as he says Minster Steven Joyce had alleged the previous day in Parliament. “We’ve spent years bringing broadband to NZ. We are opposed to a flawed proposal. Mr Joyce’s statement is like saying someone is opposed to democracy because they have reservations about MMP.”

TelstraClear presenters raised, as others did, the possibility that the regulatory forbearance period is in breach of World Trade Organisation requirements for member nations to provide adequate oversight of their major telecommunications players.

Vodafone “loves fibre”, Tom Chignell, head of corporate affairs opened. It is a lifeline for its operation. The company supports the Bill’s reform of the TSO and looks forward to the day it is abolished altogether.

Vodafone, however is opposed to the regulatory forbearance period, he said. “If the influence of the Commerce Commission is seen to be a dampener on investment, then it would be better to fix the Commission,” rather than leave it out of the equation altogether, he said. A way should be found for the Commission to have at least some influence, with a statutory requirement to consider the impact of regulation on investment.

“We’re very concerned at the expansion of the government’s role in our industry,” Chignell said. “Government will set the rules, be a major investor and also a major user of the network’s services, and we feel that’s a bridge too far.”

Vodafone plans to be a retailer in the environment and wants to ensure there will be a sufficient retail margin to make this possible, Chignell said.

Committee chairman Craig Foss suggested while opposing provisions of the bill in the UFB context, Vodafone had benefited from similar policies in winning a share of the Rural Broadband Initiative.

Chignell replied that provisions made to speed up the deployment of rural broadband are “a pragmatic answer” and there would be no regulatory holiday nor decrease of competition in the environment of that network. The rural population would be getting “an extended fixed network and at least two, maybe three mobile networks off the same towers.”