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Discuss

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The telecommunications review discussion document has lead to quite a bit of, shall we say “discussion” about the review and what it all means. 

As you’ll have seen, TUANZ is part of the “Axe the Tax” campaign as we strongly believe that taking money that was long promised to customers and giving it to Chorus shareholders is simply wrong.

But what do others think? What submissions were received? 

If this was a Commerce Commission process, we’d have a full list of submissions (and cross-submissions) to look at and pick through. We’d see the economic analysis, the legal justifications and the rhetoric from all parties.

Sadly, MBIE tells me they haven’t decided yet on when or even if they’ll put those submissions online.  Given we’re still waiting for the TSO submissions to go public, we could be waiting a long time.

It’s good to have all the submissions in one place and it’s good to have them out there in public. We need to have access to them so we can work out what rationale is being used and why for each position.

So on that score, I invite any and all submitters on the telco review discussion document to send me a copy of their submissions and we’ll make them all public here at TUANZ. 

I’ll email all those I can think of directly seeking a copy but there are bound to be some who have submitted that I don’t know about. It’s a shame – I would have thought the ultimate outcome of calling for submissions on a discussion document would be to have a discussion. 

It seems to be something of an old-fashioned approach these days. 

If you’ve got a submission you want included, send it to: paul@tuanz.org.nz and I’ll add it to the list. If it’s already online, send me the URL (or add it in the comments below) and we’ll save on bandwidth.

 

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All together now

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Last week InternetNZ organised a forum to discuss the Telecommunications Act discussion document. The document proposes setting the price that Chorus charges for access to the copper network above the Commerce Commission’s recommendation; meaning we all pay more.

The discussion was held under Chatham House rules, and TUANZ CEO Paul Brislen described it as “a remarkable meeting”. He provides his take on the issues confronting the industry as discussed at the meeting.

NOTE: This piece first appeared in the TUANZ This Week newsletter and in IITP’s Newsline

It takes quite a bit to get every telco, ISP and user group to agree on something and while I’m sure there are a couple of businesses that don’t mind the ICT Minister’s copper tax, for the most part there was outrage.

Outrage that after building a regulatory system that provides certainty and incentives to invest the government will override it for such a flimsy reason.

The upshot is that the only reason that the Minister has directed the ministry to come up with these prices is because Chorus’s share price will be affected.

That’s it.

If we give Chorus an extra $100 million a year (the amount its estimated Chorus will earn if the higher copper price, as suggested in the discussion document, is approved) it won’t result in a faster network build. It won’t result in a better network. It won’t result in a larger network – it will simply result in Chorus meeting its contractual obligations to build the Ultra Fast Broadband network (Chorus has argued it needs higher copper prices to fund the fibre rollout).

In the meantime, investment in unbundling is not only stranded, but actively penalised with an increase in the costs for unbundled lines in one of the “options” put forward, and the risk to the Local Fibre Companies (LFCs) is increased because Chorus will be allowed to aggressively lower its prices for copper broadband in those areas where someone else is building the fibre network (Chorus has about 70% of the UFB build).

The incentives to invest are removed, the ability to compete by differentiating is removed and everyone in the industry aside from Chorus is left wondering just what the rationale is for this decision.

One thing we did learn is that the discussion document’s three options are not the only options. TUANZ will be submitting that the status quo should be restored, that the Commerce Commission should hold sway over telco regulation and the Minister should stick to policy work.

There’s another reason why this should happen – the World Trade Organisation.

New Zealand is a signatory to the WTO and its “telecommunications annex” clearly says that governments should have an independent regulator so as to avoid conflicts around government investments. It should also avoid cross-subsidisation like the plague.

The good news is, there’s an enforcement arm in Brussels. Perhaps it’s time we wrote them a letter.

On Monday Chorus reported a higher than expected net profit of $171 million on revenues of $1.057 billion in its first full financial year. In commentary posted on the NZX website, Chorus pointed out that the outcome of the regulatory review will result in a reduction in future earnings.

“While these regulatory headwinds remain, management is pleased with the principled approach the Crown is taking to the regulatory review”, said CEO Mark Ratcliffe.

“We’re seeking a clearer, more aligned regulatory environment that delivers the right incentives to encourage the transition to our fibre network, and help New Zealand realise the productivity and economic benefits UFB and RBI can deliver.”