Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Tighter Telecommunication Regulation Unjustified

Professor Lewis Evans
Executive Director
NZ Institute for the Study of Competition & Regulation


No Justification For Tighter Regulation Of Telecommunications

Adopting the recommendations of the Telecommunications Inquiry would threaten New Zealand’s leadership in e-commerce and leave consumers worse off.

That is the conclusion of a review by the New Zealand Institute for the Study of Competition and Regulation, its Executive Director, Prof Lewis Evans, said today.

“One would expect robust analysis to support startling claims of huge potential benefits for consumers and greater efficiency in the economy overall. One would also expect damning evidence of why the Inquiry believes the current light-handed regime is letting consumers down.

“Regrettably, the Inquiry report provides neither,” Prof Evans said.

The Inquiry’s key failing is its focus on the short term, while virtually ignoring the longer-term effects of its recommendations, Prof Evans said.

“The proposed price regulation, for example, would reduce reduce incentives to invest, to innovate and to adopt new technologies. For potential new entrants, it would reduce their incentive to join the market at all.

“It is easy to see that this would lead to upward pressure on prices.

“The irony is that when price regulation pushes up prices in this way, that in turn is seen as justifying price regulation.

“But this is more than ironic; it harms consumers. Lower levels of investment and competition will inevitably lead to a lower quality of service than otherwise. Consumers may pay a little less tomorrow, but they will receive poorer service before long.

“That means that the Inquiry’s claim that consumers would be $328 million a year better off – and the economy $44 million a year better off – is simply not credible,” Prof Evans said.

Prof Evans said it was difficult for any regulator to determine how different consumers and businesses would balance a choice between prices today and quality tomorrow.

“For this reason economists tend to advocate open markets to resolve these trade-offs, wherever competition is credible. Telecommunications is clearly an industry where competition is alive and well. There is no justification for heavy-handed regulation,” Prof Evans said.

“Nor has the Inquiry identified what deficiencies it wants to fix,” he said.

Internet connections are up to 41 percent cheaper in New Zealand than in Australia, and more New Zealanders per capita have Internet connections than Australians have, according to an ISCR study.

“The only basic difference between the two countries is Australia’s more heavy-handed access regulation,” Prof Evans said.

Another ISCR study has shown that New Zealand’s e-commerce infrastructure is among the top group in the world. This country has become a very early adopter of e-commerce and, in certain cases, our prices are lower even than those in the United States.

“Perhaps the most persuasive argument is that the United Kingdom, which has a regime very similar to that advocated by the Inquiry, does not rank highly in early-adopter studies, despite its population density potentially contributing to lower costs,” Prof Evans said.

“It would be a terrible mistake to use the analysis in the Report of the Telecommunications Inquiry as the basis for heavy-handed regulation of one of New Zealand’s – and the world’s – most dynamic sectors.”


ENDS


For further information:

Prof Lewis Evans, ph (04) 463 5560

The report on which this media statement is based and the other NZISCR research mentioned herein are available at www.iscr.org.nz under “research”.

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Nurofen Promotion: Reckitt Benckiser To Plead Guilty To Misleading Ads

Reckitt Benckiser (New Zealand) intends to plead guilty to charges of misleading consumers over the way it promoted a range of Nurofen products, the Commerce Commission says. More>>

ALSO:

Half A Billion Accounts: Yahoo Confirms Huge Data Breach

The account information may have included names, email addresses, telephone numbers, dates of birth, hashed passwords (the vast majority with bcrypt) and, in some cases, encrypted or unencrypted security questions and answers. More>>

Rural Branches: Westpac To Close 19 Branches, ANZ Looks At 7

Westpac confirms it will close nineteen branches across the country; ANZ closes its Ngaruawahia branch and is consulting on plans to close six more branches; The bank workers union says many of its members are nervous about their futures and asking ... More>>

Interest Rates: RBNZ's Wheeler Keeps OCR At 2%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2 percent and said more easing will be needed to get inflation back within the target band. More>>

ALSO:

Half Full: Fonterra Raises Forecast Payout As Global Supply Shrinks

Fonterra Cooperative Group, the dairy processor which will announce annual earnings tomorrow, hiked its forecast payout to farmers by 50 cents per kilogram of milk solids as global supply continues to decline, helping prop up dairy prices. More>>

ALSO:

Results:

Meat Trade: Silver Fern Farms Gets Green Light For Shanghai Maling Deal

The government has given the green light for China's Shanghai Maling Aquarius to acquire half of Silver Fern Farms, New Zealand's biggest meat company, with ministers satisfied it will deliver "substantial and identifiable benefit". More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news