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Commerce Act changes overdue to underpin telecoms

Media Release December 21st, 2000

Commerce Act changes overdue to underpin telecoms (& other) competition

The success of the new telecommunications regime announced yesterday would be better guaranteed if the long promised changes to the Commerce Act were introduced, the Employers & Manufacturers Association (Northern) says.

"What's happened to the promise to align our Commerce Act with Australia's Trade Practices Act?" asked Alasdair Thompson, EMA's chief executive. "Is it going the same way as the pledge to allow the expensing of R&D?"

"The new telecommunications' policy would require less intervention by the new electronics commissioner if Section 36 of the Commerce Act was amended to clarify the terms of market competition.

"Though business needs as little regulation as is consistent with the efficient functioning of markets, at present the Commerce Act is less effective than it can and should be.

"The telecommunications environment to prevail from next year is hardly 'world leading' but Government is to be congratulated for getting to grips with this critical sector and for allowing good scope for ongoing improvement.

"Several important initiatives should prove valuable in encouraging competition and new investment, including the setting up of the electronics commissioner within the Commerce Commission and the industry forum.

"The manner in which the electronics commissioner will be asked to proceed gives us a degree of confidence since cost efficiency is to be the leading criteria for determining the nature of change.

"We are confident too that the extra modest regulation will be more than repaid from savings on the telco's legal fees.

"And its especially pleasing to see the number portability issue is to be given a hurry up.

"However the Government seems happy to play politics with two key issues; local loop unbundling and the Kiwi Share's Universal Service Obligation.

"The basis on which Telecom is asked to wholesale its network costs to other carriers will invite the early intervention of the electronics commissioner, which will result in more regulation than necessary, and no one wants that.

"The new Commissioner will have plenty of disputes to help resolve starting from deciding what a fair price is for retail access to the network and from which the so-called retail discount is to apply. Any sensible wholesale price would be based on the actual costs of maintaining the network, plus a margin agreed between the players for developing it further.

"This half way unbundling arrangement appears to be a trade off against the requirement for Telecom to extend its Kiwi Share's Universal Service Obligation to outlying areas, which are uneconomic, and to supply them with limited internet capability.

"Under the guise of fulfilling a social obligation, Government is in fact continuing the inherent subsidy that urban New Zealand extends to rural areas.

"This will hold back our growth potential as there are more cost effective ways to achieve universal service. Amongst them would be industry funding of infrastructure for universal service in uneconomic areas and tendering it out.

Further comment: Alasdair Thompson tel 09 367 0911 (bus) 09 303 3951 (hme) 025 982 024

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