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Telecommunications Commissioner speech

Media Release

Issued 28 June 2003-04/142

Telecommunications Commissioner delivers speech to 5th Annual Telecommunications Summit

In an address to the 5th Annual Telecommunications Summit this morning, Telecommunications Commissioner Douglas Webb spoke of changes to the marketplace since 2001 - including recent undertakings by Telecom to offer cost-based prices for data tails - and put to industry participants that competitive innovation, efficiency, product range and customer choice will increasingly decide the outcome for their businesses.

In considering the scorecard of the regime to date, Mr Webb noted that the major disputes that kicked off the regime have now been finalised.

"The Commission has cleared away the major access issues we inherited - the interconnection of the Telecom and TelstraClear fixed networks and the creation of a wholesaling regime that allows competitors to resell Telecom retail products."

"We are now seeing new entrants, new products, and prices moving in response to competition. The regulatory regime is a relevant and significant contributor to achieving those gains."

Mr Webb spoke of the temptation to look for 'big bang' solutions and to believe that if the regulator doesn't take radical action, it is giving up on the goal of improving services to consumers. This ignores the very real progress that has been made, on many fronts.

"TelstraClear and any other company wanting to become a provider of national services - including local access and calling - has the ability to deliver those services. That's never before been true in New Zealand."

Mr Webb said that these decisions provided the context for the debate on local loop unbundling. "The question is what incremental gain could LLU offer New Zealand now, over and above the changes already made."

Mr Webb said that had local loop unbundling been adopted, the market response would not have had much impact on residential and small business users.

"The more we investigated, the clearer it became that LLU was not likely to be economic for competitors of Telecom where the user was a householder or a small business.

"Once you look beyond LLU, you are able to focus on more refined and productive approaches to the access problem. Firstly, we now regulate the resale of local access and calling services and of Telecom's Jetstream products. Secondly, while not unbundling the local loop, the Government accepted the Commission's recommendation to regulate a bitstream service.

"With a combination of bitsream unbundling and the right to resell local access and Jetstream, competitors can offer a combination of voice and broadband services to residential and small business customers across most of the country. And of course, in major CBDs, and in time other metropolitan centers, consumers can expect to be able to choose between TelstraClear voice and broadband services where that company has its own network, and a number of wireless voice and broadband offerings. This competitive mix will be further enhanced once 3G is available."

"This is a balanced outcome that addresses the major bottleneck problem of local loop access, without the doubtful benefits of full regulated unbundling of copper loops.

Mr Webb also spoke of the clear and significant welfare benefits available from access to data tails for Telecom's competitors. "We decided that there should be an opportunity for commercial negotiation to work, rather than moving at once to regulation," said Mr Webb.

"We have had discussions with Telecom about the data tails service and our expectations as to the price structure. These discussions have resulted in a series of undertakings given by Telecom to the Commission late last week that will achieve the result we sought - cost-based pricing of data tails."

The Commission will release details of Telecom's undertakings shortly.


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