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NZ Telecoms Inquiry Terms Of Reference - Govt

NEW ZEALAND TELECOMMUNICATIONS INQUIRY: TERMS OF REFERENCE

The Communications Revolution

The world is experiencing a communications revolution. The Internet, e-Commerce and other developments (including the convergence of communication technologies) are profoundly reshaping economic and social life. New Zealand must position itself to meet the challenge of this revolution. The development of information-based industries is a key to New Zealand’s future social and economic development.

The telecommunications industry is of vital importance to the development of the information-based economy. New Zealanders and New Zealand businesses need access to cost efficient, timely and innovative telecommunications services.
Effective competition is widely seen as a key to the development of telecommunications services. The ability of new telecommunications networks to interconnect fairly and efficiently with existing networks is critical to the development of competition.

The Ministerial Inquiry

New Zealand must ensure it has an appropriate regulatory regime for the telecommunications sector to take full advantage of the information economy and future technological developments.

The Government of New Zealand has therefore decided to establish a Ministerial Inquiry into the New Zealand telecommunications services regulatory environment to examine whether the current arrangements are best suited to achieving the Government’s objective in this sector.

Government Objective in Telecommunications
The Government’s objective for telecommunications is to ensure that the regulatory environment delivers cost efficient, timely, and innovative telecommunications services on an ongoing, fair and equitable basis to all existing and potential users.

Terms of Reference

The Inquiry shall:

1) Assess the extent to which the current regulatory regime meets the Government’s objective for the telecommunications services markets.

2) If the current regulatory regime does not achieve the Government’s objective, make recommendations for any amendments to the policy and regulatory framework in order to achieve the Government’s objective.

3) In developing recommendations, assess the costs and benefits of key options by reference to the Government’s objective.

4) In making its assessment and developing recommendations, take due regard of:
a) The Government’s overall economic and social objectives, and the current Kiwi Share obligations;
b) New Zealand’s progress to date in the provision of telecommunications services, including by comparison with progress made in other relevant countries;
c) regulatory developments in other countries;
d) relevant theoretical perspectives on best-practice regulation of the telecommunications industry;
e) the impact of new technologies;
f) the impact of any options on investment in telecommunications infrastructure and services to meet future needs;
g) any factors specific to the New Zealand environment; and
h) any changes to relevant legislation (such as the Commerce Act or the Consumer Guarantees Act).

5) Make detailed specification of the implementation requirements of any recommendations, such as any industry-specific legislation and regulations.

6) In making its assessment and developing recommendations the Ministerial Inquiry shall investigate and include particular comment on the following issues.

The environment for telecommunications network access and interconnection
a) Alternative means of establishing interconnection terms and conditions;
b) Pricing principles and other terms and conditions (such as service quality standards) for current and future forms of interconnection;
c) Processes applying to interconnection negotiations, including dispute resolution and enforcement mechanisms;
d) Local loop unbundling;
e) Resale of telecommunications services;
f) Information disclosure;
Development of an information economy
g) Whether the regulatory environment facilitates the ongoing delivery of Internet access and other telecommunications services critical to the development of an information economy in New Zealand;
h) The best means of ensuring efficient network management and investment in network capacity to address the growth of the Internet;

The Kiwi Share Obligations
i) Whether the Kiwi Share Obligations are the best means of meeting the Government’s objective for residential telephone consumers and facilitating the ongoing delivery of telecommunications services, and if not what alternative arrangements should be put in place;
Numbering
j) The current numbering plan administration arrangements under the Number Administration Deed;
k) The current number portability arrangements, including those under the Number Administration Deed;
Other competition issues
l) Bundling of competitive and non-competitive retail telecommunications services in response to competition;
m) Any undue telecommunications services price discrimination; and
n) Whether there is any need for new regulatory institutions or arrangements.

Process
The Inquiry team will:
a) On commencement hold initial discussions with key industry participants and consumer groups on issues covered by Inquiry;
b) Obtain relevant expertise, including consulting and secretariat services, to assist it in examining issues covered by the Inquiry;
c) Obtain public submissions on a draft report (prepared by the Inquiry team or a consultant) and hold public hearings;
d) Obtain expert advice where necessary to ensure due process is followed; and
e) Report regularly to the Minister of Communications on the Inquiry’s progress.
Reporting Date
The Inquiry will report to the Minister of Communications by 29 September 2000.

Background on Telecommunications Inquiry members
Mr Hugh Fletcher

Mr Fletcher was the Chief Executive Officer of Fletcher Challenge until his retirement in 1997. He has had extensive experience in business as a director of numerous boards. He has a Master of Commerce with First Class Honours in Economics and a Master of Business Administration from Stanford University.

Mr Fletcher currently holds a number of private sector board positions, including Chairman of CGU Insurance Australia Limited, New Zealand Insurance Limited and New Zealand Thoroughbred Marketing Limited. He is also Chair of the Selwyn Foundation. He currently remains a non-executive Director of Fletcher Challenge Limited.

Mr Fletcher has a high public standing that recognises his extensive business expertise and standards of personal integrity and leadership.

Statement of Interests

Mr Fletcher does not have any interests in telecommunications companies operating in New Zealand, or any other involvement in telecommunications that could give rise to a conflict of interest.

Ms Cathie Harrison

Ms Harrison has a legal background. She became an Associate Member of the Commerce Commission in 1996 and has been a Member of the Commerce Commission since 1998.

Ms Harrison has extensive legal experience, with particular expertise in competition law. She has been a Partner in Chapman Tripp Sheffield Young and is currently a Principal in Harrisons, a law firm she established that specialises in communication, information technology, copyright and media law.

Statement of Interests

Ms Harrison was one of a number lawyers advising Telecom on competition issues until 1995 and did a small amount of other legal work for Telecom until mid 1998.

Ms Harrison does not have any interests in telecommunications companies operating in New Zealand, or any other involvement in telecommunications that could give rise to a conflict of interest.

Mr Allan Asher

Mr Asher has been Deputy Chair of the Australian Competition and Consumer Commission (ACCC) since 1995. The ACCC is responsible for the administration of competition law in Australia, including telecommunications specific competition laws.

Mr Asher has experience in the application of competition law and reform of sector-specific law in the electricity, gas and telecommunications markets in Australia. He has extensive experience in dealing with consumer issues as a past Chief Executive of the Australian Consumer Association.

Statement of Interests

Mr Asher does not have any interests in telecommunications companies operating in New Zealand, or any other involvement in telecommunications that could give rise to a conflict of interest.

Telecommunications Inquiry


QUESTIONS AND ANSWERS


Q. Why is it necessary to hold an Inquiry into telecommunications?

A. The telecommunications industry is vital to the development of the information economy, so it is critical that New Zealand has a regulatory environment that delivers internationally competitive telecommunications services.

New Zealand’s light-handed approach to regulation of the telecommunications sector is different to that adopted elsewhere in the world. This has contributed to many New Zealanders questioning whether they are paying too much for their telecommunications services.

We now need a proper independent assessment of the current regulatory regime for telecommunications and advice on what aspects need changing. The Inquiry is the vehicle the Government has chosen to provide this.

Q. What is the Government’s objective for the telecommunications sector?

A. The Government wants to ensure that New Zealand has a telecommunications sector that delivers competitive and innovative services of a high quality, and that these services are delivered on an ongoing and fair basis to all New Zealanders who need them.

Q. What will the Inquiry cover?

A. While the broad aim of the Inquiry is to assess the extent to which the current regulatory regime meets the Government’s objective for the telecommunications sector, there are specific issues that the Government would like examined. These include:

 The environment for interconnecting competing suppliers with Telecom’s network.

 Telecom’s Kiwi Share Obligations.

 Telephone number portability and administration.

 The management of Internet traffic.

 Developing New Zealand as an information economy.

 A range of other competition issues.

The full terms of reference for the Inquiry, also being released today, give more detail.

Q. Who will run the Inquiry?

A. A three person team has been appointed to undertake the Inquiry.

The Government has been fortunate in securing the services of an impressive team, chaired by Hugh Fletcher, the former Chief Executive of Fletcher Challenge.

Allan Asher, Deputy Chair of the Australian Consumer and Consumer Commission (ACCC), who has extensive experience in competition and consumer issues, will also join the team.

The third team member is Cathie Harrison, who has valuable legal experience working on competition and telecommunications issues.

Q. What process will the Inquiry follow?

A. The exact process to be followed by the Inquiry will be decided by the Chair in consultation with the other members of the Inquiry team. However, it is envisaged that after some preliminary consultation with the major players in the telecommunications sector, the Inquiry will produce a draft report that assesses the current regime and suggests options for reform.

It is envisaged that submissions on the draft report will be called for and public hearings will also be held. This input would then be used in producing the final report to be presented to Government.

Q. When will the results of the Inquiry be known?

A. The Inquiry will begin work immediately. It has been asked to report to the Minister of Communications by 29 September. It is expected that the Inquiry report will be made available to the public shortly thereafter.

Q. What happens then?

A. If the Inquiry concludes that the current telecommunications regulatory regime could be improved, it is required to make detailed recommendations to this effect. The Government will then need to consider the Inquiry team’s recommendations and decide on how best to proceed. However, the Government would like to see any changes introduced at the earliest possible opportunity.

Q. Does the public have any role in the Inquiry?

A. The Inquiry will be seeking submissions from all interested parties, including consumers and providers of telecommunications services. It is envisaged that a draft paper on options for reform will provide a focus for submissions. Written submissions will be invited but the Inquiry is likely to also hold public hearings in the main centres. Details will be made available on the Inquiry website www.teleinquiry.govt.nz.

Q. What will the Inquiry cost?

A. The budget for the Inquiry is $802,000 (excluding GST). A contribution of $250,000 will come from the existing Commerce budget - $552,000 is new funding allocated by the Government. This is a relatively small budget for such a major project. It includes all direct expenses for the Inquiry, including fees, technical advice, costs of holding public hearings and travel.

Q. How much are the Inquiry team members being paid?

A. The Chairman will be paid $1,200 a day while the other team members will receive $900 a day. Inquiry team members will be paid only for the time they spend on Inquiry business.

Q. Where will the Inquiry obtain technical advice?

The Inquiry team will need to obtain technical advice to assist it in assessing the issues in the sector. Much of that technical advice is likely to be sourced from overseas.

Q. Why is the Telecommunications Inquiry taking longer than the Electricity Inquiry?

A. A longer time frame is needed for the Telecommunications Inquiry because it is envisaged that the Inquiry team will need to spend the first few months preparing a draft report on options for reform before seeking public submissions on that draft report. This period of time is needed because of the wide ranging nature of the terms of reference and the need to obtain technical advice.

Q. The Electricity Inquiry panel is travelling overseas to study overseas regimes. Why isn't the telecommunications Inquiry team doing the same?

A. The Government considers that the most effective way to proceed in telecommunications is for the Inquiry team, after developing a general understanding of the issues, to obtain technical advice to assist it in preparing a draft report. Technical advice is likely to include the experience of other countries and state-of-the-art thinking on telecommunications issues. The draft report will be released for public submissions.

The main industry players also have ready access to overseas advice and experience, and this is expected to be available to the Inquiry when it considers submissions on the draft report.

Q. Will the Inquiry deliver lower phone bills for consumers?

A. There is some debate over how New Zealand’s telecommunications prices compare with the rest of the world. Nevertheless, the Government is committed to ensuring that New Zealanders have access to the best possible prices for telecommunications services and that all users are dealt with fairly and equitably. That is why the Government has established the Inquiry.


Hon Trevor Mallard
Acting Minister of Communications
23 February 2000

23 February 2000

PRESS STATEMENT

from Hugh Fletcher, Chairman
Ministerial Inquiry into Telecommunications


I am honoured to have been asked by the Government to lead the New Zealand Telecommunications Inquiry. I look forward to working with the other members of the Inquiry team to address the challenging and wide-ranging terms of reference.

At the first meeting of the Inquiry team next week, decisions will be made on how best to address the terms of reference. I anticipate that we will be able to announce more details about the timetable for the Inquiry shortly after that.

At this stage, we are planning to spend some time preparing a draft report that will set out options for reform. We then plan to call for submissions on the draft report.

The Inquiry panel is to report its findings by 29 September this year.

An Inquiry web site is being set up and will be available next week. The web site address is www.teleinquiry.govt.nz. This will contain the Inquiry terms of reference and press releases from the Minister and the draft report when it becomes available. It will also be used to convey public statements made by the panel and public notices relating to processes and procedures adopted by the panel. It will also contain the secretariat’s address and contact details.

The Inquiry Manager is Mr John Gilbert and the secretariat address and telephone and fax numbers are:

Level 11, Ministry of Commerce Building
33 Bowen Street
Wellington

Tel: (04) 460 1375
Fax: (04) 460 1374

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