Labor Promises Enquiry into NZ Telecoms Industry

Industries such as telecommunications and other utilities are different beasts to what the last Labor government was thinking of when it implemented the 1986 Commerce Act, according to the party's commerce spokesman Paul Swain.

The party last week announced it will hold an enquiry into the telecommunications industry if elected later this year. It also announced a raft of measures to tighten up the Commerce Act, several of which have the industry specifically in mind.

The inquiry will take a specific brief to look at number portability, the numbering plan, bundled services, information disclosure and access to the Internet under the Kiwi Share Obligation (KSO).

Swain says the last issue is of particular concern to the party.

Telecom New Zealand has cleverly distinguished between voice and data traffic and wants to charge for the latter. This, in Labor's view, is not so much about capacity but more about Telecom bypassing its obligation under the Kiwi Share option when voice and data become indistinguishable. Swain also says the government has dithered and done nothing on this and other telecommunications issues.

However, Labor's announcement did get a response form the government -- within hours Minister for Communications Maurice Williamson released a new disclosure regime for Telecom.

Shortly before that the government also released its measures on tightening the Commerce Act, which it has been working on since the post-1996 election Coalition Agreement.

The proposed Commerce Act changes involve tightening up the definition of "dominance" to mean high market power. Swain says this sounds vaguely biblical, but neither he nor anyone else can say how it would be different from Labor's "substantial degree of market power," which Labor has borrowed from the Australian competition regime. The government changes also beef up penalties for anti-competitive behavior.

Labor's proposals go further. Pertaining to telecommunications, the most relevant part is that it wants the test for anti-competitive behavior to lean further toward an effects based approach. The current regime focuses more on the intent of the company, which is far more difficult to prove.

"Put it this way: if the Commerce Act can't deal with the Telecom/Saturn situation, where Telecom is competing on a street-by-street basis and undermining competition, then there's something wrong with the act," Swain said. "We don't want to regulate every industry but there are industry-specific issues here that need to be addressed."

The party will also provide greater (though as yet unspecified) resources for the Commerce Commission, and will look at the idea of a specific utilities regulator, to cover not only telecommunications but also industries such as electricity, oil, ports and airports.

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