27 Apr 2011
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Telco groups pitch Special Access Undertaking approach to UFB

Earlier this month 11 New Zealand telecommunications companies, as well as a selection of consumer advocate groups, joined forces to oppose the government’s proposed UFB bill.

The group has now suggested "win-win” alternatives to concerns around a regulatory holiday.

A letter from the group says that while it fully supports broadband infrastructure investment, group members have a range of serious concerns with the Bill as it currently stands.

TUANZ Chief Executive Paul Brislen says the letter sets out an alternative to a regulatory holiday and brings the Commerce Commission back into the picture, while also providing certainty to lines fibre companies and access seekers.

The model for the alternative plan is the ‘Special Access Undertaking’ approach introduced to the Australian telecommunications regulatory regime in 2002.

"Regulatory certainty could be provided to access providers by ensuring an approved SAU prevailed over any subsequent attempt to regulate prices,” Brislen says.

"At the same time, regulatory oversight of prices could be maintained by allowing the Commerce Commission to review and approve price terms in a SAU,” he says.

"Hopefully, in this way we can reach a situation where everyone committed to protecting New Zealand consumers and ensuring the country moves forward in the digital age is satisfied, and at the same time New Zealand’s competitive environment is preserved.”

The letter highlights the following key points:

Special Access Undertaking

The regulatory holiday in the Telco Amendment Bill prevents the Commerce Commission from doing its job. That is, the Commission will not be allowed to recommend regulation of monopoly services when it is in the best interest of consumers.

Many parties have objected to the regulatory holiday for Telecom (or other Local Fibre Companies). The Telecommunications Users Association of NZ, Federated Farmers, Consumer New Zealand, Internet NZ, Vodafone, 2 Degrees, TelstraClear, Call Plus, Kordia/Orcon, Opto Network and Torotoro Waea, have written to all MPs outlining their concerns around the Bill – including the regulatory holiday.

The Government says that Telecom’s investors (or Regional Fibre Group investors) need this regulatory holiday before they will invest in UFB. However, Telecom’s CEO has simply said they need price certainty and RFG members have proposed alternative ways to provide certainty.

A Special Access Undertaking (SAU) is an alternative to the regulatory holiday. It could provide certainty to those investing in UFB, including Telecom and RFG – but also provide certainty to those that expect to buy UFB. It also allows the Commission to do its job.

The SAU is a concept that was introduced into the Australian regulatory regime for telecommunications in 2002. Under the regime, a person who is, or expects to be a telecommunications service provider may give an SAU to the Australian Competition and Consumer Commission (ACCC) in relation to any telecommunications service, provided that the service has not yet been ‘declared’ by the ACCC (i.e., subjected to access regulation).

An SAU is a written undertaking in which the provider undertakes to comply with the terms and conditions specified in the undertaking in relation to the provisions of access to access seekers.

Regulatory certainty could be provided to the access provider by ensuring that an approved SAU prevails over any subsequent attempt to regulate prices. At the same time however regulatory oversight of prices can be maintained by allowing the Commission to review and approve price terms in a SAU.

In order to give effect to such a regime, the Telco Act would need to be amended in the following way:

The provisions for undertakings (proposed section 156AD) would need to be amended so that the undertakings may include price terms;

The process for consideration of undertakings (section 156AJ) would need to be amended so that the relevant consideration is by the Commission (not the Minister), having regard to the reasonableness of any price terms set out in the undertaking; and

The provisions relating to the effect of undertakings (section 156AR) would need to be amended so that:

?acceptance of an undertaking automatically triggers designation of the service; and

? the undertaking prevails over any subsequent standard terms determination for the same service.

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