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The Commissioner

01 Oct 2009

There appear to be some in the industry that speak out a lot about the Commission’s decisions. What are your thoughts on these individuals or companies?Carriers have different policies and approaches. Look at Telstra in Australia; they had a very vocal anti-regulatory approach over the last few years. They have now changed that approach under their new regime.It really does not affect our decision making or processes at all, and some of the submissions can be frankly quite amusing. But it sort of comes with the territory, if you like.Most of the submissions you receive are heavy reading. Do you personally read every submission?Yes I do. (Goes away and pulls out a mighty folder containing submissions). That’s why we are able to ask questions that are pretty directed. It’s very easy for a carrier to get someone to write a hundred pages about an issue from which they can take quite extreme positions, but it is far more difficult in a conference to sustain that.It seems you have a rather direct approach at conferences involving the industry.People describe that as a direct approach but I think generally, there are three or four key issues in any matter and there is superfluous material around the issues. I like getting to the heart of issues. If parties put issues in their submissions that seem extreme, I like to test it under a bit of direct questioning. As a result, many of these extreme positions often disappear.With relation to the recent conference on MobileTermination Rates (MTR) , can you use an example of these extreme views?I can’t make any comment there. Others have made observations about it. But certainly I think it’s fair to say where there is a heavy reliance on economic theory to support a proposition, my interest is to determine how the theory works in practice and whether there are things in the New Zealand market that seem to be inconsistent with the economic theory. There were some examples of that at the conference.Recently, confidential information pertaining to the interconnect deal between Vodafone and 2degrees was leaked to the press. Do you have any idea who leaked that material?We’re making inquiries. It goes to the heart of the confidentiality regime. It’s not that the Commission is trying to prevent information getting into the public domain; we encourage information being made public. But when parties provide us with commercially confidential information, it’s for the parties to waive that confidentiality and there’s a process to follow if the party wishes to remove confidentiality on information they have provided. There was a process, and it wasn’t followed.It was surprising that the Commission ordered the material to be removed from publication.No, we didn’t order the information to be removed. We advised the publication that the information was subject to a Section 100 order and it may be a breach of that order to publish that material. The inquiry is ongoing.Is this the first time that this has happened?There certainly have been inadvertent releases of confidential information before. In fact, this case may have been an inadvertent case.The MTR campaign has been taken on the road. Do you think that there is a risk of oversimplifying and popularising such a complicated issue?The first thing is that it does not influence what we do at all, obviously. The other parties have a right to campaign and push their issues whichever way they like, but it does not impact on our processes in any way. It doesn’t affect the application of legal testing.What are your thoughts on Steven Joyce, the current ICT Minister?He’s certainly held in high regard, no question about it, but it’s not my role to comment on this.Can you explain what involvement the Minister has with the decision making process at the Commission?The Schedule Three process that we are going through involves the Minister, but Standard Terms Determinations do not involve the Minister. So the only issue that involves the Minister is when regulated services should be added to or taken away: that’s a Schedule Three process.But he’s kept informed, correct?Yes, he’s always informed of a decision, but he’s informed after a decision is made, the same as everyone else is.But leading up to a STD decision, is the Minister in a position to lend his opinion to an issue? Or is that not his place?No. He would not be consulted, if that is what you mean. It’s a completely independent process.The current government is conducting a regulatory review. What’s your opinion on that process?It’s an appropriate role for governments to look at and review regulation. That’s the role of governments and that’s exactly what they should be doing. Of course, generally the process involves consultation with everyone involved. But in terms of what it may or may not recommend, we’ll just have to wait and see.It seems like lobby groups are pressurising the government to loosen the bolts, so to speak.I don’t think there’s anything new about that. That’s the nature of the political process.Do you think that this pressure from the industry to lessen the activity of the regulator has increased then, over the last couple of years?If you look at the history, before 2001, there was no telecommunications regulation at all. You had a regime from 2001 to 2006, and from 2006 the current regime came in. So there has been an increasing amount of regulation. There will always be those who advocate for more regulation and those who advocate for less regulation. Again, the political process changes over time.Telecom’s ‘loyalty offer’ separation breach made headlines, but have there been other breaches that you are aware of?There were probably trivial breaches, which are minor. There may be a case or cases where somebody goes into a Telecom system and sees something that they shouldn’t. Those employees will report this into an honesty box. Most of those were accidental, inadvertent and not important. But if there is something more serious it could be deemed as non-trivial. (Refers to case of first breach when Telecom didn’t reach an undertaking milestone.) The means of tracking [the terms, conditions and milestones of Telecom’s separation] was pretty ropey early on, but now there is a much more sophisticated system in place. The fact that a breach is non-trivial doesn’t necessarily mean that it is a major issue ultimately.Do you think that Telecom Wholesale’s very act of withdrawing the loyalty offer is an admission of guilt?I don’t think Telecom would admit that.Do you agree with Vodafone and Orcon among others that this loyalty deal was detrimental to local loop unbundling?This is subject to a live investigation, so I can’t comment on these issues.Do you have then, an opinion on how LLU has been tracking?It’s only really reached Auckland and two exchanges in Wellington.Did you expect better results from LLU?The STD at a minimum referred to 15 unbundled exchanges, while access seekers were seeking 25 exchanges a quarter. I think if you do the math you might come to a conclusion that there have been less exchanges unbundled that there could have been.With regards to the government-led fibre rollout, what involvement will the Commission have there? Will it regulate price?Again, I can’t really comment. There is an announcement that is not far away from the Minister and a lot of those things will become clear.What are your thoughts of the current environment?The industry is certainly on the brink of the next generation [technologies]. Quite clearly, what we’ve been dealing with is the regulatory regime with the legacy copper network and wireless. What the fibre initiative does, and why it is so important, is that it sets the scene for the future.It has the advantage of being able to set most of the regulatory regime in place before investment is made, so that is very important for the industry. The role of the regulator is likely to be quite different because rules will be set ‘ex ante’ as they say. If it is set up properly, the need for regulation is less. That is the future. There are also some legacy resale regulated products that may not need to be regulated. There is a process in place to review those products.Our view is that there is no need for regulation if there is effective competition. As effective competition develops, then regulation can be dismantled.So are you therefore saying that there may be less of a need for regulation if next-generation technologies operate or function properly?The role may change. If an open access network is established as part of the model, then a lot the regulatory issues are dealt with. So it is the opportunity to create that model which then requires a less of a role of the regulator as a backstop. There are still Schedule Three powers to be used if and when they are necessary, but the hope of course is that they won’t be necessary.