Commerce Commission takes ‘extreme’ positions on telco rules 15 Jun 2012
- Intueri plans to merge 6 NZ training schools Business
- MARKET CLOSE: NZ shares rise in global rally Business
- NZ dollar gains with commodity currency upswing Business
- HydroWorks to raise another A$1.5M ahead of ASX listing Business
- Innovation and infrastructure still holding back NZ Business
- UPDATE: Christchurch council company meets first deadline Business
- NZ moves up Global Competitiveness Index News
- CCHL nearly triples dividend payout with special payment Business
- Goldman Sachs NZ trading under scrutiny in trial Business
- RBNZ to pay $140 million dividend from FX gains Business
Commerce Commission taking ‘extreme’ positions on telco regulation
By Pattrick Smellie
June 15 (BusinessDesk) - New Zealand is gaining an international reputation for "extreme" and unpredictable regulation by its competition watchdog, the Commerce Commission, says Andrew Bascand, managing director of fund manager Harbour Asset Management.
In a submission to the telecommunications commissioner, Ross Patterson, Bascand says the commission's approach puts the success of the government's ultra-fast broadband initiative at risk, and could be a turn-off for foreign investors considering buying shares in partially privatised state-owned energy companies.
His comments follow what he describes as last month's "policy shock" of draft regulations for the unbundled copper local loop - the traditional mainstay infrastructure of the national telephone system, which fibre-optic cable will replace as ultra-fast broadband rolls out nationwide.
The government's $1.5 billion subsidy plan is intended to accelerate uptake of UFB, but the Commerce Commission's approach suggests it "has a mandate to tilt the playing field back to copper," while using a flawed benchmarking approach to regulation, Bascand said.
"Telco industry regulation needs to have a policy anchor that is consistent across a broad range of objectives involving customer outcomes, the allocation of capital, and the recognition of the benefits to society in the move to fibre that may not just be consumer-related, he said.
"Regulated returns need to have a cost of capital framework, not a benchmarking framework," said Bascand.
While releasing draft regulations for consultation was a good practice, "some market participants observe that the commission seems to take an extreme position initially on some issues."
That raised risk premiums for investors at odds with the commission's role as a "core player" in New Zealand's capital markets.
The commission's drafts appeared to adopt tactical positions "to be used as a bargaining tool with companies", or to allow it conduct "goal-seeking exercises."
Bascand said if a benchmarking approach had to be used, it would make most sense to use the agreed price for basic UFB service of $37.50 a month, since that had been "tested in the real world through a long, robust and hard-negotiated tender process" overseen by Crown Fibre Holdings.
Telecom, which split off its infrastructure unit Chorus earlier this year to participate in the UFB roll-out, won the lion's share of the UFB funding in a process that policymakers were anxious to ensure did not force pricing for copper-based serviced to fall so far that uptake of UFB stalled.
However, last month's draft decision had led Goldman Sachs to cut its forecast of UFB uptake by 10 percent, suggesting outcomes that "run entirely counter to government policy", tilting the playing field in favour of copper and forcing Chorus to accept uneconomic returns on its copper network.
However the issue was handled, the government should be aware international investors now look askance at New Zealand regulators, making them wary of investing in partially privatised assets where regulatory risk remains high, such as the electricity sector.
"The government should contemplate legislation to ensure Chorus earns an appropriate return on their entire copper network and settles this matter before they embark on talking to global investors about IPOs of the SOEs," Bascand told Patterson. "Our recommendation is to set aside the UCLL and all other copper based investigations pending the full telco sector review."
While the review was scheduled for 2016, enough evidence of UFB uptake may have emerged in time for it to be held a year earlier instead.
23 Sep 2016 Canterbury Earthquake
New Zealand Government Hon Gerry BrownleeMinister supporting Greater Christchurch Regeneration 23 September... more
23 Sep 2016 Business News
Article - BusinessDesk Friday 23 September 2016 12:47 PM RBNZ pushes for new quarterly disclosure regime By Paul McBeth Sept. 23 ... more
18 Jul 2016 Lifestyle
The Outlook for Someday Young New Zealanders Making Films For Good What does sustainability mean to you? Since 2007 The Outlook for... more
3 Aug 2016 Property
Wednesday 03 August 2016 10:30 AM Auckland house prices are stabilising, may have plateaued, Barfoot says Aug. 3 (BusinessDesk) -... more
2 Aug 2016 Property
Article - BusinessDesk NZ home values rise at fastest quarterly pace in 12 years By Tina Morrison Aug. 2 (BusinessDesk) - New... more
30 Mar 2016 Migration
British High Commissioner Jonathan Sinclair is defending changes to skilled migrant rules for Britain but suggests they won't affect... more
25 Aug 2016 Travel & Tourism
New Zealand Government Hon Wagner using the new eGates at Wellington Airport.... more
10 Aug 2016 Travel & Tourism
Article - BusinessDesk Wednesday 10 August 2016 12:19 PM Aug. 10 (BusinessDesk) - New Zealand accommodation providers had their... more
23 Sep 2016 Netball
Netball NZ Stars to hit the court for FAST5 Ferns Friday 23 September, 2016The FAST5 Ferns will be eyeing off a fourth straight title... more
25 Aug 2016 Motor Sport
25 Aug 2016 Opinion
Column - Gordon Campbell Gordon Campbell on the end game in Spain First published on Werewolf more
11 Aug 2016 Opinion
Column - Gordon Campbell Gordon Campbell on the Impotence of the Reserve Bank First published on Werewolf more
29 Aug 2016 Appointments
New Zealand Government Hon Jo Goodhew Minister for Food Safety 29 August 2016 Jane Lancaster has been appointed to the Food ... more
12 Aug 2016 Appointments
New Zealand Government Hon Hekia ParataMinister of Education 12 August 2016 Appointments to New Zealand National Commission for... more
3 Aug 2016 Recruitment
New Zealand Government Hon Steven Joyce Minister for Tertiary Education, Skills and Employment 3 August 2016 Jobs growth continues... more
3 Aug 2016 State of the Market Report
Wednesday 03 August 2016 11:57 AM NZ private sector wage inflation misses expectations in June quarter Aug. 3 (BusinessDesk) - New... more