Commerce Commission takes ‘extreme’ positions on telco rules 15 Jun 2012
- Sanitarium Health Food NZ exec van Heerden steps down Business
- Global Woman wants 30% target for female directors Business
- Indian arrivals at Auckland Airport tumble Business
- Adshel takeover triggers NZME option to buy NZ business Business
- Police undecided on whether to buy back Wynyard software Business
- Abano expects 50% lift in 2017 first-half profit Business
- NZ export log prices firm in October Business
- RBNZ to replace 90-day bank bill projection for track of OCR Business
- Wynyard calls in administrators after giving up on $10M loan Business
- NZ dollar retreats at signs of stronger US economy 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 Oct 2016 News
New Zealand Government Hon Simon Bridges Minister of Energy and Resources 23 October 2016 Media Statement Bridges to attend... more
12 Oct 2016 News
New Zealand Government Hon Anne TolleyMinister for Social Development 12 October 2016 $4.2 million Community Finance boost to... more
18 Oct 2016 Business News
Article - BusinessDesk Tuesday 18 October 2016 11:00 AM NZ inflation slows to 0.2% pace in third quarter, beating estimates, as... more
18 Oct 2016 Lifestyle
818 Entertainment KIWIS GET FIRST PEEK AT THE ALL NEW BLONDINI GANG WITH RELEASE OF OFFICIAL PORK PIE TRAILER more
12 Oct 2016 Lifestyle
NZSO 12 October 2016 - NZSO media release for immediate release NZSO welcomes Dutch piano virtuoso Ronald Brautigam to NZ The NZSO... more
12 Oct 2016 Property
Article - BusinessDesk Wednesday 12 October 2016 08:19 AM Auckland development blowouts reminiscent of run up to GFC: KPMG's ... 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
21 Oct 2016 Migration
Article - BusinessDesk Friday 21 October 2016 11:23 AM NZ migration, tourism hits new highs in September, driven by record... more
11 Oct 2016 Migration
Article - BusinessDesk Tuesday 11 October 2016 03:13 PM UPDATE: Immigration policy tweaks capture senior executive migrants (Recasts ... more
12 Oct 2016 Travel & Tourism
Article - BusinessDesk Wednesday 12 October 2016 05:25 PM Air NZ sells remaining stake in Virgin Australia Oct. 12 (BusinessDesk) -... more
12 Oct 2016 NZ Tourism
12 October 2016 International visitor guest nights have risen by more than 13 per cent, and eleven of our twelve... more
24 Oct 2016 Rugby
The Black Ferns have continued their trans-Tasman superiority, crushing the Wallaroos 67-3 at Eden Park. In a dominant display the... more
24 Oct 2016 Rugby
New Zealand’s rugby community is mourning the loss of former All Black Wally Argus, who passed away this week in... more
18 Oct 2016 Opinion
Column - Gordon Campbell Gordon Campbell on plastic bag activism, and street harassment
11 Oct 2016 Opinion
Gordon Campbell on how the political centre is a mirage First published on Werewolf more
21 Oct 2016 Appointments
New Zealand GovernmentHon Steven Joyce Minister for Tertiary Education, Skills and Employment 21 October 2016 Appointments to... more
19 Oct 2016 Recruitment
Article - BusinessDesk Wednesday 19 October 2016 09:09 AM AWF Madison buys Absolute IT for $15.3mn, expanding further into white... more