2. Introduction
10. This discussion paper assesses the effectiveness of New Zealand's telecommunications information disclosure regime. It identifies opportunities for improving the regime and invites feedback from interested parties on the costs and benefits of the proposed changes.
2.2 The New Zealand Regulatory Environment for Telecommunications
11. The objective of New Zealand's regulatory environment for telecommunications is to promote economic efficiency, including efficient pricing and service provision. Competition is seen as the best means of achieving this objective.
12. Potential problems arise from Telecom's dominant position in the supply of local loop facilities, which competitors generally must access in order to provide viable services.
13. In order to meet concerns about Telecom's dominant position in local loop access New Zealand has relied principally upon the provisions of the Commerce Act 1986 and the threat of further regulation.
14. The Government has continued to monitor the regulatory environment in order to identify opportunities for enhancing its effectiveness. In particular, the Ministry has recently reviewed options for the regulation of numbering and is completing a review of the penalties and remedies of the Commerce Act. This discussion paper on information disclosure requirements is part of this stream of work.
2.3 The Role of Information Disclosure Requirements
15. New Zealand's competition law prohibits a dominant operator in a market from acting anti-competitively, for example by subsidising a service in order to exclude competitors or charging itself less than it charges competitors for a service (Commerce Act section 36). Businesses are also prohibited from entering into arrangements which could substantially lessen competition (section 27).
16. In order for the law to be effective in deterring anti-competitive behaviour, private parties or the Commerce Commission must have confidence that they can obtain information to investigate and, where relevant, prove anti-competitive behaviour. For this purpose they need to present a range of information to the courts in evidence.
17. This information may be available through the court discovery process and the statutory powers of the Commerce Commission. However, obtaining this information may be costly or subject to substantial delay. For this reason there may be net benefits to society in using government regulation to require operators in industries where there are particular concerns about barriers to entry to disclose specified information about their operations to the community.
18. Specifically, information disclosure can support the development of competition in the telecommunications industry by:
- ensuring relevant telecommunication service pricing and interconnection agreement information is available to other telecommunications operators;
- assisting in the effective valuation of any Kiwi Share obligation costs entrants are required to contribute to as part of an interconnection agreement;
- assisting in the efficient detection of anti-competitive behaviour and the identificationof any excess prices or profits in any monopoly components of Telecom's business; and
- enabling the efficient monitoring of telecommunications industry performance over time.
2.4 Current Information Disclosure Requirements
19. The New Zealand Government has the power to require Telecom by Order in Council to disclose information in order to facilitate effective competition in the telecommunications sector (section 5 of the Telecommunications Act 1987, see Annex 2).
20. Current regulations under the Act require Telecom to publish the following information:
- price information about certain prescribed services;
- the full text of any interconnection agreement; and
- the financial statements of Telecom.
21. In assessing whether there are opportunities to improve disclosure requirements a net benefit criterion is proposed. Any proposed change should result in increased benefits when the costs of disclosure are subtracted from estimated benefits. Likely beneficiaries, beyond other telecommunications companies, include consumer representatives, financial and policy analysts, and others interested in monitoring telecommunications sector performance.
Back to Top