3. Prescribed Services
3.1 Prescribed Services Disclosure Requirements
22. Prescribed services for which information disclosure is currently required are those services which primarily rely on Telecom's local loop for their delivery. Services currently subject to disclosure are:
- access to the public switch telephone network (PSTN);
- leased circuits;
- telecommunications links enabling telephone calls within Telecom's free-calling area, or to places outside the free-calling area, including national and international toll calls.
23. The information Telecom must provide about each prescribed service is:
- the standard contract prices and terms and conditions on which the prescribed service was offered for supply at the end of each quarter;
- the principles or guidelines applied by Telecom in determining whether or not to allow a discount, and the maximum discount available to a customer;
- where a discount has been allowed of 10 per cent or more of the standard contract price for the supply of a prescribed service:
- the principles or guidelines applied by Telecom in allowing that discount;
- the actual discount allowed; and
- if the discount represents a variation in the standard terms and conditions on which the prescribed service was offered, those terms and conditions as varied; and
- if prescribed and non-prescribed services are bundled together and offered at a discount of 10 per cent or more, and those services were supplied at a discount, the amount of the discount applied, and a statement that the discount applied to services other than prescribed services.
3.2 Compliance
24. The Ministry of Commerce monitors Telecom's compliance with the prescribed services disclosure requirements. The Ministry considers that Telecom has complied with the requirements. In response to a request by the Ministry, Telecom has provided greater detail on such issues as locations where city business line tariff is available, locations where ISDN business line connections are available, and the principles on which it bases its premier discounts.
3.3 Importance of Prescribed Services Discounts
25. The principal use of the disclosure requirements for prescribed services is to provide information about non-standard discounts since that information would not otherwise be available. Such information has proved useful in monitoring the telecommunications environment, is potentially of use to entrants in formulating competitive pricing strategies, and may be of use in evaluating whether Commerce Act concerns arise. The Ministry considers that the information required about each prescribed service is appropriate. However, the Ministry proposes recommending changes in what services are specified as prescribed services and how information should be presented.
3.4 Proposed Additions or Deletions to Prescribed Services
Additions
26. Information on non-standard national freephone call discounts ("0800 service") is not generally available because Telecom considers it to be a value-added service that does not fall within the scope of the current prescribed services regulations. Telecom publishes the standard tariffs for 0800 service calls in its list of charges (Telecom List of Charges or TLOC). The Ministry considers that including the 0800 service as a prescribed service would facilitate the development of competition for the service and assist in monitoring by making available information on non-standard discounts available for the service. It therefore proposes recommending that the definition of prescribed services be widened to include 0800 service calls.
27. From time to time new services may also emerge which could fit the definition of a prescribed service. The Ministry seeks industry comment on whether there are any other services which may need to be included in the definition of prescribed services.
Possible Deletions
28. A case can be made that there is no longer a need for international calls and leased services prices and discounts to be published as prescribed services because extensive competition exists for these services. The Ministry proposes recommending the removal of these disclosure requirements from the regulations if information is provided which clearly demonstrates that these markets are now fully contestable.
3.5 Improving Prescribed Services Information For International Comparisons
29. Comparing the price of telecommunications services within New Zealand with prices in other countries helps facilitate competition by providing information to assessthe effectiveness of our regulatory environment. In recent years it has become increasingly difficult to accurately benchmark New Zealand's tariffs with other countries with the emergence in New Zealand of substantial quantity based discounting across the full range of services supplied.
30. OECD tariff comparison models are the primary means of benchmarking New Zealand telecommunications services prices with those of other countries. The models calculate the price of a basket of relevant services whose price is converted to a common base using purchasing power parity exchange rates. The main models of interest are the business and residential telephone service models.
31. The exclusion of the effect of discounted tariffs distorts the comparison of New Zealand's telecommunications services prices with other countries. This is because in many overseas countries telecommunications services' prices are controlled by a regulator or discounting is not as common as it is in New Zealand. Tariffs input into the OECD model need to reflect the effect of quantity discounts in order to accurately report New Zealand's comparative performance.
32. The call data input by Telecom into the OECD business and residential telephone service models in recent years does not accurately reflect the actual price reductions which have occurred during that time. This situation distorts the results for New Zealand. More accurate information on average national call prices is needed to ensure accurate benchmarking.
33. Similarly, the New Zealand data on business telephone rental entered in the OECD model is incorrectly specified. Two rentals are entered, non-city area at about $701 pa and city area at about $596 pa. However, the business telephone rental value entered should be a weighted average of these two rentals and include the effect of discounts. This situation also distorts the results for New Zealand and accurate averaged business telephone rental tariff data is required.
34. To improve international comparisons the Ministry proposes recommending that Telecom be required:
- for each call zone specified in the OECD business telephone service tariff model, to disclose the average business national calls price, net of any discounts, for user call data which broadly fits within the OECD user profile;
- for each call zone specified in the OECD residential telephone service tariff model, to disclose the average residential national calls price, net of any discounts, for user call data which broadly fits within the OECD user profile;
- to disclose the average business telephone service rental price net of any discounts;
- to disclose the method used to calculate the averaged tariff data; and
- to disclose the data twice yearly.
35. The cost of preparing such information is considered to be modest.
3.6 Proposed Changes to Publication Format
36. Telecom is currently required to publish any changes to its prescribed services tariffs on a quarterly basis and to make the information available in its principal offices at Auckland, Wellington and Christchurch.
37. Telecom also publishes tariffs for all its standard telecommunications services, including all prescribed services, in TLOC. TLOC is made widely available by Telecom. To reduce the cost of disclosure the Ministry proposes recommending that the publication of prescribed services tariffs be by way of TLOC only. The Ministry would require the relevant page of the TLOC to be updated within one month of any change to a prescribed service.
38. To ensure an up-to-date list of prescribed services is still available Telecom would be required to maintain a list in TLOC of current prescribed services. Telecom would also be required to provide copies of all changes to prescribed services in TLOC to the Secretary of Commerce. Publication via the Internet would improve accessibility, but would only be provided in addition to a hard copy.
39. The Telecommunications (Disclosure) Regulation 4(3) requires Telecom to publish the prices and terms of condition of supply of prescribed services at the end of September in each alternate year from 1990 on. This would no longer be necessary with the use of TLOC, as an up-to-date list of prescribed services tariffs would be widely available.
40. The present requirement for Telecom to disclose discounts greater than 10% on a quarterly basis at principal offices would remain. However, an acceptable alternative may be to disclose this information at an Internet site maintained by Telecom on a quarterly basis.
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