End Users Benefit from Telecommunications Act Review - 9 August 2005
[ Last Updated 28 October 2005 ]
Media Statement from Hon David Cunliffe, Minister of Communications
9 August 2005
Contents
Minister of Communications David Cunliffe today announced proposed changes to the Telecommunications Act 2001 to make it more effective.
"A healthy, competitive market is the best outcome for consumers. The changes I am announcing today will make the Act more effective, where necessary, in driving down prices and improving the quality and range of services.
The Telecommunications Act facilitates competition in telecommunications by requiring network operators like Telecom to provide access to their networks to other telecommunications companies.
"The Act is the cornerstone of the Government's regulatory toolset in telecommunications. It is vital that it provides for fast and robust regulatory processes.
"The principles of the Act are sound. It is pro-competitive, pro-consumer legislation that takes a long-term perspective.
"These changes, therefore, improve the implementation of the Act and do not change its fundamental purpose and principles.
The changes include:
- Providing for key access terms and conditions to be set upfront by the Commerce Commission on a multi-company basis. At present, bilateral negotiations are first required, followed, if necessary, by bilateral determination of terms and conditions by the Commission;
- Enabling telecommunications companies to get quick access to regulated terms and conditions set by the Commission where existing contractual arrangements are not as good as the regulated service. This will be particularly beneficial in the fast-moving Internet services sector and will prevent "contracting out" below a regulated minimum service standard;
- Enabling the Minister to accept, reject or call for reconsideration of part of a Commission recommendation (where parts are not fully interrelated);
- Improving the ability of the Commerce Commission to take enforcement action in the High Court where required. At present only affected parties can take action, which can be difficult and costly for small operators;
- Making more flexible the time period during which particular services, like interconnection, may be regulated. At present the Act only allows for a five-year period with the possibility of a single two-year extension following a full investigation. The changes will allow a five year extension or a three year extension following a simplified investigation process;
- Enabling the Minister to make network interoperability standards mandatory where the majority of industry agrees;
- Enabling the Minister to set standards for the availability and service quality of emergency services, including on mobile networks.
The changes also provide for setting up independent consumer complaints resolution schemes for network operators, and, if necessary, Internet service providers.
"I receive too many letters from customers concerned about service connection wait times and the like. This industry needs an impartial specialised complaint resolution service."
A number of fine-tuning amendments are also proposed with regard to implementation and funding of telecommunications service obligations, notably the Kiwi Share Obligations on Telecom.
"Unlike National we have consistently made clear that we will preserve free local calling. However, there are implementation issues around how TSO charges are calculated and applied that require a further look. New Zealanders want lower-cost, higher speed telecommunication services.
"The business of business is business. The business of Government is protecting the public interest. These reforms well enhance our ability to do that. We are determined to improve those aspects of New Zealand's performance in telecommunications which, remains unsatisfactory in many respects compared to the majority of OECD countries.
"Taken as a group, these proposed amendments do not change the fundamental purpose or intent of the Telecommunication Act but they do represent a significant overhaul of the Telecommunications Act 2001 to make it more effective, more flexible and able to resolve service bottlenecks more quickly."
The proposed amendments will be introduced to Parliament later this year.
The amendments follow a review of the implementation of the Act initiated in October 2004. A discussion paper was released by the Minister of Communications on 17 November 2004.
Contact: Julian Kersey, Advisor, 04-471 9116, 021-811 999.
Background
The Telecommunications Act 2001 (the Act) aims to promote competition in telecommunication markets by regulating the supply of certain telecommunications services between service providers. This regime is the key mechanism the Government is relying on to spur further competition in telecommunications to deliver lower priced services to end-users over time.
The Act also provides for the implementation and funding of telecommunications service obligations, such as the Kiwi Share Obligations.
Experience in the Act's operation since its implementation identified a number of issues that justified a review of the Act with a focus on implementation issues. The review took place between November 2004 and August 2005 and included the publication of a discussion document and the receipt of submissions and cross submissions.
The primary purpose of the implementation review was to fine-tune the processes under the Act and to provide clarification, where necessary, of definitions and interpretations.
Decisions Made
As a result of the review the Minister intends to introduce a Bill to amend the Act in the next term of government to achieve the following:
Multilateral Network Access Terms and Conditions
1. empower the Commission to require the preparation of, and if necessary determine, access terms and conditions to apply on a multilateral basis;
Access to Terms and Conditions Set in a Determination
2. improve the ability of access seekers to seek a determination where any existing commercial agreement is not as good as the regulated service;
Codes of Practice for Regulated Service Access
3. enable the Commission to make access codes of practice (for regulated services) mandatory;
Multi-Network Service (e.g. Number Portability)
4. empower the Commission to initiate a determination regarding the development and implementation of multi-network services;
Enforcement
5. allow the Commission to enforce (via the courts) the implementation of access terms and conditions set in a determination;
6. allow the Commission to require access providers to provide information promptly to access seekers;
Duration of Regulated Services
7. extend the duration of regulated services (e.g. network interconnection), currently five years plus an extension up to two years, by:
- allowing for an extension of up to five years by use of a full review;
- providing for a simplified test (rather than a full review) for one extension of three years; and
- allowing for an extension of up to two years (without further review) for services regulated in the Act in December 2001 where the Commission is unable to complete the reviews required for a full extension prior to December 2006;
Undertakings
8. allow the Commission to accept and enforce undertakings from access providers under certain conditions in lieu of regulating;
Interim Continuity of Supply Orders
9. allow the Commission, under certain limited circumstances, to order an access provider to continue to supply access (on previous terms and conditions) where the service has previously been regulated and pending a review by the Commission on whether the service should again be regulated;
Government Policy Statement
10. allow the Government to send to the Commission a statement of government economic policy and to require the Commission to have regard to that statement in certain investigations (akin to s26 of the Commerce Act);
Minister's Decision-Making Powers on Commission Recommendations
11. allow the Minister to accept some recommendations while rejecting and/or referring back others to the Commission for reconsideration provided that interrelated recommendations may not be treated differently;
Telecommunications Service Obligations (Such as Universal Service)
12. close potential loopholes and remove distortions in the methodology used for calculating the liabilities of telecommunications companies to fund the provision of telecommunications service obligations (TSOs);
User Complaints Resolution Service
13. provide regulation-making powers to require telecommunications service providers to set up and administer an independent consumer complaints resolution scheme;
WTO Commitments
14. require compliance of telecommunications service providers with relevant New Zealand commitments under the WTO;
Emergency Call Services
15. provide regulation-making powers to set minimum requirements for availability and service standards for emergency telephone services;
Network Interoperability Standards
16. provide for regulation-making powers to specify industry-wide network interface standards where a majority of the industry request such standards;
Commencement Date for Determinations
17. clarify that the Commission may specify the commencement date of a final pricing determination including from the time of lodgement of the initial determination.
Process
- October 2004 Cabinet Paper on discussion paper agreed;
- Discussion paper released in November 2004;
- Submissions were called for, 21 submissions were received and released February 2005;
- A period was allowed for cross submissions, four were received and were released March 2005;
- Policy decisions agreed 8 August 2005.
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