Draft guidance on Telecom’s non-discrimination

Draft guidance on Telecom’s non-discrimination obligations released for consultation

The Commerce Commission has today released a paper which sets out the Commission’s draft guidance on Telecom Corporation of New Zealand Limited’s non-discrimination obligations under the Telecom Separation Undertakings. The Commission is seeking submissions from Telecom and other interested parties.

The guidance aims to assist Telecom in meeting its non-discrimination obligations, increase certainty to service providers that Telecom will treat them in a non-discriminatory manner, and improve transparency for industry and other stakeholders. The need for this further guidance arose out of the Commission’s investigation of the Telecom Wholesale loyalty offers.

The consultation paper is available on the Commission’s website www.comcom.govt.nz under Industry Regulation/Telecommunications/Operational Separation of Telecom

Submissions can be sent to telco@comcom.govt.nz and must be received by 5pm, Friday 19 February 2010.

Background

The Separation Undertakings have effect as a deed given by Telecom to the Crown under Part 2A of the Telecommunications Act 2001 (Act) on 25 March 2008.

The purpose of Operational Separation is set out in Section 69A of the Act:

a) to promote competition in telecommunications markets for the long-term benefit of end-users of telecommunications services in New Zealand; and

b) to require transparency, non-discrimination, and equivalence of supply in relation to certain telecommunications services; and

c) to facilitate efficient investment in telecommunications infrastructure and services.

Clause 31 of the Undertakings provides:

When doing or omitting to do anything in respect of the provision of a Relevant Network Access Service, the ANS Unit (including its Employees, agents and contractors) will not discriminate between Service Providers and other Telecom Business Units or between Service Providers.

Clause 56 of the Undertakings provides:

When doing or omitting to do anything in respect of the provision of a Relevant Wholesale Service, the Wholesale Unit (including its Employees, agents and contractors) will not discriminate between Service Providers and Retail Units or between Service Providers.

The Separation Undertakings required Telecom to establish an Independent Oversight Group (IOG) to monitor Telecom’s compliance with the Undertakings. The IOG’s decisions are not binding on the Commission.

The Commerce Commission is responsible for enforcing the Undertakings.

On 6 November 2009, the Commerce Commission announced that it was issuing proceedings alleging that three separate loyalty offers made by Telecom Corporation of New Zealand Limited’s Wholesale business unit between December 2008 and July 2009 are likely to have breached Telecom’s obligation not to discriminate between service providers under the Telecom Separation Undertakings.

The Commerce Commission can take enforcement action for a breach of these obligations, though it is up to the courts to set appropriate penalties. The High Court may impose penalties of up to $10 million for a breach of the Undertakings. In addition, the High Court may issue orders on any terms and conditions the High Court thinks appropriate, including to restrain Telecom or to require Telecom to undertake specific actions. The Commission will have regard to any decision of the Courts in relation to the matters discussed in the guidance, and will revise the guidance where appropriate.

ENDS

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