Telecom gets regulatory relief on resales

Published: Fri 17 Dec 2010 10:00 AM
Telecom gets regulatory relief on resales
By Paul McBeth
Dec. 17 (BusinessDesk) – Telecom Corp., which is looking likely to win a chunk of the government’s $1.35 billion fund to roll-out high speed internet, has gained a reprieve from the Commerce Commission on regulation of resales.
The Commerce Commission has recommended to Communications Minister Steven Joyce that sales by Telecom of broadband, data and bundled services to be repackaged and sold by rivals shouldn’t be regulated. Resale services that have significant take-up, such as residential and business lines and smartphone services, should stay regulated, as should services that face limited competition, the commission said.
“With the roll-out of ultra-fast broadband reshaping the telecommunications environment, the commission’s recommendation is predicated on the existing regulated wholesale services, such as the unbundled bitstream service, being accessible as the next step on the investment ladder for telecommunications operators,” Telecommunications Commissioner Ross Patterson said in a statement. “It is critical that the regulated wholesale services remain a viable alternative to the resale services which are recommended to be deregulated.”
Telecom was put on Crown Fibre Holding’s priority list for 25 regions in the UFB initiative, including Auckland. The phone company will carve out its network business to participate in the deal, with a demerger requiring shareholder approval.
The phone company welcomed the decision, saying the legislation has been trumped by more detailed rules, including local loop unbundling.
Tristan Gilbertson, group general counsel at Telecom, said the decision sends a signal to the market at a time when significant investment is needed to roll-out fibre around the country.
“The commission has recognised the importance of rolling-back early interventions in the market, in light of subsequent developments and rapidly increasing competition,” he said.
The regulator flagged this would likely be its decision when it published a draft report on the review in August.
Telecom’s shares rose 0.5% to $2.17 in trading yesterday, and have dropped 14% this year.

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