29 June 2006 Speech Notes

Telecommunications Amendment Bill
First reading speech notes

Madam Speaker, I move that the Telecommunications Amendment Bill be now read a first time.

At the appropriate time I intend to move that the bill be considered by the Finance and Expenditure Committee, that the committee report finally to the House on or before 6 November 2006, and that the committee have authority to meet at any time while the House is sitting except during oral questions, and during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 192 and 195(1)(b) and (c).

Introduction

This Bill is a central part of the Government¡¦s package of measures to assist the New Zealand telecommunications sector to catch-up with leading OECD countries.

It implements the findings of two separate but related review processes: the telecommunications implementation review; and the recent telecommunications stocktake.

This Bill introduces changes to make the catch-up process possible. It is the keystone of a package of measures designed to improve the performance of the New Zealand communications sector.

The four components of this package include:

1. Legislation to deliver an effective wholesale regime

2. Measures to encourage infrastructure based competition including:
- Developing package for rural communities; and
- Ensuring we have a competitive cellular market.

3. Future-proofing the regulatory environment to technology change including:
- Reviewing the Telecommunications Service obligations; and
- Preparing for next generation networks.

4. Continued development and implementation of the government's Digital Strategy to encourage the smart use of information and communications technology.

This package is a commitment to make New Zealand a world leader in information technology.
This legislation is focused the first component of the package ¡V delivering an effective wholesale regime. This is done in three main ways:

1. Extending the range of services subject to regulation;
2. Enhancing the ability of the Telecommunications Commissioner to implement these services; and
3. Empowering the Commissioner to effectively monitor and enforce compliance.

The need for reform

Before going into further detail on these reforms, it is important to understand why they needed. Effective regulation of the telecommunications sector is necessary in order to ensure that the Government¡¦s objectives in telecommunications are met.

Telecommunications Act 2001 dealt with a number of key issues in the sector. However, the development of competition in the New Zealand telecommunications sector has not met expectations. Analysis has clearly shown that the government¡¦s objectives in telecommunications would not be met under the status quo.

The performance of New Zealand¡¦s telecommunications service markets is in the bottom third of OECD countries. In particular, this is a result of the limited degree of competition in key telecommunications markets. This Bill accordingly focuses on measures to comprehensively address these competition concerns.

The government regards progress in this area as a matter of national importance. Information and communications technologies have been shown to be crucial enablers of business productivity and economic growth. Our comparatively poor performance in telecommunications is likely to be negatively impacting on the international competitiveness of our economy.

Combined with other measures, which include further policy reviews and the Digital Strategy, the regulatory improvements proposed by this Bill will accelerate progress toward the Government¡¦s objectives:
„h Promoting competition in telecommunications markets for the long-term benefit of end-users;
„h Increasing broadband service uptake and the timely availability of cost-effective broadband services; and
„h Facilitating the supply of telecommunications services to New Zealanders who may not otherwise receive those services on a commercial basis or at an affordable price.

The content of the bill

The Bill itself can be summarised into three main parts: extending the range of services subject to regulation; enhancing the ability of the Commissioner to implement regulated services; and empowering the Commissioner to monitor compliance in the sector.

1. Extending the range of services subject to regulation

Regulated services are at the heart of the regulatory regime. This Bill brings New Zealand into line with international best practice by:

„h Unbundling the local loop; and
„h Removing restrictions on the existing unbundled bitstream service and clarifying that naked DSL can be purchased. This means that broadband can be purchased without having to purchase a phone service.

2. Enhancing the Telecommunications Commissioner ability to implement services

It is important to ensure that the Commissioner can effectively implement the regulation of these services. This Bill introduces new and enhances existing processes under the Act to ensure that service providers can get effective and timely access to regulated services.

Standard terms determination introduced

- The Bill allows the Commission to set terms of supply for regulated services by providing a multilateral process for setting these terms. This will allow the Commission to resolve supply terms for regulated services once, rather than for each and every access seeker separately.

Section 22 amended

- The Bill enhances the ability of access seekers to seek regulatory redress by removing provisions that previously restricted access seekers from seeking determinations where they had commercial agreements for supply of the service. Access providers are also restricted from taking prejudicial action against an access seeker who applies in such circumstances

Commissioner able to initiate multi-network determinations

- The Commissioner is empowered to initiate a determination of the terms and conditions of regulated multinetwork services, rather than relying on access seekers to apply.

3. Empowering the Commissioner to effectively monitor and enforce compliance

This Bill introduces a number of key changes to empower the Commissioner to monitor and enforce compliance with regulatory obligations.

Accounting separation regime introduced

- The Commissioner will be empowered to require Telecom New Zealand to prepare and disclose information about its retail and wholesale business activities as if they were independent entities.

- This accounting separation regime will allow the Commissioner to define how Telecom¡¦s business activities and services are allocated between wholesale and retail. The regime will increase the transparency of the sector and this is crucial to ensuring efficient commercial and regulatory outcomes.

- Telecom has recently announced its intention to voluntarily separate its wholesale and retail businesses and to put in place externally auditable non-discrimination measures. This is a potentially positive development that the Government wants to consider in detail. Consideration will also be given potential implications for the proposed accounting separation regime.

- Telecom New Zealand, among many others, will also make submissions on this important issue to the Select Committee considering the Bill and officials will work in parallel to assess submissions made.
Information disclosure
- Also included is an information disclosure regime that empowers the Commissioner to require access providers to prepare and publicly disclose relevant information.
- This will increase the overall transparency of the sector by giving the Commission and access seekers certainty that providers are meeting regulatory obligations.
Sector monitoring role for the Commission introduced

- The Commissioner will be required to monitor competition in, and the performance of telecommunications markets. This includes making reports and summaries of relevant information publicly available.

Enforcement regime strengthened

- The enforcement regime is strengthened and standardised to ensure compliance with the regulatory obligations under the Act. The Commission will be able to take direct enforcement action and will have a wider range of tools at its disposal.

Implementation review amendments
In addition to the core changes I have outlined, this Bill addresses a number of implementation issues that have been identified through past experience with the processes under the Act including:
1. Removing automatic expiry of regulated services and instead requiring the commission to periodically review the need for continued regulation of services.
2. Empowering the Commissioner and the Minister of Communications to consider binding commitments from access providers as an alternative to regulation of additional services in the future.

3. Empowering the Minister of Communications to establish an independent consumer complaints resolution scheme and to set minimum standards for emergency call services.
4. Streamlining the process for adding, amending or removing the regulation of telecommunications services under of the Act.

Concluding statements

Madam Speaker,

The Telecommunications Amendment Bill is an important piece of legislation that, in conjunction with other initiatives announced by the Government, will accelerate progress toward the Government¡¦s objectives in telecommunications.

This Bill implements a bold vision. It has to. If we are serious about our economic transformation; if we are serious about building a knowledge-based economy; we must have a bold vision and take definite steps to achieve it.

In that vein, I expect that in 2015 we will no longer be talking about "broadband" at all. The size of the pipe will not matter, as it will be taken for granted. Connectivity will be ubiquitous.

New Zealanders can expect to see a greater variety of end user devices, the convergence of broadcasting, telecommunications and IT ¡V adding mobility where we demand it, increasing choice and putting users firmly in control.

The possibilities are endless.

This Labour-led government is providing a responsive legislative framework that will allow these possibilities to be a reality in New Zealand.

ENDS

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