Cunliffe David: Telecommunications Amendment Bill — First Reading 
Cunliffe David: Telecommunications Amendment Bill — First Reading 
[Volume:632;Page:4071] 
Hon DAVID CUNLIFFE (Minister of Communications) 
: 
 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 during any evening on a day on which there has been a sitting of the House and on a Friday of a week in which there has been a sitting of the House despite Standing Orders 192 and 195(1)(b) and (c). 
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 implementation review in 2004 of the Telecommunications Act and the recent Telecommunications Stocktake Review. This bill introduces changes that are needed 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 that package include first this legislation which will deliver an effective wholesaling regime; second measures to encourage infrastructure-based competition including developing a package for rural communities and ensuring we have a competitive cellular market; third the future-proofing of the regulatory environment to technology change including by reviewing telecommunications service obligations and preparing for next-generation networks; and fourth the continued development and implementation of the Government’s digital strategy to encourage the smart use of information and communications technology. The package is a commitment to make New Zealand a world leader in information and communications technology. 
This legislation is focused on the first component of that package: developing an effective wholesale regime. That is done in three main ways: first by extending the range of services subject to regulation second by enhancing the ability of the Telecommunications Commissioner to implement those services and third by empowering the commissioner to effectively monitor and enforce compliance. 
Before going into further detail on these reforms it is important to understand why they are needed. Effective regulation of the communications sector is necessary in order to ensure that the Government’s objectives in telecommunications are met. The Telecommunications Act 2001 dealt with a number of key issues in the sector. However the development of competition in the New Zealand communications 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 the New Zealand sector is in the bottom third of OECD markets. In particular that is a result of the limited degree of competition. 
This bill accordingly focuses on measures to comprehensively address those competition concerns. The Government regards progress in that 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 a digital strategy the regulatory improvements proposed by this bill will accelerate progress towards the Government’s objectives by promoting competition in telecommunications markets for the long-term benefit of end users by increasing broadband service uptake and the timely availability of cost-effective broadband services and by facilitating the supply of telecommunication services to New Zealanders who may not otherwise receive those services on a commercial basis or at an affordable price. 
The bill itself can be summarised into three main parts: extending the range of services enhancing the ability of the commissioner to implement regulated services and empowering the commissioner to monitor compliance in the sector. On the first of those regulated services are at the heart of the regulatory regime. The bill brings New Zealand into line with international best practice by first unbundling the local loop and second removing restrictions on the existing unbundled bitstream service and clarifying that naked DSL—the separation of voice from data streams—can be purchased. 
Second it is important to ensure that the commissioner can effectively monitor the regulation of those services and implement that. 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. The bill allows the commissioner to set terms of supply for regulated services by providing a multilateral process for setting those terms. That will allow the commissioner to resolve supply terms for regulated services once rather than for each and every access seeker separately. Section 22 of the Act is amended and thereby 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. The commissioner is empowered by the bill to initiate a determination on the terms and conditions of regulated multi-network services rather than relying on access seekers to apply. 
Third the bill introduces a number of key changes that empower the commissioner to monitor and enhance compliance with regulatory obligations. They include the accounting separation regime which is hereby 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. The 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 that 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. That is a potentially positive development that the Government wants to consider in detail. Consideration will also be given to potential implications for the proposed accounting separation regime. Telecom New Zealand among many others will also make submissions on that important issue to the select committee that considers the bill and officials will work in parallel with it to assess the submissions that are made. 
On the issue of information disclosure I say the bill also includes an information disclosure regime that empowers the commissioner to require access providers to prepare and publicly disclose relevant information. That will increase the overall transparency of the sector by giving the commissioner and access seekers certainty that providers are meeting their regulatory obligations. A sector monitoring role for the commissioner is introduced. The commissioner will be required to monitor competition in and the performance of telecommunications markets. That includes making reports and summaries of relevant information publicly available. 
The enforcement regime is strengthened in this bill. It is also standardised in order to ensure compliance with the regulatory obligations under the Act. The commissioner will be able to take direct enforcement action and will have a wider range of tools at his or her disposal. 
The Telecommunications Amendment Bill is an important piece of legislation that in conjunction with other initiatives announced by the Government will accelerate progress towards achieving the Government’s objectives in telecommunications. The bill implements a bold vision—it has to do so. If we are serious about our economic transformation and if we are serious about building a knowledge-based economy then we must have a bold vision and we must take definite steps to achieve it. 
In that vein I expect that in 2015 when we will measure the success of our National Digital Strategy 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 and the convergence of broadcasting telecommunications and information technology adding mobility where we demand it increasing choice reducing prices and putting users firmly in control. The possibilities are endless and this Labour-led Government is providing a responsive legislative framework that will better allow those possibilities to become a reality in New Zealand.