Telecommunications Bill Submission

INTRODUCTION

The Institution of Professional Engineers New Zealand (IPENZ) is a membership-based organisation representing 8,200 professional engineers of all disciplines. Its members work in a wide range of sectors, including consultancies, construction, industry, local authorities and utilities including all parts of the telecommunications industry.

IPENZ is committed to developing and improving the professional practice of engineering in New Zealand for the benefit of its people and industry, including supporting its increasing diversity of application and disciplines, and its globalisation and our members are required under our of Code of Ethics to "share and exchange advances for the benefit of society".

General

In general, IPENZ supports the main thrust of the proposals. A disputes process needs to be created to clear up the disorder that is occurring. Unfortunately, several opportunities appear to be overlooked.

The Government clearly wishes New Zealand to become a knowledge economy and to entice lifestyle migrants to telework from New Zealand. This will not be possible without significant improvements within our telecommunications infrastructure to enable it to support broadband services.

While the changes proposed in the bill will assist with this, the decision not to include an unbundled local loop (i.e. an ability for other carriers to access, at a reasonable price, Telecom's copper cables) as one of the designated services will significantly hamper such improvements. It is like expecting a Mini to win the Indy 500.

The provisions do allow for the Commissioner to recommend changes to the Regulations to move with the fast developing technology, but we need speed now, not later if New Zealand is to lead instead of follow. It also does not clear up the clutter of line after line being laid without any collaborative approach with regard to waste, resources and disruption time.

Part One: Telecommunications Commission and Levy

Disputes Process
New Zealand telecommunications legislation is internationally regarded as a badly failed experiment where litigation has attempted to replace regulation, only to find that the litigation process is expensive, slow and ineffectual. It is good to see that a disputes process is being proposed in the Bill.

Service Quality
The proposed legislation does not appear to give the Commissioner any power to investigate either complaints or issues surrounding service quality. In the current marketplace there is increasing demand for customers to out-source provision and management of telecommunication services, and this relies on being able to sign a customised Service Level Agreement with their preferred carrier. These agreements are essential to ensure that the response times, hours of business, etc match what the business requires.

There would be few, if any, national businesses that could be serviced by any carrier without including some Telecom-provided services. And currently Telecom is virtually deaf to requests from other carriers to provide back-to-back agreements that are outside of its standard business agreements. This stifles the development of innovative management services to support the customers' requirements and/or leaves the competing carrier at financial risk if the customer insists on a single SLA covering the Telecom-provided component as well.

Membership of Commerce Commission
While basing the Telecommunications Commissioner within the Commerce Commission has the benefit of sharing staff and experience in the competition area, consumers' complaints or issues aren't considered at all. Under the Bill, the Commissioner has not been given any power to investigate either complaints or issues surrounding service quality.

Currently, simple telecommunications problems can be an expensive shambles when it involves several networks. There is a desperate need for a regulator and a telecommunications ombudsman. Telecom NZ will argue eloquently, long and persuasively that such measures are not needed, but they do, of course have a vested interest in this matter.

Part Two: Designated and Specialised Services

Provider monopoly
Telecom NZ is widely considered to have exploited their monopoly power, especially in the rural networks which on the whole have not had investment anywhere near their depreciation rates. Most rural telecommunication networks in NZ, for example, need significant investment to bring them up to modern standards of quality.

There may be an assumption by the government that new technologies (such as wireless services) will eliminate the "natural monopoly". However this is ill founded as the technologies:
a) are not yet available in economically viable form
b) are unlikely to provide a universal solution in the NZ environment, and
c) have yet to be proven to be capable of providing the range of technical capability already achievable over traditional land-based circuits (e.g. bandwidth)

It should be remembered that the Radio Spectrum is a limited resource and while engineers keep developing clever ways to squeeze more signals into it, the rate at which usage grows continues to outstrip the amount we have available.

Part Three: Telecommunications Service Obligations

Kiwi Share
We generally accept the proposal in the Bill that Telecom has the key role as Telecommunications Provider and that other companies that will use the upgraded network pay for it on a "user pays" principle. We also support the idea that there should be an independent audit of Telecom's price claims to cover the costs of the Kiwi Share "access deficit".

Part Four: Networks

Emergency services

In the interests of public service, telecommunications providers should be obliged to support or fund the following activities:
a) The provision of features and the application of the telecommunications network to search & rescue operations and to establishing preparedness for it.
b) The provision of features and the application of the telecommunications network to civil defence situations and to establishing preparedness for it.
c) The provision of special features in the telecommunications network specifically for law enforcement and their application.

These services are most effectively developed either by the telecommunications provider or in close cooperation with the telecommunications provider. It therefore seems appropriate that a fixed proportion of the funds spent on, or derived from, each telecommunications network should be made available for the above purposes. This provides an upper limit on funds available to provide these services. If those involved cooperate and fulfil all target objectives, any remaining funds could be returned to the telecommunications provider. This would appear to give the telecommunications provider the right incentive to produce results.

Part Five: Miscellaneous

No comment

Schedule One: Designated and Specified Services

Number portability
We support number portability as a designated service.

Local loop unbundling
As mentioned in the introduction to this submission, if New Zealand is to strive to become a Knowledge Economy and aim to entice lifestyle migrants over here to work via modem, then we will need to start looking like a technically acceptable place to do so. This requires the universal availability of broadband services, not just in the currently available pockets of the major cities. As most citizens are restricted to Telecom as their provider, it seems broadband services will only become available if Telecom decides to make them available.

In contrast, unbundling would enable any provider to take up the challenge and compete to do so. The commercial competition this will provide would ensure fastest, cheapest and most innovative technology is used.

Schedule Two: Telecommunications Access Codes

No comment

Schedule Three: Procedure for Altering Regulated Services

No comment

Schedule Four: Enactments Ammended

No comment

Other Issues

Resource Management
Line after line is being laid without any collaborative approach with regard to waste, resources and disruption time. Today there are six companies trenching down town Auckland with their own telecommunications cables. In Wellington there are five companies, and in Christchurch four. This is economic madness - it runs against sustainable management principles to allow trenching and retrenching to occur without any coordination. In addition to the wasted investment in replicated trenches, the mere act of trenching has widespread disruption and costs for road owners and users, shopkeepers, and non-telecommunication utility owners as trenches are (repeatedly) dug along streets and into buildings.

Conclusions

While the legislation should give a clear structure of providers and services in the telecommunications sector and a disputes process to deal with it, the opportunity to include services to aid in the Government's Knowledge Economy vision appears to be overlooked. Admittedly, the provisions do allow for the Commissioner to recommend changes to the Regulations to adapt, but our concern is that the need for ULL and similar provisions are already apparent.

John Gardiner
Manager Engineering Practice and Deputy CEO
National Office
Institution of Professional Engineers New Zealand