Although I will have a passing interest in the progress of the new wholesale regulation, my interest really is focused on the retail service regulation.
Included in the amendments to the Act is the introduction of new retail service regulation that will be quite a change for the Commerce Commission and for the telecommunications industry. Until now, when it comes to regulation of retail behaviour, the Commission has been responsible for the enforcement of principle-based regulation. The mainstay of that legislation is the Commerce Act, which requires that firms in a market compete, and the Fair Trading Act, which protects that competition by ensuring that consumers are not misled, among other things.
The new retail services quality regime provides the Commission with new powers to impose prescriptive rules to address problems in retail telecommunications markets. However, if the problem is not clearly defined the imposition of prescriptive rules can have a dampening effect on competition. It can also prevent innovation and restrict new products being brought to market, to the detriment of competition, and therefore, consumers. The balance between protecting competition and protecting the consumer is delicate.
The amendments to the Act also require the Commission to monitor aspects of retail service quality. The Commission will have to introduce new monitoring and reporting requirements that retail service providers must adhere to. Effective competition requires that consumers make buying choices based on accurate information. Shining a light on performance and service delivery can therefore be a useful contribution to the competitive process. But the information needs to be meaningful to consumers and, in a complex and fast-moving technical market, it needs to be understandable. Both of these aspects can be a challenge when it comes to the retail telecommunications market in New Zealand.
There is no doubt that the new retail regulatory regime poses a challenge for both the Commission and the industry. The key will be regular and constructive conversations about the issues, clear problem definitions, and agreement about which tool will best solve the problem. Competitive markets must always be the outcome which is being sought, as it is competition which will deliver benefits to consumers.
By Geoff Thorn, CEO, New Zealand Telecommunications Forum