Commissioner Webb loses PM's support; to resign soon?

, posted: 15-May-2006 08:19

Tim Hunter at the Auckland Sunday Star Times has looked into Telecommunications Commissioner Douglas Webb's role in the regulation debacle. While not quite getting his marching orders by Prime Minister Clark, it's clear that Webb's report card could hardly be worse.

Without the support of the government, Webb will have little choice but hand in his resignation very soon. Webb will be remembered as the "Backflipping Commissioner" or the official who first recommended local loop unbundling in 2003, but mysteriously went against that recommendation a few months later. The Ministry of Economic Development (MED) wrote off Webb's recommendation and then Communications Minister Paul Swain wanted the Commission to reconsider the lot, but unfortunately, the cabinet didn't agree with him.

It is Webb's work that the government now has to tackle with the new regulation. Given how completely wrong Webb and his officials got it, there should be an inquiry. One things that needs to be looked at is the role that Commission officials with a background in telcos played when forming the existing regulation. It was never clear why for instance the regulated Unbundled Bitstream Service (RUBS) had to have the constraints it did, such as slow upstream speed and a prohibition on so-called real-time services - Internet telephony and gaming for instance. I'm given to understand that those constraints were introduced by a member of the Commission's regulatory team and would like to know if this is correct or not.

Although Telecom didn't have to follow the regulated sevice with its commercial UBS (CUBS), it did that, and blamed the Commission for the constraints. The industry and public were confused over the regulation and Telecom's use of UBS for its commercial service, to the point that the Commission had to issue a statement explaining that it wasn't actually the regulated variant. Why was Telecom then allowed to call it UBS when it wasn't that? That was a question I asked the Commission several times, but never got an answer to.

Internet service providers quickly learnt that in reality there was no choice but to accept Telecom's CUBS if they wanted wholesale DSL. The resold Jetstream DSL comes at the same speeds as CUBS, but with more onerous financial undertakings, making it pointless for providers.

As for RUBS, the long, cumbersome and expensive regulatory process was not an option for anyone. Even so, TelstraClear went down the regulatory route but despite gaining a determination for RUBS after well over a year's worth of submissions, conferences and bureaucratic mulling gave up at the last moment.

Why? Because Telecom threatened legal action that would further postpone TelstraClear's entry into the market and either way, the final RUBS that the Commission had set out lacked the technical specifications from the draft determination. In other words, the regulated service was a total dog for TelstraClear, so when Telecom proffered a million dollar sweetener plus 3.5Mbit/s downstream for its CUBS that it could implement very fast, well, it was a no-brainer really.

There has never been a regulated Unbundled Bitstream Service in New Zealand, which makes you wonder what the purpose of Webb's recommendation was.

Webb's decision in 2003 not to unbundle played into the hands of Telecom, which once again created its own regulation that put the brakes on the wholesale market and stopped competing providers from building up customers numbers. Three wasted years later, Webb won't be missed by anyone apart from Telecom.

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NZ government could create new last-mile monopoly with UFB

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