The Commission said on Thursday it had recommended to the New Zealand Government that any decision on deregulation should be deferred and reconsidered in two years’ time.
The decision is a reversal of the Commission’s statement in September when it said it intended to recommend to the government that Spark’s wholesale voice services be deregulated following its completion of an investigation and an assessment of the effect on competition in the market from deregulation.
Spark’s resale voice services enable other retail service providers (RSPs) to rebrand and on-sell fixed line phone services based on Spark switches, avoiding the need to deploy their own infrastructure.
The services are provided on a commercial basis and their inclusion in the Telecommunications Act gives the Commission the ability to specify terms for the services.
The Commission said on Thursday that RSPs buying Spark’s wholesale voice services to sell bundled with broadband were able to avoid investing in their own voice facilities or switching customers to an Internet-based voice service.
“The availability of the wholesale voice services in the Act has helped new RSPs enter the market and has intensified competition”, said telecommunications commissioner Dr Stephen Gale.
“RSPs currently buy Spark’s wholesale voice services by commercial agreement but the Telecommunications Act provides a regulatory backstop. We could compel Spark to supply these services at a margin less than its own retail price if commercial arrangements fail in a way that threatened competition.”
Dr Gale said the Commission’s investigation found that Spark was facing “increasingly effective competition to its wholesale voice services. However, the ability of RSPs to switch quickly to alternatives is still constrained”.
“There are a range of alternatives in the market that allow RSPs to supply voice-only services as well as bundles of voice and broadband.
“But the constraint on RSPs switching to alternatives quickly and easily may allow Spark to disrupt competition if the regulatory backstop were removed from the Act now.
“We believe this constraint on switching will diminish in the near future, so we are recommending that the minister defers the decision so we can revisit our recommendation in two years’ time,” Dr Gale said.