Govt hints at extra ComCom powers

Last updated 10:14 11/12/2013

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The Government is hinting at giving extra power to the competition regulator to ensure that its decisions actually benefit consumers.

Since the Commerce Commission made its final determination to slash the price of copper broadband connections from next year, the Government has warned that there is no certainty that the tariffs paid by households will fall at all.

The price cut could amount to more than $10 per connection going to retailers per month.

Chorus, which owns the existing telecommunications network, claims the decision simply transfers value from it to companies such as Telecom and Vodafone.

While two small retailers, Slingshot and Orcon initially made commitments to cut prices, they have since warned that litigation over pricing could delay any drop.

Telecom and Vodafone, which represent more than 80 per cent of the market, have made no price commitments.

Communications Minister Amy Adams said while wholesale markets could be thoroughly investigated by the regulator the situation was "opaque" when it came to seeing if consumers would benefit.

"We all want to see consumers not pay any more than they need to, but unless we have firm commitments from the retailers, that it's going to be passed through, consumers are going to be none the wiser," she said.

"There's probably a valid question to be asked whether there is enough oversight or at least transparency as to whether these wholesale prices dropped, whether they are passed on."

There were options to ensure "some opportunity to review the degree of pass through" of the commission's rulings.

Adams published a discussion document in August which included options to overrule the competition regulator, which met stiff opposition from the Coalition for Fair Internet Pricing.

Paul Brislen, chief executive of the Telecommunications Users' Association (Tuanz), said consumers had been promised a price cut, but the free market could ensure it happened.

The Commerce Commission's own market review had concluded that prices had fallen substantially since regulation was introduced, Brislen said, and Tuanz would "badger" telcos to ensure they passed on price cuts.

Giving added powers to the regulator could be counterproductive by stifling the market.

"As far as I can tell the only way we can guarantee pass through of any kind is with retail price controls, and I'm very weary of retail price fixing in the telco market."

Even giving the commission the option to review whether there was pass on of its decisions would be a major expense, Brislen said.

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- Fairfax Media


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