Kordia Submission on the Telecommunications Act Discussion Paper. 3 rd November 2015

Transcription

1 Kordia Submission on the Telecommunications Act Discussion Paper 3 rd November 2015

2 EXECUTIVE SUMMARY Scope of submission 1 Kordia Limited (Kordia) welcomes the opportunity to submit on the Regulating Communications for the Future: Review of the Telecommunications Act discussion paper (Discussion Paper). This submission comments on the broadcasting and radiocommunication issues raised in that paper. It also comments on general thematic issues in the Exploring Digital Convergence discussion paper (Convergence Paper), released by the Ministry of Culture and Heritage, as they relate to convergence in the broadcasting sector. 2 Kordia is a member of the Telecommunication Carriers Forum (TCF), and supports TCF s submission, which focusses on issues relating more directly to telecommunications. Convergence and implications for broadcasting 3 Kordia generally agrees with the descriptions of convergence in the Convergence Paper and the Discussion Paper, its resulting increase in the level of competition in markets and its implications for consumers. The most important point is that convergence is breaking down barriers between previously separate sectors, rather than increasing them. 4 The papers released by the government, however, do not appear to fully realise the implications of this change. Its effect is to broaden markets and increase competition, especially at the service layer. It should be leading to less regulation. Instead, the papers appear to view convergence as leading to the narrowing of markets in some areas and as justifying more regulation. 5 It is also important to recognise that the effect of convergence is different for some networks, as compared to the services carried on them. While facing increasing competition from telecommunication networks for the carriage of broadcasting programmes, broadcasting transmission networks do not compete for telecommunication services with telecommunication networks or with Telecommunication Retail Service Providers (RSPs). Application of Telecommunications Act to broadcasting networks 6 Kordia strongly questions the justification for the proposal in the Discussion Paper to amend the Telecommunications Act (Act) so that it applies to broadcasting transmission networks and services. 7 This proposal in the Discussion Paper is justified on the basis that that it is incongruous that telecommunications infrastructure is subject to the Act but that broadcasting is not. 8 This is a completely inadequate justification for a proposal that could have significant adverse and costly affects. The Discussion Paper lacks any analysis of whether the present situation is creating a problem that requires regulation. 9 The proposal in the Discussion Paper is also contrary to the objectives of the review, the government s own decision-making frameworks and earlier policy decisions. Broadcasting networks are also facing increasing competitive pressure for the broadcasting transmission services they provide. 10 At the same time, there remain some important distinctions between broadcasting transmission services and telecommunication services, such that there remain good reasons for excluding broadcasting from the Act. KORDIA PAGE 2 OF 15

3 Competition issues relating to radiospectrum 11 Kordia generally supports the existing approach to dealing with competition issues in relation to radiospectrum, in particular, the use of use-it-or-lose-it provisions and spectrum caps, but recommends the use of licence conditions to enforce their requirements. Decision-making should remain the Ministry of Business, Innovation and Employment (MBIE). Market investigation and recommendatory roles for the Commerce Commission should be specified in legislation. Rest of submission 12 This submission expands on these points, makes a suggestion in relation to existing works and also comments on some of the other questions in the Discussion Paper. KORDIA PAGE 3 OF 15

4 CONVERGENCE AND IMPLICATIONS FOR BROADCASTING Digital convergence 13 Kordia generally agrees with the descriptions of convergence in the Convergence Paper and the Discussion Paper, its resulting increase in the level of competition in markets, and its implications for consumers. 14 The digitisation of content and the development of technology to deliver services to customers and for customers to access content from multiple services using a single device has, and will continue to, break down barriers between industries. 15 In the broadcasting sector, these changes have resulted in a proliferation and expansion of platforms for delivering content to consumers, and in consumers accessing a wide range of different kinds of content. At the transmission level, traditional broadcast services are now delivered over satellite, via Digital Terrestrial Television (DTT) and by telecommunication networks. Digital compression has also meant that a much larger number of programmes are able to be carried over the spectrum available to broadcasters than previously. 16 At the platform level, viewers access video content from traditional broadcasters, new broadcasters on platforms such as Freeview, Hybrid Broadcasting-Broadband Services (HBB- TV) such as FreeviewPlus, over-the-top providers (such as Netflix, Neon, Quickflix and Lightbox), and user-generated platforms (eg YouTube, Vimeo). The range of video and entertainment services watched is now very wide. Implications for markets 17 Kordia agrees that the implications of convergence for markets, and for the regulatory environment, need to be considered. 18 The most important point is that convergence is breaking down barriers between previously separate sectors. Content that was traditionally broadcast only over broadcasting transmission networks can now be broadcast over telecommunication networks. High-quality video content can now be produced by a wider range of people than ever before, with much more content now available. Consumers can now purchase devices and other equipment at affordable prices that are capable of viewing content across a range of platforms. 19 The breaking down of barriers between traditionally separate sectors means that competition between transmission technologies and services, broadcasters and platform providers and individual programmes is increasing. This is recognised at page 45 of the Discussion Paper, which notes that the ability to provide services online and the erosion of historical industry and international boundaries have contributed to an environment where competition can flourish. 20 In the Commerce Commission s clearance of Sky s acquisition of Prime TV, the Commission described a transmission vehicle services market that included terrestrial transmission by radio spectrum, satellite transmission, microwave multi-point distribution and the use of telephone lines. This indicates that even in 2006 the Commission saw these different services as competing. The strength of that competition has only got stronger since. Implications for regulation 21 Kordia agrees with the government s vision for the TIME sectors stated in the Convergence Paper and the comments in that paper that the government needs to make sure that it is not standing in the way of achievement of the vision. Kordia also agrees that regulation and policies need to be up to date and flexible and that unnecessary roadblocks to innovation need to be removed. Kordia also agrees that if there is a need for regulation it should be the minimum required to achieve a clear, public purpose. KORDIA PAGE 4 OF 15

5 22 As noted above, convergence, with its breaking down of barriers between traditionally different sectors, is leading to more competition. This should, in turn, lead to less regulation. Where market regulation is proposed, there needs to be clear evidence that regulation is necessary and justified. This is especially important given the pace of change in markets and the risk that regulation will prevent further innovation and stifle further change. Different effects for broadcasting networks 23 At the same time, it is important for policy makers to recognise that the effects of convergence can be different for different participants in the market. Convergence has enabled telecommunications network providers and RSPs to carry traditional broadcasting services. Indeed, video services are seen by the telecommunications sector as a major area of growth. 24 Similarly, for traditional broadcasters, convergence has opened up access to a wider range of transmission vehicles, at lower cost than ever before. 25 Convergence has not, however, opened up a similar range of options for the providers of traditional broadcasting networks. While facing competition from telecommunication companies and despite being data-based networks, traditional broadcasting transmissions networks are not able to provide telecommunication services in competition with telecommunication network owners or RSPs. 26 This is mainly because broadcasting networks are passive one-way systems with no return over the broadcasting network. They are not suitable for most telecommunication services (apart perhaps from some niche services). 27 Hybrid systems such as HBB-TV are being developed, but the return path even for those services is the broadband network, operated by a RSP. The provider of broadcasting transmission services does not in New Zealand have control over any broadband networks. Application of Telecommunications Act to broadcasting networks 28 In light of these comments, Kordia questions the justification for the proposal to amend the Act so that it applies to broadcasting transmission networks and infrastructure. 29 The proposal is justified in the Discussion Paper on the basis that that it is incongruous that telecommunications infrastructure is subject to the Act but that broadcasting is not. 30 The Discussion Paper claims that the current exemption for broadcasting is increasingly arbitrary, given the convergence of broadcasting and telecommunications infrastructure. It states that there is little policy justification for retaining the exclusion in its current form, particularly as broadcasting services are increasingly consumed as telecommunications services. Justification for proposal inadequate 31 The Discussion Paper s justification for the proposed change is completely inadequate given the costs and potential adverse effects of bringing broadcasting transmission networks and services within the Act. 32 The costs of the proposal are quite significant: 32.1 If implemented, the spectre of price and/or terms regulation under the Telecommunications Act would always exist. This will affect behaviour and interfere with normal commercial relations. It will mean that parties seeking to enter into agreements with broadcasting network owners will try to play the regulatory risk card, and that broadcasting network owners will spend time and resources considering the KORDIA PAGE 5 OF 15

6 regulatory risk issues. It will affect investment decisions and could also affect the value of assets and broadcasting businesses If an investigation were subsequently to be undertaken by the Commerce Commission under Schedule 3 into whether or not a service should be designated or specified, significant costs for broadcasting transmission network owners, broadcasters, the Commission and others will arise. The costs will be in dealing with an investigation, the uncertainty created by the investigation for business and investment decisions, and the interference with normal commercial arrangements If any service were to be designated or specified, there would be even greater regulatory costs for broadcasting transmission network owners, broadcasters, the Commission and others both in the costs in working through the terms of any determinations or undertakings, and the effect of any such determination in terms of stifling innovation, impeding investment decisions, interfering with commercial negotiations, and also the risk of a determination setting the wrong price or terms. 33 Supporters of the proposed change might argue that the benefit of the proposal is that it operates as a backstop and also allows the Commission, which is an expert body, to carry out a full investigation into whether or not regulation is needed. 34 Even if that is the case, the proposal would still create significant costs and have adverse effects as discussed above in paragraph 32.1, and also create uncertainty. 35 Indeed, the adverse effects and costs of the proposal would be material to such an extent that there needs to be clear justification for the proposal, beyond the simple and bald statement that the present situation is incongruous. Instead, there needs to be evidence that the present situation creates a problem that requires a change and that could be deserving of a more detailed examination by the Commission. 36 The Discussion Paper, however, lacks any such analysis. Proposal contrary to objectives of review and previous government decisions 37 The proposal in the Discussion Paper is inconsistent with the objectives of the review and previous government decisions. 38 The Discussion Paper states various principles for the regulation of telecommunications including that of clear necessity. The paper states that this principle requires that regulation should only be imposed where it is clearly justified and that deregulation should be considered where sufficient competition exists. 39 The proposal breaches this principle. No clear justification for the proposal is provided. It is also inconsistent with Cabinet requirements for good regulatory decision-making. 40 The proposal is also inconsistent with the government s February 2009 decision to stop the review of the regulation of digital broadcasting that was commenced in The decision was based on advice from the Ministry of Economic Development (now MBIE) and the Ministry of Culture and Heritage. 41 After considering various issues relating to broadcasting transmission services, the officials advice concluded that: 41.1 there was no strong case to address competition concerns in the broadcasting sector; 41.2 the broadcasting services market is workably competitive; KORDIA PAGE 6 OF 15

7 41.3 there are no obvious essential facilities that entrants or competitors will struggle to access in order to provide broadcasting services or that are unavailable to them as a consequence of anti-competitive behaviour by an incumbent with market power; and 41.4 general competition law is adequate and FTA broadcasting is viable and competitive. 42 Kordia submits that these overall conclusions remain valid and, if anything, there is more competition than ever before for broadcasting transmission services. Broadcasters are able to use a variety of transmission services to deliver their services to viewers. 43 Kordia also agrees with the comment in the officials advice in February 2009 that a pressing case is needed to introduce regulatory powers. The claimed inconsistency that the Discussion Paper points to is not a pressing case. Effect of convergence appears to be misunderstood 44 The proposal appears to be based on a flawed understanding of the effect of convergence. 45 The only substantive point made in the Discussion Paper to justify the proposal is that broadcasting services are increasingly consumed as telecommunications services. 46 This is certainly the case in relation to broadcasting programmes and content but it misses some key points. 47 First, as noted above, convergence is opening up more routes to the market for broadcasters, in the sense that they now have more options than ever as to how to deliver their programmes and content to viewers. 48 Programmes are broadcast on a number of platforms. Freeview, for example, is on DTT and satellite, and also offers a HBB-TV service. Individual content is available on the internet on a variety of services, including catch-up services provided by broadcasters themselves, on payper view services (eg Apple TV), or on subscription on-demand services (eg Netflix). The Discussion Paper even notes at page 33 that the continuing trend towards delivering high quality video content over broadband networks may result in traditional broadcasting platforms being supplanted. 49 This trend should mean that there is no justification for regulation of broadcasting transmission services. Further, if the paper is correct that broadcasting services are becoming more like telecommunication services, then there is even less justification for regulation of broadcasting transmission services as the potential field of competition is even larger. 50 Second, as discussed above the impact of convergence is not balanced. Although telecommunication services may be becoming more like terrestrial broadcasting services in that telecommunication services also now carry many programmes than are broadcast over terrestrial broadcasting services, that does not mean that broadcasting transmission services are becoming more like telecommunication services. As the Discussion Paper notes at page 32, convergence between telecommunications and broadcasting sectors in New Zealand has mostly been in one direction. 51 Further, despite the increased options for broadcasters and that they are all data-based networks, there remain important differences between the networks by which those programmes and content is conveyed to customers. These include: KORDIA PAGE 7 OF 15

8 Telecommunications network Capable of delivering any kind of digital content or programme. Capable of delivering a large number of different programmes to customers at the same time. Each programme can be transmitted in a short period of time. One to one communication. Two-way communication. Broadcasting transmission networks Restricted by physical parameters of spectrum licences and technical capabilities of equipment to broadcast-type services. Restricted to transmitting a small number of programmes at the same time by spectrum capacity limitations. Each programme has to be broadcast continuously for its playing duration at a scheduled time. One to many communication. No or limited return path over network. 52 The claim that broadcasting services are increasingly consumed as telecommunications services is therefore flawed and does not provide a basis on which to remove the exemption for broadcasting conveyance from the Act. 53 To put it another way, there appear to be good reasons for the exception for broadcasting from the Telecommunications Act. Recommendations 54 Kordia recommends that: 54.1 The proposal that broadcasting transmission networks and services be made subject to the Act be reconsidered If the proposal is to be taken further, the government needs to: analyse whether the current situation creates a problem that needs to be addressed (which is required by its own decision-making frameworks); if it considers that there may be an issue that needs to be addressed, clearly articulate the reasons for the proposals and explain how they passed the test for regulation; and re-consult on the proposal, including the rationale. KORDIA PAGE 8 OF 15

9 COMPETITION ISSUES RELATING TO RADIOSPECTRUM 55 The Discussion Paper discusses various issues relating to the way in which competition issues are dealt with in the allocation of spectrum, including: 55.1 whether to (a) continue with the current system where the Commerce Act applies to acquisitions of spectrum and acquisition limits are also imposed by the Government as part of auction rules, (b) to rely solely on the Commerce Act to deal with any competition issues that arise in spectrum auctions, or (c) to move to a system where the Commerce Act does not apply to spectrum auctions and competition issues are dealt with only in auction rules; 55.2 if spectrum caps continue to be specified in auction rules (eg through acquisition caps), whether overarching statutory authority for those rules and/or a process for setting them is needed; 55.3 if spectrum caps continue to be used, whether statutory provisions for their enforcement are needed, rather than to continue to rely on contractual deeds; and 55.4 whether competition issues in spectrum allocation should continue to be dealt with by MBIE or an independent body, such as the Commerce Commission. 56 Kordia has already submitted on these issues in the review of the Radiocommunications Act After considering the further discussion of these issues in the Discussion Paper, Kordia: 56.1 Confirms its view that the current approach, where the Commerce Act applies to acquisitions of spectrum and acquisition limits are also imposed by the Government as part of auction rules, continue. Spectrum caps allow flexibility in dealing with competition issues and a much more targeted and certain approach to allocation than relying solely on the Commerce Act. This is very useful for an auction situation. Use-it-or-lose-it provisions are advantageous because they ensure that spectrum is not hoarded, and that it is utilised for a constructive purpose. Provided the period for the use-it-or-lose-it provisions is reasonable, they should result in an efficient use of spectrum. Kordia does not consider that it is sufficient to rely solely on the market to determine whether spectrum is used, because of changing priorities of bidders, the risk of strategic blocking by bidders, and changes in the use and value of spectrum over time. Kordia considers that any uncertainty that is created (which is limited in any case and can be addressed through the measures discussed in paragraph 56.3 below), are limited and outweighed by the benefits of a flexible and targeted ex ante approach Confirms its view that, in future, spectrum caps and use-it-or-lose it conditions should be provided for in management right and licence conditions. This will make such provisions easier to enforce while also allowing some flexibility to the government in responding to breaches. It would also avoid the problems identified in the Discussion Paper inherent in providing penalties for contractual breaches in legislation Supports the inclusion of high-level objectives to govern the setting of spectrum caps, use-it-or-lose-it rules, and consultation requirements on the government. While decisions on these matters to date have generally been made on a consistent basis, and the government has consulted on them in advance, Kordia considers it useful to provide a stronger legal framework for decisions on those issues by the government. KORDIA PAGE 9 OF 15

10 In its submission on the Radiocommunications Act Discussion Paper, Kordia expressed opposition to implementing competition safeguards in legislation, but Kordia s concern was over the detailed requirements being set out in legislation (which would be too limiting) Confirms that decision-making on the acquisition limits matters remain with MBIE, but that the Commerce Commission should be involved to undertake the market analysis and make recommendations on both the application and removal of spectrum caps. The Commerce Commission s role should be provided for in legislation, so that the responsibilities of the Commission are clear. KORDIA PAGE 10 OF 15

11 INFORMATION ABOUT KORDIA AND CONTACT INFORMATION Background on Kordia 57 Kordia Limited is a subsidiary of Kordia Group Limited, a state-owned enterprise whose sole shareholder is the New Zealand government. Kordia Limited provides telecommunications services and broadcasting transmission services (see in New Zealand. Kordia Group also has an Australian subsidiary. 58 As a state-owned enterprise, Kordia is bound by the requirements of the State Owned Enterprises Act 1986 (SOE Act). The SOE Act requires that state-owned enterprises operate as successful businesses. State-owned enterprises must be profitable and efficient, good employers and exhibit a sense of social responsibility by having regard to the interests of the community in which they operate. 59 Kordia is also bound to produce an annual Statement of Corporate Intent which includes, among other things, objectives, activities, accounting policies and performance targets. Kordia s Statement of Corporate Intent for 2015 sets out its overall intentions: 59.1 To provide high quality services and products at competitive prices To manage its financial assets and liabilities on a prudent basis To make investment and business decision that protect and add shareholder value To operate an efficient, effective and profitable business and provide to the owners a commercial return on the capital employed. 60 In 2012/13, Kordia Group Limited made a net profit after tax of $10.7M (on a net positive EBITDA of $44.7M), in 2013/14 Kordia Group incurred a net loss after tax of $8.63M (on a net positive EBITDA of $3.669M), and in 2014/15 Kordia Group made a net profit after tax of $9.234M (on a net positive EBITDA of $37.990M). Highlights of the 2014/15 result include strong performance from the Australian operations and increased New Zealand telecommunications revenues. 61 Kordia Group normally pays a dividend to the Crown of its surplus level of funds, but after the trading losses in 2013/14 no dividend was paid for that year. A special dividend of $5M has recently been declared and paid by Kordia Group. Kordia Group is forecasting a dividend of $4.8M in 2015/16. Contact person for submission 62 Kordia s contact person for this submission is: Anthea Herron Senior Legal Counsel DDI Mobile: P O Box 2495 Auckland KORDIA PAGE 11 OF 15

12 APPENDIX 1: RESPONSES TO SELECTED QUESTIONS IN TELECOMMUNICATIONS ACT DISCUSSION PAPER Chapter 1: Goals for this Review 1 Do you have any comments on the government s: a. long-term vision for communications markets; and b. regulatory principles? Kordia agrees with both the government s long-term vision for communications markets and the regulatory principles. However, the proposal to apply the Act to broadcasting transmission networks and services is not consistent with the regulatory principles. Chapter 3: Is the regulatory framework fit for purpose? Six key problem areas 2 What is your view on creating an overarching Communications Act to consolidate economic regulation across the communications sector? Kordia does not see any need for this proposal. There is no need to bring the broadcasting sector within the Act for economic regulatory purposes, as is implied in the suggestion of an overarching Communications Act. The sole exception is that broadcasting assets should remain subject to Part 4 of the Act. 3 Have we identified the main challenges facing communications regulation as we move beyond 2020? Kordia considers that the government has not properly identified the implications of increased competition for the telecommunication and broadcasting sectors. If anything, this should lead to less regulation, not more. (see main part of submission) Chapter 4: Pricing for fixed line access services 4 Do you agree with our policy objectives for the price regulation of fixed line infrastructure?. Please see TCF submission for comments in relation to telecommunication infrastructure. If the government wishes to apply the Act to broadcasting transmission networks and services, it will need to consult on the objectives for price regulation of those networks and services. Chapter 5: Mobile competition and radio spectrum 19 What are your views on the options for reform in spectrum allocation? a. How could the overlap between spectrum assignment by government and consideration under the Commerce Act be managed? No change to the current approach is required. It is the best approach for dealing with the issues that spectrum allocation involves. See comments in main part of submission. b. Should there be any requirements on government to consult or establish objectives for spectrum assignments in legislation? Yes, see comments in paragraph 56 of submission. 20 Is an undertakings regime needed to set and enforce spectrum assignment terms and conditions? Where would this sit within the existing legislative framework? KORDIA PAGE 12 OF 15

13 Some sort of statutory underpinning to spectrum assignment terms and conditions is needed so that they can be enforced more effectively. 21 Should the Ministry of Business, Innovation and Employment or an independent agency monitor and enforce assignment conditions? This is an appropriate role for MBIE. Chapter 6: The regulatory toolkit 22 Is there a need to update the current purpose statement in the Telecommunications Act for the communications access regime? What are your views on the suggested changes? Currently the purpose statement in section 18 of the Act that guides Commerce Commission decisions under the Act is to promote competition in telecommunications markets for the long-term benefit of end-users of telecommunications services within New Zealand. The Discussion Paper proposes two changes to the purpose statement: amend the purpose statement to provide that, in addition to promoting competition, the purpose is to promote outcomes consistent with outcomes in competitive markets. This proposed change is stated as recognising that the Act is aimed at regulating services provided in markets with little or no competition, and to align the purpose under the Act more closely to part 4 of the Commerce Act. add additional purposes of promoting growth, innovation and investment in communication markets. The paper appears to view these purposes as linked to the first amendment, but proposes that they apply alongside the existing purposes. Kordia does not have any concerns with the first amendment, but opposes the second amendment. The reason that Kordia opposes the second amendment is that it could make it easier for regulation to be imposed, as the new purpose proposed is focussed on a narrower set of circumstances than currently set out in section 18. It will give more emphasis to these aspects of the overall competition purpose, and could result in poor regulatory decisions being made that have no overall benefit on competition or for end-users. The second amendment would also complicate decision-making, with potential conflicts between the additional purposes and the existing competition-related purpose. 26 Do you think there are current net neutrality issues in New Zealand? No, there is more than enough capacity in telecommunications networks to ensure that net neutrality issues do not arise. 27 Do you think the regulatory regime is capable of addressing net neutrality issues if they arise in New Zealand? If not, what approach should we consider? There is no need for regulatory intervention to address net neutrality issues. 28 Are there other net neutrality matters you consider should be considered in a regulatory context (for example, peering or certain content distribution practices)? No. 31 Do you support the Commerce Commission having the flexibility to: a. implement price-only regulation? KORDIA PAGE 13 OF 15

14 b. adopt either a one-or two-stage pricing process? See TCF submission in relation to telecommunication services. It is not possible to provide useful comment on these issues in relation to broadcasting transmission networks and services, without knowing the scope of the services likely to be covered by the Act, the reasons for regulation or the problems that regulation is intended to address (these comments are without prejudice to Kordia s submissions for the proposal to extend the Act to broadcasting infrastructure and services). The rules and processes of regulation are secondary to the question of whether or not broadcasting transmission networks and services should be brought within the Act. Although these second order issues are important, the question of whether or not broadcasting transmission networks and services should be brought within the Act needs to be determined first. Kordia therefore reserves its position on these issues in relation to broadcasting transmission networks and services. If the government decides that broadcasting transmission networks and services should be brought within the Act (which Kordia opposes), the government must then consult on the proposed rules and processes for regulation of the prices and terms of broadcasting transmission networks and services. 33 In your view, is there justification for the Government to make it clear in legislation whether or not backdating will occur? It is not possible to provide useful comment on this issue in relation to broadcasting transmission networks and services at this stage. The government needs to consult on these issues in relation to broadcasting transmission networks and services, if regulation of those services is proposed. 34 In your view, is there still a need for a separate Telecommunications Commissioner (rather than using the general Commissioners)? It is not possible to provide useful comment on this issue in relation to broadcasting transmission networks and services at this stage. The government needs to consult on these issues in relation to broadcasting transmission networks and services, if regulation of those services is proposed. 35 Would the increased accountability created by a merits review process outweigh the risk of increased uncertainty and length added into regulatory processes? Kordia strongly supports merits review and suggests that the scope and processes for such review be developed and further consulted on by MBIE. Substantive review by the courts of decisions made by the Commerce Commission is necessary to ensure that those decisions are made properly under the Act and achieve the purposes of the Act. Judicial review or appeal on questions of law is too limited. Decisions of the Commerce Commission have very significant impacts for the companies involved, for future investment in infrastructure and for consumers. While merits review processes can take some time, Kordia considers that merits review is worthwhile and any delay is not undesirable. Kordia does not consider, however, that merits review should be modelled on sections 52Z and 52ZA of the Commerce Act. The restriction of merits review under those sections to input methodology decisions and the requirement that any amended or substituted input methodology is or will be materially better than the input methodology set by the Commission has severely limited the effectiveness of merits review. The process restrictions in section 52ZA(2) have also limited the effectiveness of merits review. Kordia also considers that the restrictions on merits review under sections 52Z and 52ZA of the Commerce Act were a significant cause of the length and complexity of the recent merits review appeal. KORDIA PAGE 14 OF 15

15 37 Do you have any comments on the potential removal of the broadcasting exclusion in the Telecommunications Act? Kordia opposes the potential removal of the broadcasting exclusion, for the reasons set out in the main part of this submission. Kordia supports the continuation of the current exception to that exclusion, namely the continuation of broadcasting assets being subject to Part 4 of the Act. 39 Please outline any other modifications you propose should be made to the regulatory framework, explaining how these would align with section 157AA(a) of the Telecommunications Act. Existing works rights Kordia submits that the government consider a minor amendment to the existing works provisions in the Act to confirm the status of co-located works on existing works. While Kordia considers that colocated works are protected by the existing works provisions, the position is not as clear as it could be. Significant costs could be avoided if the status of such works (provided the co-located works do not substantially alter the character of the existing works they are sited on) is clarified. Kordia refers MBIE to Verco v Kordia Limited CIV judgement for background. Telecommunications Development Levy While no change is proposed, the Discussion Paper discusses whether the coverage of the Telecommunications Development Levy (TDL) should be expanded so that local and international businesses that provide content and services over telecommunications networks be required to contribute to the levy. The last few years have seen the highest level of investment in telecommunication services by industry members that has ever occurred and investment is continuing. Kordia submits that MBIE consider whether, in this environment, the TDL remains necessary and is beneficial. In particular, Kordia submits that MBIE review whether the TDL is delivering tangible benefits to customers (especially rural end-users of the broadband service) as compared to the economic impact of the TDL on the industry. KORDIA PAGE 15 OF 15