Toward competition in New Zealand telephony : for the degree of Master of Arts in Economics at Massey University

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Massey University
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Dramatic changes have occurred in the telecommunications sectors of most industrialised countries over the past decade. So too have their regulatory and government policy environments in the worldwide trend towards deregulation and open competition. The New Zealand market is now claimed to be the most deregulated, open, and competitive in the world with all government-imposed barriers having been removed. An economist's Utopian vision for telecommunications would be a set of highly competitive markets, subjected to very minimal interference, to enable the full impacts of technological change or demand variation to be reflected in market adjustments. Ideally, telecommunications would be a dynamic and demand-responsive industry subject only to the restrictions of capital and consumer markets. Progress towards a fully competitive telecommunications industry was never anticipated to be simple. The effectiveness and appropriateness of New Zealand's general competition legislation, namely the Commerce Act 1986, has regularly been called into question. One is often reminded of the Commerce Commission’s gloomy conclusion in 1992 that reliance upon the Commerce Act "may be of some help - but of a protracted, expensive and uncertain kind, and with definite limitations on its scope" (Commerce Commission, para. 437, 1992). The battle towards open competition in New Zealand telecommunications has clearly been impeded by the application of 'light-handed' regulation with primary reliance on the country's general competition legislation. New Zealand's experiences provide valuable lessons for other countries, in particular, the danger of placing too heavy a reliance on the judicial system operating under the country's general competition legislation, as industry regulators. In New Zealand, competition has become something akin to an ideology - a complete faith that if a market is structured so as to involve multiple participants, competitive conduct will result to bring about superior, efficient performance. We can but hope, that as competition becomes more widespread in all telecommunications markets, its real benefits in terms of overall economic efficiency, will indeed accrue to all sectors within society.
Privatisation, Telecommunication, Deregulation, Economic aspects, New Zealand