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Remedy working but telco doctor's future still uncertain

03 May 2012

The Commerce Commission’s latest report on the telco sector provides some encouraging reading for budget-conscious consumers.

According to the commission’s telecommunications annual monitoring report for 2011 (available here), competition in the sector is intensifying and customers are being offered better and cheaper deals from their telco providers.

One example is mobile data: the report says average rates dropped from 20c per megagbyte in the 2009-10 year to 12c in the 2010-11 year.

Despite the emergence of sharper retail pricing, the report doesn’t give the impression that telcos are in a death spiral as some in the industry have claimed recently

Average monthly household spending on telecommunications services has risen from $126 in the 2006-07 year to $145, in part because of consumers’ new-found thirst for mobile data.

"A significant change we’ve seen since our last report is that the consumption of mobile data has doubled in the 2010/11 year,” explains the report’s overlord, telecommunications commissioner Dr Ross Patterson.

"This increased consumption is accompanied by a substantial decrease in the price of mobile data and reflects the growing popularity of accessing the internet using mobile devices like smart phones and tablets.”

Despite overseeing a healthy period of competitive rejuvenation during his time at the Commerce Commission, Dr Patterson’s future in the role of commissioner is uncertain. His five-year term expires in September and while he has put his hand up to stay on, the Ministry for Economic Development recently advertised the position. Wellington scuttlebutt suggests there is political momentum to replace the incumbent.

Some in the industry believe Dr Patterson has been too "interventionist” and that he is overly enthusiastic about pushing for further regulatory control over the distribution of content, a major issue as the delivery of video over Ultra Fast Broadband becomes a reality in the near future.

Communications Minister Amy Adams and her Government colleagues have indicated they are reluctant to tackle the content issue through the use of regulation or intervention.

Whether it’s Dr Patterson or a newbie in the role later this year, the telco commissioner will find themselves walking a tight rope to keep government, consumers and the industry all happy. Their efforts will be well rewarded however, as the job comes with a salary of more than $400,000.

That’s still peanuts compared to, say, the remuneration being paid to Telecom’s new CEO

But then again, as Dr Patterson’s monitoring report points out, Simon Moutter will be stepping into a job made harder by the tighter regulatory regime of recent years, which has whittled back Telecom’s share of the market.