Fair treatment of new phone and internet companies

Extracted from Cook Island News

Vodafone will be allowed to continue owning and operating the local cable network, as well as selling internet and phone services in a newly-competitive market.

A new report by independent economist John de Ridder makes it clear that Avaroa Cable Ltd should not be licensed to operate as a phone and internet retailer, while simultaneously operating the undersea Manatua Cable.

But the report does not require Vodafone Cook Islands to split its network and retail arms. The report’s position was backed by Bernard Hill, chairman of the new Competition and Regulatory Authority that commissioned the report.

William Framhein, from Orama Ltd, has been fighting to be allowed to set up a new mobile phone company to go head-to-head with Vodafone Cook Islands.

He is concerned that Vodafone may not provide a level playing field to competing companies using its network, and so he has continued his calls for a separation between the network operators and the service providers.

That is what happened in New Zealand when Telecom was required to split in two – a lines company named Chorus and a phone and internet retailer named Spark.

“In other countries it has proved difficult to get network operators to treat all comers the same,” Framhein said, “but restricting them to network provision has solved this common problem and given them a more stable platform of income.”

Vodafone Cook Islands chief executive Phillip Henderson indicated Cook Islands’ small population might be a hurdle to splitting Vodafone’s network and service providers functions.

“Any separation needs to be made in the context of the size of the market and the cost and benefit that may or may not be achieved and the appetite of the Government to underwrite it,” Henderson said.

He emphasised that if the costs to Vodafone of providing services were reduced, then the company might be able to offer consumers better value, as it had in the past.

But he put a dampener on hopes of cheaper prices any time soon. “We will need to see a major recovery in the Cooks economy and any benefits associated with the cable are likely to be aligned with the timing of that recovery.”