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Strategic Interaction Under Asymmetric Regulation: the 'Kiwi Share' in New Zealand Telecommunications

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  • Howell, Bronwyn

Abstract

Regulation binds incumbent firms to a different set of obligations from their entrant-competitors thereby creating an asymmetric set of options from which the firms may select the strategies under which they will interact. Whilst most regulatory obligations are specified in law some take the form of contractual agreements. New Zealand's 'Kiwi Share' obligations bind the incumbent to a set of retail tariff structures and levels that have both restricted the incumbent's choices and opened up a range of new strategic opportunities for its rivals that have had a significant effect upon the development of the New Zealand industry. This paper examines the specific consequences of the asymmetric tariff obligations and ensuing strategic interaction amongst sector participants on sector development - namely the effect of universal service retail prices and the allocation of the ensuing costs on the sector's ongoing regulatory agenda; the role of a 'free local calling' obligation on the evolution of New Zealand's broadband market; and the consequent application of further asymmetric legislative obligations on the incumbent to address apparent "problems" for which the asymmetric tariffs and rivals' strategic choices provide more credible explanations than the incumbent's exertion of its dominant position.

Suggested Citation

  • Howell, Bronwyn, 2008. "Strategic Interaction Under Asymmetric Regulation: the 'Kiwi Share' in New Zealand Telecommunications," Working Paper Series 19117, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    • Handle: RePEc:vuw:vuwcsr:19117
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    File URL: https://ir.wgtn.ac.nz/handle/123456789/19117
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    References listed on IDEAS

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    1. Lewis Evans & Arthur Grimes & Bryce Wilkinson, 1996. "Economic Reform in New Zealand 1984-95: The Pursuit of Efficiency," Journal of Economic Literature, American Economic Association, vol. 34(4), pages 1856-1902, December.
    2. David Boles De Boer & Lewis Evans, 1996. "The Economic Efficiency of Telecommunications in a Deregulated Market: The case of New Zealand," The Economic Record, The Economic Society of Australia, vol. 72(216), pages 24-35, March.
    3. Enright, Christina, 2000. "Strategic Behaviour of Internet Service Providers in New Zealand and the Performance of this Market," Working Paper Series 3914, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    4. Howell, Bronwyn, 2007. "Pendulous Progression: 20 Years of Telecommunications Regulation in New Zealand," Working Paper Series 3968, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    5. Howell, Bronwyn, 2007. "A Pendulous Progression: New Zealand Telecommunications Regulation 1987 -2007," Working Paper Series 3960, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    6. Howell, Bronwyn, 2007. "A Pendulous Progression: New Zealand's Telecommunications Regulation 1987-2007," Working Paper Series 3974, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    7. Blanchard, Carl, 1995. "Telecommunications regulation in New Zealand: Light-handed regulation and the Privy Council's judgment," Telecommunications Policy, Elsevier, vol. 19(6), pages 465-475, August.
    8. Howell, Bronwyn, 2003. "Building Best Practices Broadband in New Zealand: Bringing Infrastructure Supply and Demand Together," Working Paper Series 3887, Victoria University of Wellington, The New Zealand Institute for the Study of Competition and Regulation.
    9. Eugenio J. Miravete, 2003. "Choosing the Wrong Calling Plan? Ignorance and Learning," American Economic Review, American Economic Association, vol. 93(1), pages 297-310, March.
    10. Pablo T. Spiller & Carlo G. Cardilli, 1997. "The Frontier of Telecommunications Deregulation: Small Countries Leading the Pack," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 127-138, Fall.
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