Telecom NZ wants full structural separation

Stuart Corner
Friday, 13 April 2007 12:23

IT Policy - Regulation

Telecom suggests that at least some degree of ownership separation would "enhance the credibility of the model and avoid the complex governance procedures that appear to be emerging in the current process." Other elements of operational separation would still be required but could be much simpler to implement, it says.

Significantly, Telecom NZ suggests that its model would resolve the problem dominating Australian telecoms at the moment: how to transition to a FTTN network without disadvantaging operators that have installed DSLAMs in exchange to make use of the existing copper access network; without giving the owner of that network an exploitable monopoly yet ensuring it makes a fair return on its investment.

Telecom proposes that it and Netco commit to the delivery of access services and regulated wholesale products on a rapid timeframe. "With guaranteed ongoing equal access to Netco, competitors and Telecom will have the confidence to invest and develop their own services rather than reselling regulated Telecom services," it says. "Over time, regulated resale and bitstream services should be removed as milestones for competitor activity are met.

Telecoms's proposal has been received enthusiastically by The Telecommunications Users Association of New Zealand (TUANZ).

"This is potentially a watershed for the telecommunications landscape," TUANZ CEO Ernie Newman said.

"On the face of it there are several very important benefits for users compared to the current approach. First, structural separation offers much greater certainty for competing service providers who buy access to Telecom's network...Second, it offers both Telecom and others a much more secure environment into which to invest for new network infrastructure, by providing full visibility of the network operation without the distortion of mixing it with the provision of services....Third, by eliminating vertical integration of the network and service operations, it should over time reduce significantly the amount of regulatory oversight, allowing the industry to use its resources to compete in the marketplace with less distraction from complex regulatory processes and reducing regulatory costs - much of which the community bears.

 

Telecom will present a full submission on the Government's white paper by 27 April and says it intends to consult with industry on the proposal in the interim.