Stuart Corner
Sunday, 27 January 2008 05:38
IT Policy -
Regulation
Page 1 of 2
The New Zealand Government's attempts to implement a consensus-based operational separation of the network, wholesale and retail of operations of Telecom New Zealand looks like coming seriously unstuck with two lead industry bodies united in their opposition to Telecom NZ's latest proposals.
In September 2007, The New Zealand Government
issued its first determination for the operational separation of Telecom NZ saying the move would "underpin increased competition and efficient investment for the long-term benefit of all New Zealanders." Telecom NZ was given just 20 working days to prepare its draft separation plan.
Telecom NZ submitted its initial draft operational separation plan in October 2007 and in response to industry submissions, an amended version on 19 December. Communications minister Michael Cunliffe on 24 December issued Telecom with an amended determination supposed directing it to address concerns raised in the submissions and again invited submissions on the amended plan.
According to his press release the amending determination "addresses a number of matters designed to improve the workability of the separation regime, as well as modifying the requirements in respect of wholesale staff incentives and IP interconnection." However industry's view is that it has done no such thing.
Cunliffe now has two choices: accept Telecom's amended separation proposals despite the industry criticism or impose his own operation separation regime on Telecom. He will likely find it hard to ignore the strident opposition to the plan voiced by The Telecom Users Assocation of New Zealand (TUANZ) and by the Internet Society of New Zealand (InternetNZ).
InternetNZ said: "Fundamental to operational separation is the issue of incentives: the purpose of this regulatory framework is to align [executive] incentives on the separated entity with the broader interests of competition for the long term benefit of end users. The minister's amended determination, allowing group incentives for the wholesale division manager, seriously undermines the incentives structure that operational separation is aimed at putting in place."
