NZ Gov't unbundles local loop, forces accounting separation on Telecom NZ.

Stuart Corner
Wednesday, 03 May 2006 17:18

IT Policy - Regulation

The New Zealand Government has announced sweeping reforms to its telecommunications regime that will require Telecom NZ to unbundle its local loop, account separately for various parts of its operation and give trade watchdog the Commerce Commission an enhanced monitoring role to ensure improved competition.
It has also canvassed full structural separation of Telecom with communications minister, David Cunliffe, saying: "We are continuing to look at whether additional measures are warranted, such as the structural separation of Telecom's retail and lines operations."

The government has put in place a number of initiatives to encourage investment in alternative infrastructure such as fibre, wireless and satellite networks by: reviewing public sector investment in telecommunications infrastructure to encourage a whole-of-government approach; reviewing whether Telecom's ability to reduce local prices solely in response to new competing infrastructure investment should be constrained; developing a rural package and expansion of the Digital Strategy Broadband Challenge fund.

The Government says it has become increasingly concerned about the significant gap in broadband Internet performance between New Zealand and leading OECD countries.

The move has been enthusiastically welcomed by Telecom's largest competitor, TelstraClear, which congratulated the minister on a "Great decision". CEO, Allan Freeth said the announcements "will allow true competition for the first time because key obstacles are to be removed".

 "We'll be working through the detail of the announcements very shortly, but from what we've seen tonight the Minister has made the kinds of bold steps needed to allow companies like TelstraClear to provide customers with a true choice," he said.

"We'll be dusting off plans we shelved a couple of years ago and look forward to seeing what we can do for customers."

Telecom NZ was unimpressed, saying: "It is hard to see how the steps announced today will deliver on the Government's aims of high speed broadband throughout New Zealand."

General manager government & industry relations, Bruce Parkes, said: "As we have told the Government in our submissions, high speed broadband services and the advanced products that will run on them require major investment from all players in the sector. Today's package actually tells players to put away any major investment plans and rely on regulation instead."