Telecom NZ will have to do the splits

Stuart Corner
Tuesday, 28 November 2006 12:33

IT Policy - Regulation

A New Zealand Government committee, reporting on new telecoms legislation, has recommended the operational separation of Telecom New Zealand into a fixed network access unit, one or more wholesale units and one or more retail units.

The recommendation, from the majority of the Finance and Expenditure Select Committee, goes much further than the original legislation, as table in the New Zealand Parliament in June, which recommended only an accounting separation, similar to that imposed on Telstra. This would have required Telecom NZ to disclose information about its retail and wholesale business units as if those activities were operated as independent companies.

The committee based its recommendation on the belief that, with only accounting separation in place, "it would be difficult to guarantee a 'Chinese Wall' between entities that are not operationally separate."

Telecom said the proposal was "Not ideal, but we will do our best to work with it." Chairman, Wayne Boyd, said: This form of separation is more complicated and costly than we believe is necessary for New Zealand but we will work to implement it as swiftly as is reasonably possible. With the reorganisation Telecom has been working on since early this year, Telecom has already made progress down the path that is outlined here. We will be doing what we can to settle on detailed undertakings with the Crown with input from the industry."

Alan Freeth, managing director of Telstra's New Zealand subsidiary, TelstraClear, said the proposals "means consumers can look forward to better services from more providers...We will work with the Government on the details around separation and the Commerce Commission on the all-important terms for local loop access."

Communications minister, David Cunliffe, said the government would consider the committee's recommendations before deciding on the next step in the progress of the bill.

The Telecommunications Amendment Bill was introduced to Parliament on June 29. It implemented the Labour-led government's pledge to deliver faster, better broadband Internet access, as unveiled in the pre-budget telecommunications stocktake package announced on May 3.
 
In his first reading speech on the bill Cunliffe said it would deliver an effective wholesale regime, encourage infrastructure based competition including developing a package for rural communities and ensuring a competitive cellular market; would future-proof the regulatory environment to technology change by reviewing the telecommunications service obligations and preparing for next generation networks; and that it continued development and implementation of the government's Digital Strategy to encourage the smart use of information and communications technology.

A copy of the committee's report can be downloaded from here.