Telecom UFB inclusion requires structural separation

Telecom’s UFB inclusion requires effective structural separation

Media Release – 13 December 2010

InternetNZ (Internet New Zealand Inc.) strongly supports today’s progress on the Ultra Fast Broadband initiative, while highlighting its ongoing concern in respect to market structure and regulatory holidays.

Crown Fibre Holdings Ltd today released details of its next set of prioritised bidders in the Ultra-fast Broadband initiative. The bidders include Telecom NZ, covering twenty-five of the thirty-three candidate areas.

“The announcements bring greater clarity. Many parties can now move ahead with their respective strategies, whether they are potential winners of UFB bids or will be looking to compete, with their own options,” says InternetNZ Chief Executive Vikram Kumar.

On the issue of structural separation, “Telecom’s participation in UFB requires structural separation, as all parties have accepted,” says Kumar. “We pointed out in our submissions on the MED’s document that the nature of any structural separation has to be pro-competitive, and that the current model isn’t.”

“With Telecom now having been selected as a prioritised bidder, the Ministry of Economic Development and Crown Fibre Holdings have to urgently progress the development of a structural separation model that can secure the existing copper wireline market, while allowing Telecom’s participation in UFB.

“This is even more important given Telecom is also in the running, together with Vodafone, for the Rural Broadband Initiative funding.

“A coalition of incumbents in the rural area, combined with a poor structural separation of Telecom, would be a leap backwards for competition in the New Zealand communications industry.

“Further consideration should also be given to the status of the regulatory holiday applying to UFB providers should negotiations with Telecom prove successful.

“The mess that would be created by the copper half of Chorus’ business being regulated and the fibre half not is self-evident.

“Finally, we note that in Christchurch and Dunedin, two prioritised bidders are in discussions. This competitive process should assist CFH in delivering the best possible price, as noted in our release last week welcoming the price points agreed with the first approved partners.

“Once again, we commend CFH for progressing the initiative.

“However, discussions with Telecom require the above points to be handled well, if New Zealand’s telecommunications markets are to remain competitive,” Vikram Kumar says.

ENDS

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