Minister should say “no” to Telecom – InternetNZ

InternetNZ (Internet New Zealand Inc) strongly opposes Telecom’s request for a fourth variation to the Undertakings that operationally separate the company, arguing that it would effectively end the benefits that operational separation has brought about.

Policy Director Jordan Carter says “the operational separation of Telecom into three units able to operate in a standalone manner was a key plank of the 2006 amendments to the Telecommunications Act. A staged implementation over several years from 2008 is now under way.

“Operational separation has driven new investment by a range of players, seeing lower prices and higher speeds for consumers.

“By separating Telecom’s operations into wholesale, retail and network divisions, operational separation when complete will see Telecom offering equivalence of inputs (same prices, systems, terms & conditions) on the relevant services between their downstream business units and other access seekers (other ISPs and telecommunications companies).

“Everyone will get the same services based on the same systems when operational separation is fully implemented.

“Telecom is seeking changes with this Variation request that effectively stop operational separation. The company now argues that the emerging ultra-fast broadband (UFB) market makes the development of the systems required to give effect to the 2007 separation redundant.

“They couldn’t be more wrong.

“Regardless of whether Telecom is a player in the UFB world, the copper access network is going to be a mainstay of telecommunications services for Kiwis for years to come.

“Completing the changes charted in 2007 is absolutely essential to guaranteeing competition and its outcomes of improving services and prices for broadband and telecommunications users. As the experience since then has also shown, competition is the key driver of investment in new infrastructure and services.

“Arguments around the new UFB market, or Telecom’s consideration of structural separation, are being raised at the wrong time. The Government should ignore them and reject this variation request, and in so doing protect the successes achieved so far by operational separation.

“If Telecom did start a structural separation process, then a renegotiation of the whole operational separation framework would be a key part of that conversation.

“Of course, such a discussion would need to be done in public, and after a transparent policy debate about how to structure the new environment. It would not be done by slipping changes in through variations to the existing Undertakings.

“Minister Joyce should say no to this request, and in doing so he should be clear that he is not cutting off the possibility of future changes to operational separation after public discussion of a world that included a structural separation of Telecom.

“Allowing this request now would prejudice the Government’s ability to get the best deal from any Telecom participation in UFB, and would also weaken the Crown’s negotiating position in any structural separation discussions down the line.

“That would not be good for taxpayers, or for anyone who uses telecommunications or Internet services in New Zealand,” says Carter.

A copy of the submission is available on the InternetNZ website: www.internetnz.net.nz

ENDS

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