Telecom three-way split official
Wednesday, 26 September 2007
The Minister of Communications, David Cunliffe, today formally announced the split-up of Telecom New Zealand into three or more separate units.
ANS will ensure comprehensive coverage for competitors, with Telecom being required to inform competing providers of future network builds so as avoid 'asset stranding'.
The key service that the ANS will provide is access to the local loop, or the last mile length of copper going to customers' premises.
Further, one or more wholesale and retail units, respectively, will be set up. Providers will be able to buy unbundled bitstream and other telecommunications products and services from the wholesale unit.
Cunliffe says the basis of the operational separation imposed on Telecom is that the incumbent won't be able to discriminate in favour of its business units. Instead, safeguards such as a three-member Independent Oversight Group (IOG) with powers to report directly to the Commerce Commission, will be in place to ensure full and fair access to all comers.
New Zealand's telecommunications regulator, the Commerce Commission, will have real teeth for the first time to keep Telecom in line.
One-off fines of up to $10 million and ongoing ones of half a million dollars a day are now part of the Commerce Commission's arsenal, Cunliffe says.
Cunliffe says New Zealand is still very much in catch-up mode when it comes telecommunications. For years, New Zealand has languished in the bottom of the thirty-member OECD, with telco services and products being rated very costly compared to other countries.
Telecom's split-up preference was to structurally separate, and to sell off the network business, Cunliffe says. However, reports of a backroom deal with the government to allow Telecom to sell off the network for $3 billion was vigorously denied by Cunliffe.
The separation of the UK incumbent, BT, was the model for New Zealand, Cunliffe says. There are however several improvements made to the British model, according to Cunliffe, such as the IOG. Telecom's incoming CEO, Dr Paul Reynolds who left BT this year, was very helpful in working out the separation agreement says Cunliffe. Overall, Telecom has been cooperative rather than obstructive as in the past, the Minister says, as 'they changed their minds' during talks.