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[Minister Joyce responds] Telecom has released a statement confirming it is fully
investigating structural separation – that is, the possible sale of Chorus.
“Telecom’s strong preference is to align the
interests of its equity and debt holders with those of the Government and New
Zealanders,” says Telecom CEO Paul Reynolds. “The Government’s UFB initiative
will fundamentally reshape the structure of the entire telecommunications
industry in New Zealand and Telecom is therefore undertaking a thorough
assessment of the merits of structural separation.
“In making a
thorough assessment of structural separation we need to have a detailed
understanding of the regulatory environment, and this warrants detailed
discussion and analysis with Government before any decisions regarding its
viability can be made.”
In order to participate in the UFB a company that
has a majority share in the layer one infrastructure (ducts and cables) can’t
provide retail services on that network. This rule - which the Government has adhered to staunchly - is to avoid what’s occurred
in the copper world, where Telecom owns the infrastructure and provides
ubiquitous retail services.
Telecom has asked ICT Minister Steven Joyce to consider variations
on three aspects of its operational separation undertakings related to its
ownership of the copper network.
“These three amendments will not impact on the
service levels experienced by our end user and industry customers, and will not
detract from the EOI level playing field. Rather, they reflect how fast
the policy and technology environment is evolving in telecommunications,” says
Reynolds.
“In these three areas Telecom, industry
participants and New Zealand consumers face significant costs and risks of
disruption that were not foreseeable at the time the commitments were
made. They also lock Telecom, the industry and the Government into some
choices which should be considered as part of the UFB initiative and the
potential structural separation of Telecom.”
The proposed changes are to:
·
-
Suspend the forced bulk migration of existing
broadband customers onto a new copper-based broadband service. We will,
however, continue to supply this new broadband service to all new customers;
·
- Remove the requirement for Telecom to migrate
17,000 customers onto a new VoIP over copper service by the end of this year;
and
·
- Remove the requirement for Telecom to build a new set of wholesale systems that are not consistent with the industry structure implied by UFB.
ICT
Minister Steven Joyce has released a statement this afternoon responding
positively to Telecom’s announcement that it is investigating structural
separation. “A potential structural separation of Telecom would involve a
number of complex regulatory issues to work through. I am encouraging Telecom
to work with Crown Fibre Holdings and the Ministry of Economic Development.”
He says
Telecom is not the only industry partner to have raised regulatory issues in
relation to its bid. “There have been a number of positive recent developments
from potential partners as momentum builds in the ultra-fast broadband
initiative. Clearly potential partners are working hard to put their best foot
forward.”
Joyce acknowledges Telecom request for the government to consider a further variation to the company’s Operational Separation Undertakings. “Mr Joyce says he is conscious of the importance of certainty around issues raised and will expedite Telecom’s request through the usual process with an open mind,” the statement reads.
See: FIBRE 2010: Did David Skilling seal Chorus's fate in 2008?
and Telecom's road to separation
