New Zealand ponders telco service obligation future

The New Zealand government is reviewing Telecommunications Service Obligations with a view to reduce what Telecom New Zealand is required to offer.

The New Zealand government has flagged that it may look to overhaul the current obligations placed on incumbent telecommunications provider Telecom New Zealand, with a view to removing some of the legacy requirements, including the need to provide dial-up internet and fax services.

The Telecommunications Service Obligation (TSO) is a deed between Telecom New Zealand, Chorus, and the New Zealand government. It requires that Telecom have on offer: Voice call services, dial-up internet services, fax services, free local calling options, line-rental prices in line with the Consumer Price Index (CPI), free 111 calls, and a listing in the White Pages.

The deed was originally forged in 2001, and Communications and Information Technology Minister Amy Adams said the telecommunications industry in New Zealand has changed significantly since then, with more competition, more customers taking up mobile instead of fixed-line voice services, and the rollout of the government-backed Ultra-Fast Broadband (UFB) network improving broadband services in the country.

The current TSO requirement for dial-up and fax services requires Telecom New Zealand to keep older legacy technology, such as the public switched telephone network (PSTN), which will be replaced over time. This means Telecom New Zealand is prevented from using the most cost-effective technology to provide TSO services, according to the New Zealand government.

Adams released a discussion paper today outlining potential changes to the TSO provisions in light of the current telecommunications environment.

"Given the changing telecommunication scene, I am now seeking public feedback on the extent to which the TSO should be modernised and reshaped to meet the current environment and likely future changes in the sector," she said in a statement.

Apart from maintaining the status quo, the government outlined three different options to change the TSO. The smallest change would see Chorus take on more of the TSO role as the wholesale network operator, while removing the requirement for dial-up and internet services, and would see the line-rental charge calculated on producer price index (PPI).

The second option would see the introduction of so-called "TSO Zones". This would be areas of the country, such as remote or rural locations, where there is insufficient competition to ensure quality of service and similar prices to the competitive areas.

The third option would see the TSO Zones put out to tender for companies other than Telecom or Chorus to provide the services.

Telecom New Zealand said today that it welcomes the review.

"We believe the current copper-based TSO should be updated to allow TSO services to be delivered over other available technologies, such as mobile and fibre," the company said in a release to the Australian Securities Exchange (ASX).

"The telecommunications landscape has changed enormously in recent years, driven by extended take-up and coverage of fixed and mobile access networks. It makes sense for regulation to better reflect this new technological landscape."

The New Zealand government is accepting submissions on the discussion paper until August 20.


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