Telecom NZ breaches separation rules

Telecom New Zealand has breached its operational separation undertakings for the first time, the NZ Commerce Commission said this morning.

Telecom New Zealand has breached its operational separation undertakings for the first time, the NZ Commerce Commission said this morning.

The undertakings outline specific milestones and commitments which have to be met by Telecom, as it progresses down the road towards strict operational separation of its retail, wholesale and network arms.

Since 31 March, these commitments have been enforceable by law.

The telco should have provided information to the NZ Telecommunications Minister and the Commission by 30 June 2008 on the number of copper lines in the nation and the zones in which these lines fell — ranging from zone one for major cities to zone four for isolated rural areas.

According to the Commission, this information forms the base of measuring the performance of Telecom NZ at migrating 80 per cent of the country from the existing PSTN (public switched telephone network) to a broadband network with minimum speeds of 10Mbps by 2012, which is a commitment in the undertakings.

However, telecommunications commissioner Dr Ross Patterson told that the problem was "really a technical breach" and was certainly unintentional. "There wasn't a realisation that it was a firm deadline."

The telco itself flagged the breach to the commissioner, according to a spokesperson for Telecom NZ, who said it planned to have the information ready in around three months. "Whether it was oversight or distraction or whatever, it didn't get picked up," the spokesperson added, saying that British Telecom had similar experiences in the early days of pulling itself asunder.

Patterson said that because the information wouldn't be needed until 2010 when the migration of 80 per cent of lines needed to be finished, it wasn't important that it reached the Commission now. "The fact that they might slip three months was of no import at all."

However, he made it public for the sake of openness. "We take the view that we've got the duty to be completely transparent," he said.

Missing separation deadlines without reasonable cause incurs maximum fines of NZ$10 million, as well as NZ$500,000 for each day the plan is breached.

Telecom won't face the financial stick this time, however. "If the outcome of these discussions is satisfactory, the Commission does not intend to use the formal enforcement remedies under the Telecommunications Act," Patterson said in a statement.

To date, the telco has installed or equipped 1,500 cabinets with ADSL2+ or VDSL capability, with DSLAMs installed and operational.

As for separation in general, "they're doing a remarkably good job," Patterson said. "The level of compliance is very good."

He pointed to comments made by the chairman of the Telecommunications Users Association of New Zealand Rod Oram, which he presented at the Oceania Telecommunications Conference in Sydney this week:

"From the moment the government announced the Separation plan on 3 May 2006, Telecom's behaviours in the market place changed. Before separation it viewed its wholesale customers as unwelcome campers on its network. The moment separation became inevitable, it immediately started to recognise them as valued business partners.

"Competition has never been stronger in the New Zealand telecommunications market. Investment has been stimulated greatly as a result.

"Operational separation has been but one of several major policy advances over the past five years but it has had the biggest and most dramatic effect. It has been a major turning point not only for the industry, but for New Zealand's digital journey."


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