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Network separation key issue in Amendment Bill discussion

Media Release - September 14, 2006 - InternetNZ (The Internet Society of New Zealand) was amongst a number of organisations and industry companies presenting last night to the Finance and Expenditure Select Committee on the Telecommunications Amendment Bill.

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InternetNZ executive director Keith
Davidson says he is pleased that the key issue of the evening was
operational separation of Telecom's network from its wholesale and
retail operating arms.

“Telecom's operational separation
plan is clearly insufficient because it does not include separation
of the core network, where the 'enduring bottleneck' exists. Its plan
does not match up to the operational separation model implemented by
British Telecom.”

British Telecom's model creates a
separation division called Openreach which has responsibility for the
network assets, providing equality of access to all service providers
including BT wholesale services group and retail operations.

“Openreach does not include BT’s
wholesale services, and is a separate division from its wholesale
group. It is independent. Telecom's operational separation plan
appears to be for separation of a wholesale services group only,”
says Davidson.

Telecom's plan only provides “Equivalence of Inputs” for three
services, while British Telecom has it for many more. “Equivalence
of Inputs” means providing exactly the same services to wholesale
customers as services supplied to one's own retail arm.

An important aspect raised in many
submissions was the issue of Telecom's ISP Xtra receiving more
favourable terms and conditions than those available to wholesale ISP

InternetNZ has provided the select
committee with suggestions as to how the Bill could be amended to
provide a statutory path to a strong operational separation regime
involving network separation, if such a regime cannot be achieved by
negotiation between the Government and Telecom.

“Legislation for an operational
separation plan is essential. There must be provision in the current
bill giving the Government the power to implement operational
separation,” says Davidson. Another important point, which was
discussed in depth by lawyer Michael Wigley was that legislation must
take into consideration Telecom's Next Generation Network (NGN).

He suggested that the UK model of a
broad industry consultation process on the shape of the NGN be
adopted in New Zealand, to make sure that the future network does not
close off competitive behaviour in the industry. Additionally the NGN
must be covered by strong Equivalence of Inputs. InternetNZ is
pleased that this point was picked up in further discussion by the

At InternetNZ's presentation last night
Public Policy Chairman David Farrar opened followed by Research and
Policy Officer Jordan Carter and Michael Wigley. Other key points from the InternetNZ
presentations were:
There is massive consensus in the
industry that the status quo was not delivering.
Strong operational separation will
lead to sensible investment in, and usage of, infrastructure by both
Telecom and its competitors.
Structural regulation such as
operational separation can lead to a simplification of regulation.

The InternetNZ written submission is
published online.

For further comment please contact:

Keith DavidsonExecutive Director - InternetNZPhone 021 377 587,

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