InternetNZ releases operational separation submission

"InternetNZ supports the operational separation
process, and the path set out in the Ministry's document is by and large a good
one in our view," said Deputy Executive Director Jordan Carter.

"There are however improvements that should be considered. The Ministry's
approach to the operational separation provisions in the Telecommunications Act
has been very narrow. This narrowness extends to the services included in the
separation requirements, how new services might be subjected to equivalence
requirements, and in providing a robust process around development of Telecom's
NGN.

"InternetNZ's submission proposes changes to address this narrow focus
that are more in keeping with the model adopted in the UK, particularly
around the need for transparency and industry consultation in NGN developments.
The operational separation process would be a lost opportunity if progress is
not made in this area.

"The Ministry's focus on Equivalence of Inputs rather than the less
effective 'equivalence of outcomes' approach is encouraging. The proposed
division of assets, including fibre and some transport electronics in the new
Access division, is the right approach.

"InternetNZ has welcomed Telecom's proposed alternative approach,
consisting in our view of weaker and more tightly targeted equivalence
requirements and less restrictive governance requirements and regulatory
relaxation, traded off against a guaranteed product rollout path, investment
pledges and a structural separation of the access division.
"InternetNZ believes the Telecom proposal is somewhat light on detail but
we believe a solution between Telecom and the Government that respects the need
for a strong and robust separation and delivery of equivalence is the best
possible outcome for the telecommunications market.
"As noted in the submission, InternetNZ supports a robust process to
develop the best possible separation plan, even if this requires more time than
the Ministry had anticipated. The Society will be reviewing Telecom's plan in
greater depth in the coming days and hopes to be able to make comment on it to Government
and other stakeholders reasonably soon.

"Whichever path is eventually chosen, Telecom and the industry have a
responsibility to make it work. In particular the timing of separation
processes has to be realistic, to avoid as much as possible disruption of
service rollout (particularly of those services currently being considered in
the standard terms determination process - LLU and UBA).

"InternetNZ finally notes that the entire change to the regulatory
framework has kept investment incentives in mind. The operational separation
plan outlined by the Ministry does not, in our judgement, preclude reasonable
and effective investment by Telecom and potentially other players in the access
network.
InternetNZ believes it is inappropriate for involved parties
to be making comments that may be interpreted as unilateral threats to
infrastructural investment should they not get their way.
"Overall, InternetNZ welcomes the operational separation document and
Telecom's proposed alternative. Separation is the only way to promote a more
competitive market in telecommunications in the long run. It has to be done
once and done right," Jordan Carter concluded.

For further comment:

Jordan Carter
Deputy Executive Director
021 442 649
jordan@internetnz.net.nz