Op Sep changes a major improvement on proposal

Op Sep changes a major improvement on Telecom’s proposal

Communications Minister Steven Joyce today announced that a substantially revised and improved fourth variation to Telecom’s Operational Separation undertakings had been agreed.

InternetNZ Chief Executive Vikram Kumar welcomed today’s announcement “The changes agreed by the Minister protect the core of operational separation, unlike Telecom’s initial proposal which, if accepted, meant the end of operational separation.

“Just as important, the Minister’s choice had major implications for the success or failure of UFB. If the variation request was accepted, UFB would be much harder to pull off. As we said in our submissions, for the Minister ’to blink now is to play to Telecom’s strategy [on UFB]’. Steven Joyce hasn’t blinked. He has held his ground and deserves congratulations. Consumers will be the winners from this decision,” he said.

“InternetNZ strongly opposed the original variation request. The two key aspects of that request (indefinite deferral of migration to equivalence of input broadband services, and erosion of obligations to build new IT systems consistent with operational separation) would have fatally ripped the guts out of operational separation,” he said.

“The Government has instead forced Telecom into a position under which operational separation will still be effective and the success of UFB is not prejudiced. Telecom has bought a lot more time to meet its obligations, but the key point is that they must be fulfilled. Telecom gave the Minister no choice but to allow more time to meet the requirements in view of its delays so far. The Minister has kept the additional time under control and to a minimum.

“Importantly, and as we called for in July, this decision has been made in the context of a much-needed wider debate about structural separation of Telecom and how operational separation would need to change if that goes ahead.

“Today’s extended deadline, for the migration of Telecom retail customers to new broadband services delivered on equivalent platforms to those of competitors, appears to make technical and common sense. Our earlier submissions opposed Telecom’s proposal for no fixed migration dates. We are glad the Government did not accept that idea.

“The revised undertakings enable reconsideration of the second key issue: the nature of the IT systems to be built to fulfil operational separation. Telecom pushed for one stack (for Layers 1 and 2), contrary to the two stack (layer 1 and layer 2) model required by the undertakings. We maintained in our submission, and remain of the view, that the two stack model is required, unless overtaken by structural separation. Telecom, after consultation with industry, can come up with alternative proposals by March 2011. If they are unacceptable to the Minister, Telecom must build the two stack model.

“It will be important for industry and MED to closely monitor Telecom’s progress with its proposals and consultations, to ensure Telecom does not, yet again, come back seeking further extensions of time. This time around, they have bought up to 18 months’ delay, which the Minister had little choice but to accept. This is not the first time Telecom has sought and obtained more time. It mustn’t happen again.

“At least this solution gives time for the outcome of the UFB tender process to be known: the operational separation undertakings can be revisited if necessary in light of UFB. But Telecom knows it is locked into the operational separation undertakings in the meantime: that is a strong decision by the Minister. “Operational separation, including this variation, needs to be considered for how it would operate if Telecom is not a key partner in UFB and does not structurally separate – because if structural separation happens, a whole new settlement will be required.

ENDS

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