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InternetNZ releases telecommunications proposals

22 February 2006

(Note: Copies of full proposals from )

"Reform of New Zealand's telecommunications regulatory framework is a vital step if we have any intention of catching up with Australia, and taking New Zealand towards the top of the OECD for broadband Internet service uptake," said Colin Jackson today.

"Our key message is that there is no 'silver bullet' in telecommunications reform – a multi-pronged strategy is required to deliver a more competitive market in telecommunications. The debate is not just about whether to unbundle the local loop or not. That will not be enough by itself. It will be a very useful step forward but needs to be followed by separating Telecom's wholesale business from its retail business.

Mr Jackson, President of InternetNZ, was commenting today at the release of InternetNZ's submission to Hon David Cunliffe on options for reform of the telecommunications regulatory framework: 'Advancing Telecommunications Services for New Zealand in the 21st Century.'

"As might be expected, our focus is on creating a favourable environment for competition and innovation in the provision of Internet services. This is essential if New Zealand's economic growth targets are to be met.

"Our submission contains proposals in two areas. The first series of proposals deals with increasing competition on the key economic bottleneck in the telecommunications market – the local loop. The second series of proposals deals with the development of other areas of Internet infrastructure.

"On local loop matters, InternetNZ proposes three inter-related steps:

* Development of stronger wholesale service options for resellers of Telecom's services, starting with an unconstrained UBS (unbundled bitstream service). Such a service would allow bitstream provision at the maximum feasible line speed, with adequate network provisioning to make such services useful.

* Local loop unbundling, allowing service providers to install their own equipment in or near Telecom's local exchanges and cabinets. Growing international experience indicates this allows the development of very high-speed Internet services due to the stronger competitive environment resulting.

* A split of Telecom's wholesale business from its retail business – the only way to ensure fair treatment for all competitors on Telecom's local loop network is to ensure the company faces incentives to deliver this. Only by including Telecom's wholesale business in a separate firewalled division – or a separate company – can one be certain that it will treat all access seekers on an equivalent basis to Telecom's retail division.

"It is important that these three reforms are pursued together. They provide a range of different access options for service providers of various sizes. Together they ensure that the local loop infrastructure will be used to deliver more innovative telecommunications services for households and businesses,” Colin Jackson said.

"InternetNZ has also proposed several other reforms that do not focus on the local loop. While we regard the local loop as the key site where competition is lacking today, there are other interventions the government can make to roll out better Internet for New Zealanders.

"In these other areas our proposals include the following:

* An additional $60m for the Broadband Challenge, to ensure it can deliver meaningful fibre infrastructure to local communities. We understand that the fund, established under the Digital Strategy with a $24m limit, is fully subscribed. Expanding the fund is a simple way to show government commitment to the development of open alternative network infrastructure.

* Review of state network building – a large number of Crown organisations have network capacity installed around the country, including the developing GSN, Advanced Research Network, SOEs like BCL Ltd and Transpower, and others. It is important their networks are well-coordinated, and that any potential gains they can bring to making the national Internet backbone network more robust and more competitive are fully realised.

* Review of spectrum allocation policies, to allow better development of community wireless broadband. Current spectrum allocation policies allow the hoarding of spectrum by market participants. These should be reviewed to ensure that communities can easily roll out non-profit wireless broadband services.

* Develop a national strategy to roll out fibre-to-the-home services. Most of the best-placed OECD countries are already moving towards very high-speed Internet service rollouts. Copper technology imposes speed limits that don't exist with fibre. A national strategy to get fibre to the home – sooner rather than later – is a vital element in bringing New Zealand up to speed for the digital future.

"Taken together, this second series of proposals would push the boundaries around Internet service provision, leading to alternative options for those not well served by incumbent providers, far faster Internet access for communities with fibre infrastructure, and concrete plans to bring New Zealand to world class standing for very high speed Internet services over fibre," said Colin Jackson.

"It is clear from recent debate among commentators, Government and the community that the genuine rollout of true Broadband Internet services is on the radar screen.

"It's therefore critical that people realise that the services currently available are well behind those in other countries – in both price and service terms.

"In Australia, it is possible for businesses and householders to buy packages that deliver ADSL2 services with 24mbps downlink speed and 6mbps uplink speed, without data caps, for AUD39.95. Such services are close to 40 times faster than the majority of 'broadband' services available under the current regime.

"The current policy framework and resulting market structure cannot deliver outcomes to match Australia's, because they do not provide competition on the local loop. By far the best way to deliver higher quality, more innovative services is to create a level playing field where competition forces better services at lower prices.

"No matter what promises are made by incumbent providers, the fact is that progress in New Zealand will continue to lag behind the OECD, behind Australia – behind any country we might compare ourselves with – until competition is a fact of life, rather than allowed now and then by grace and favour of incumbents.

"The proposals above are not radical. They are not out of step with developments in other countries. Taken together, they would bring New Zealand's telecommunications regulatory framework in line with what exists in Australia, the UK, Canada, the United States and beyond – and deliver seriously better services for New Zealand.

"The government faces tough choices. Will it regulate in the long term interest of the country, despite the storm of opposition and compromises that will be offered by Telecom? Or will it back down as it did in 2004, and guarantee New Zealand's continued slide down the OECD rankings?

"InternetNZ will watch this debate with interest. Only a package of reforms will deliver the changes the community needs, and ensure that high speed Internet is available across New Zealand in the near future. We urge the government to consider our proposals and to take the decisive action needed to secure the country's digital future," concluded Colin Jackson.


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