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Network separation key issue in Amendment Bill

Network separation key issue in Amendment Bill discussion

14 September 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.

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.

Further, 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 customers.

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 committee.

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 at:


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