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Telecom remedies Separation Undertakings Breach

17 September 2008/no 32

Telecom remedies Separation Undertakings Breach

Telecommunications Commissioner Dr Ross Patterson has received information from Telecom that satisfies him that the breach of Telecom’s Separation Undertakings that occurred on 30 June 2008 has been remedied.

The breach related to Telecom’s failure to consult and provide information to the Minister for Communications and Information Technology, David Cunliffe, and the Commerce Commission before 30 June 2008 about the method by which Telecom classifies customer service addresses. The information will enable the Commission to monitor Telecom’s commitment to ensure that 80% of the country’s lines in the old Public Switched Telephone Network (PSTN) network are capable of higher broadband speeds by 2012.

Dr Patterson said, “Since notification of the breach Telecom has been in active consultation with the Commission to work through a robust process to classify the customer addresses and to establish the definitive count of PSTN lines.”

“The method Telecom has developed includes an approach to ensure transparency of the changes that will inevitably take place in the distribution network in the future,” Dr Patterson said.

“As Telecom has addressed the issue to the Commission’s satisfaction the Commission does not intend to take enforcement action under the Telecommunications Act,” said Dr Patterson.


The Separation Undertakings are legally enforceable obligations of Telecom which the Commerce Commission has the role of enforcing. The Undertakings include requirements that Telecom business units treat the other Telecom business units and external wholesale customers in an equal and transparent manner.

Zones Breach

Part A of Schedule 1 of the Separation Undertaking includes a definition for Telecom Zones 1, 2 and 3, which describe the urban density areas in New Zealand served by telephone exchanges with more than 500 lines, and covers more than 80% of total existing PSTN lines. Following consultation with the Minister and the Commission, Telecom was, by 30 June 2008, to have provided to the Minister full details of the precise method for classifying all customer service addresses within these zones.

As part of the undertakings, Telecom committed over a four year period to migrate its existing voice and data products that used the old PSTN network in Telecom Zones 1, 2 and 3 to products based on inputs from its new advanced broadband network. The network must be capable of providing a minimum broadband speed of 10 Mbps to 99% of customers in those zones by 2012. This migration is being achieved through Telecom’s current cabinetisation programme.

On 11 July 2008, the Commission issued notification that it had written to Telecom advising that a prima facie breach of the Separation Undertakings had occurred. It appeared that the breach was unintentional and the Commission indicated to Telecom and the Independent Oversight Group (IOG) that if appropriate remedies were undertaken that the Commission did not intend to use the formal enforcement options under the Telecommunications Act. However, the Commission reserved the right to reconsider this should the issue not be addressed to its satisfaction.

Public Switched Telephone Network (PSTN): The switched telephone networks of the major operators on which calls can be made to all customers of all PSTNs.

The Telecommunications Act 2001 defines a PSTN as ‘a dial-up telephone network used, or intended for use, in whole or in part, by the public for the purposes of providing telecommunication between telephone devices’.


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