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Short term uncertainty for long term stability: Telcos

Short term uncertainty for long term stability: today’s telco reviews – InternetNZ

Media release - 8 February 2013

InternetNZ (Internet New Zealand Inc) today responded to the announcement by Hon Amy Adams, Minister of Communications and IT, that two reviews (of the Telecommunications Service Obligation and the broader telecommunications regulatory framework) are to begin immediately.

“There are four important points to make about today’s announcement,” says Susan Chalmers, Spokesperson for InternetNZ.

“First: openness. Minister Adams’ announcement means that New Zealand can now have the open debate about the transition from copper to fibre communications infrastructure. The UFB and RBI were developed with a degree of commercial secrecy – reasonable enough given their nature as business transactions, including the complexity of separating Telecom, but creating difficulties in having a full and open policy debate where all voices could be heard.

“This review needs to be done with open engagement and involvement of all affected parties. We reiterate our intention to help in getting people together to talk through the issues, and our offer to host roundtables or similar events to get dialogue started,” says Chalmers.

“Second: certainty. Calling forward these reviews does not contribute to certainty for investors, for retail service providers or for consumers. Any policy review creates uncertainty, by opening up the possibility of legislative and regulatory change.

“The only hope for certainty is an open review that leads to a commitment to the existing policy framework, or to broadly agreed changes. The industry and the markets need to accept that the time these reviews will take should be worth the short term uncertainty they cause.

“Thirdly: who pays? The one year delay in moving wholesale copper broadband to a cost-based price means one more year of copper broadband customers paying today’s copper prices – almost certainly higher than what will be in place after copper services move to a cost-based pricing formula.

“This will help Chorus’s bottom line – but is it the best way to help finance the UFB? Part of the policy review should aim to identify whether the UFB needs more resources than the package Chorus and the other LFCs signed up to – and to transparently identify how any gap is paid for. It is not immediately obvious that existing copper broadband customers should be asked to fund any gap, nor that Chorus cannot meet the contractual obligations it signed up for when committing to the UFB.

“Fourthly, copper remains important. Both reviews, if they conclude that change is needed, must recognise that while the UFB is being built, competitive copper broadband services are vital to the huge majority of households. A quarter of households will never get access to fibre in any case. Fibre is the future for most, but copper is today for almost everyone – and is the main access technology for most New Zealanders for the next few years,” says Chalmers.

“New Zealand needs the fibre that the Government has committed to delivering, including by investing significant sums of taxpayer money. We are as strongly supportive of that vision – of fibre to the home for as many New Zealanders as possible – as we were when John Key announced it in 2008.

“Yet the challenge of an effective move to fibre is a real one, as is the challenge of guaranteeing universal service through the TSO. The challenge now is to review the policy framework and to do it in a way that minimises uncertainty. This is not an easy combination.

“InternetNZ will continue to support a competitive telecommunication policy framework that deals effectively with the pressures created by the migration from copper to fibre broadband. These reviews give us all a chance to test whether today’s framework can deliver that or whether changes are needed. An open, transparent review is the best guarantee that any future decisions will create the certainty that the industry needs – after the inevitable period of uncertainty today’s announcement will bring,” says Chalmers.

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