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Telecom Inqiury Issues Paper Released

PRESS RELEASE – THURSDAY 6 APRIL 2000

TELECOMMUNICATIONS INQUIRY ISSUES PAPER RELEASED

The Ministerial Inquiry into Telecommunications today released its Issues paper. Written submissions on the paper are now invited.

In releasing the paper, Hugh Fletcher, Inquiry Chairman said “the Inquiry is seeking maximum input from the telecommunications industry and telecommunications users, including the general public."

"To enable the greatest possible engagement, we have extended the deadline for submissions to 12 May”.

The Issues paper elaborates on the terms of reference for the Inquiry, and attempts to highlight all important issues. If there are issues the paper does not canvass, submitters are encouraged to draw these to the Inquiry’s attention.

Mr Fletcher stated “the Inquiry is required to provide detailed recommendations to the Government on a range of issues. It is therefore important that, in addition to outlining any problems, submitters also consider solutions, including their costs and benefits, and whether structural, regulatory or industry self-regulation solutions are most appropriate.”

The Government wishes to ensure delivery of cost-efficient, timely and innovative telecommunications services on an ongoing, fair and equitable basis to all existing and potential users. Among a range of important issues for the

Inquiry are:
 ensuring that New Zealand has a telecommunications policy that meets the demands of an information economy;
 whether there is a need for regulation to guide the agreements between network operators that make it possible for users on different networks to be connected (“interconnection”); and
 looking at whether the Kiwi Share is still the best tool to safeguard the telecommunications needs of residential users, rural and urban alike.
The Inquiry panel will release a draft report of its findings and recommendations by 30 June for further public comment. Submissions on the Issues paper will be a key input to the draft report.
In addition to Mr Hugh Fletcher, other members of the Inquiry panel are Ms Cathie Harrison and Mr Allan Asher.
The Inquiry is due to report to the Minister of Communications at the end of September.

END

The Issues paper can be downloaded from the Inquiry’s Website (www.teleinquiry.govt.nz). Hard copies can be requested from the Inquiry office (04 460 1375). A list of key points from the Issues paper is attached.

KEY POINTS FROM THE INQUIRY’S ISSUES PAPER

The information economy
 Information and communications technologies are evolving and traditional boundaries between services (e.g. telephony, broadcasting and wireless communication) are breaking down.
 These developments are changing the nature of the telecommunications sector and laying the foundation for an “information economy”.
 An important aspect of an information economy will be higher bandwidth services (e.g. high-speed Internet access) that require a high speed data network, for example, cable, third generation cellular technology, or a high speed copper telephone circuit.
 A key issue for the Inquiry is the risk of a “digital divide” emerging – a gap between information rich and information poor – and how this risk can best be managed.
New Zealand’s approach to regulating telecommunications services
 Since the deregulation and privatisation of telecommunications services, New Zealand has used a “light handed” regulatory approach, relying on the Commerce Act to deter anti-competitive behaviour and resolve competition disputes. The Government is expected to strengthen the Commerce Act in the near future.
 New Zealand’s approach is in contrast to most other countries, which have been more active in their regulatory approach. For all countries, however, the key regulatory issue has been, and remains, how best to regulate the behaviour of the “incumbent” – Telecom in New Zealand’s case.
 Comparing how New Zealand has performed relative to other countries is complex and consensus difficult given differing views on appropriate assumptions.
Interconnection
 Telecommunication networks need to interconnect so users on one network can connect to users on another.
 To date, interconnection in New Zealand has been a matter of negotiation between industry participants. While some interconnection agreements have been reached promptly, others have involved considerable delay and cost, sometimes resulting in recourse to the Courts under the Commerce Act.
 A key issue for the Inquiry is whether there is a need for regulation to guide interconnection negotiations and speed up the resolution of any disputes.
Local loop unbundling
 The ‘local loop’ normally refers to the copper wires, owned by Telecom, that enter each house and office to provide individual access to the telecommunications network. Wireless local loops are also possible.
 A key issue for the Inquiry is whether local loop unbundling should be required and, if so, on what conditions. Unbundling would allow other providers (at a cost) to access Telecom’s local loop as an alternative to establishing their own local loop network.
The Kiwi Share
 The Kiwi Share, a special share in Telecom, requires Telecom to provide residential users with a free local calling option; keep line rental charges below a set level (and rural rentals no higher than urban rentals); and maintain network coverage at the level when Telecom was privatised.
 The Kiwi Share continues to be instrumental in ensuring affordable access to telephone services by residential users, rural and urban alike.
 A key issue for the Inquiry, however, is whether the existing Kiwi Share is the best means of ensuring New Zealand’s transition to an information economy, or whether some other form of universal service obligation is better suited.
Network management
 Explosive growth of Internet and other forms of data traffic is placing increased demands on network management and capacity.
 Telecom said that network management was the reason for the introduction of its 0867 Internet access code. Others said Telecom was acting anti-competitively to avoid paying interconnection charges. 0867 also inconvenienced other providers’ customers as they had to change their Internet access number.
 A key issue for the Inquiry is to determine what is the best way to ensure efficient and fair network management.
Cellular technology
 The use of cellular phones is growing rapidly, resulting in increased competition in telecommunications services.
 There are a number of issues related to cellular technology such as spectrum allocation, airtime resale, roaming (access to another provider’s network outside of the home networks coverage area) and access to some infrastructure (e.g. the sharing of cell sites).
Numbering
 In order for users to easily change service providers, all telephone numbers should ideally be portable.
 At present, a technology called ‘call-forwarding’ is used, whereby a call is re-routed from the ‘old’ network number to the ‘new’ network number. Some consider that this technology is unsuitable and a more advanced solution is desirable.
 This issue is being addressed within the framework of the industry’s ‘Numbering Administration Deed’, along with how the cost would be divided amongst providers if a more advanced solution is adopted.
 A key issue for the Inquiry is whether the Deed is the best means of addressing number administration and number portability issues.

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