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NZ's 'World Leading' Telecommunications Reform

20 December 2000 Media Release
Government announces 'world leading' telecommunications reform

The government has announced what it considers to be 'world leading' telecommunications regulatory reform.

Communications Minister Paul Swain released the government's response to the Ministerial Inquiry into Telecommunications today.

"The new regime is forward looking. It concentrates on tomorrow's solutions rather than yesterday's problems," Paul Swain said.

"What we are announcing is designed to bring greater certainty, investment, competition, opportunity and consumer benefit.

Telecommunications Commissioner
"We are appointing a Telecommunications Commissioner as a specialist Commissioner within the Commerce Commission. The new Commissioner will be part or full-time depending on the workload and will be funded by industry.

"The Commissioner's key functions will be to resolve disputes over regulated services; to report to the Minister on the desirability of regulating additional services and to monitor and enforce Kiwi Share obligations.

"A regulated price will only be set if there is a dispute over the price that the parties cannot resolve themselves. The Commissioner does not have the power to overturn commercially negotiated agreements.

"The government would prefer firms to reach their own agreements on a commercial basis. Regulation will only be used as a backstop if commercial solutions cannot be found.

We have adopted these recommendations from the inquiry.

Designated Services.
Those services that will be designated are as follows:
- Interconnection with Telecom’s fixed telephone network. The options available for the Commissioner will be either forward looking cost based (TSLRIC) or bill and keep. This will ensure that efficient interconnection prices are charged and will also solve the 0867 problem that has been the subject of argument over recent times.
- Wholesaling Telecom’s fixed network services - retail price minus costs saved
- Number portability, including 0800 number portability

Deferred Designation
"Fixed to mobile carrier pre-selection from Telecom’s network with a deadline of 31 December 2001.

Specification
"The government has taken a narrower focus on these issues than the inquiry and decided that although specification of services will be an option, none of the services the inquiry recommended will be specified at this time.

The Kiwi Share
"The Kiwi Share Obligation is essentially a contractual agreement between Telecom and the Crown which was established with Telecom when it was privatised in 1990. We are making improvements to the Kiwi Share, improvements we feel are necessary to meet the government's social objectives – consumers should benefit as a result.

The upgraded Kiwi Share requirements:
- Extends geographic coverage to current levels.
- Clarifies that free local calls include dial up data (eg. Internet) calls.
- Brings basic Internet access to virtually all New Zealanders by upgrading Telecom’s network to provide 9.6kbps data capability to 99% and 14.4kbps to 95% of residential lines over two years from the passage of legislation. (Telecom is to bear the capital cost of this upgrade – the industry is to contribute to any ongoing KSO losses)
- Establishes an improved funding mechanism – industry is to continue to contribute to any Kiwi Share losses through a more transparent and competitively neutral mechanism.

"There will be a tighter monitoring regime on Telecom's performance, including 111 performance, dial tone availability and infrastructure upgrade as mentioned above.

"The government welcomes the commitment from Telecom to this agreement. It represents about a one hundred million-dollar upgrade to its network. As a result more people will obtain basic Internet access.

'At this stage the Government does not see any need to legislate the Kiwi Share. Telecom has indicated its willingness to enter into a revised arrangement along the lines described. We expect an exchange of letters to take place later this week with a new arrangement finalised at the time of the passage of legislation.

Information society initiative
"An Information Society Initiative, recommended by the inquiry, will be established to facilitate a partnership between government, industry and local communities. The key objective of this is to promote the information economy in New Zealand.

"This initiative will promote programmes relating to the information economy and consider as a priority the issue of access to bandwidth in New Zealand.

"Details of the initiative will be announced early next year.

"As I said to begin with I believe we have come up with a world leading piece of work. I intend to introduce legislation to implement these decision early next year for passage around the middle of next year," Paul Swain said.

ENDS

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