User groups split on Telecom’s request for leniency

Telecom boss evokes pain caused by XT and Yahoo!Bubble

Telecom’s request for leniency on its operational separation requirements has been met by a cautious 'OK' from TUANZ and definite 'No' from InternetNZ.

In a fourth request for a variation to Operational Separation undertakings agreed to by Telecom and the Labour government in 2006, the incumbent telco has asked that the requirement to migrate 90 percent of its customers to new wholesale broadband services by December 2010 be suspended. In addition, Telecom wants to be let off the requirements to move 17,000 customers over to a new VoIP copper service by the end of the year and to build a new set of wholesale operational support systems.

In a letter to the Minister requesting the latest variation, Telecom CEO Paul Reynolds stated the undertakings will 'place enormous strain on Telecom’s systems and force Telecom and its customers to risk significant service outages, and disruption, to achieve a set of outcomes that may only delay the ship to Ultra Fast Broadband (UFB)'.

He cites Telecom’s issues with rapid migration to the XT Network and the issues faced with the Yahoo!Xtra Bubble services in 2007 as providing 'sobering examples of the pain and disruption service outages can cause to our customers and to New Zealand'.

Reynolds also claims the undertakings are proving more costly than first envisaged and were drawn up before the government’s UFB initiative, which could see Telecom structurally separate.

In a statement today TUANZ accepts Telecom’s concerns about risk of service failure if it is forced to meet the current deadline. “However, we note that Telecom entered the Undertakings willingly in 2006, at which time the deadline was acceptable. If it is given relief, we would not want this to be taken as a signal that the government will grant variations any time there is slippage in a timetable,” says CEO Ernie Newman.

“In respect of Telecom’s undertaking to migrate 17,000 customers onto a new VoIP (Voice over Internet Protocol) service by December 2010, we see its failure to deliver as being within Telecom itself rather than an industry-wide issue. We can live with some modest extension of time, but do not think this Undertaking is any less valid than when established in 2006.”

Meanwhile InternetNZ “strongly opposes” Telecom’s request for a fourth variation. “Telecom is seeking changes with this Variation request that effectively stops operational separation. The company now argues that the emerging UFB market makes the development of the systems required to give effect to the 2007 separation redundant. They could not be more wrong,” says policy director Jordan Carter in a statement.

He says only if Telecom starts a structural separation process, is it appropriate to renegotiate operational separation. “Such a discussion would need to be done in public and after a transparent policy debate about how to structure the new environment.”

If Telecom does not meet the undertakings on the specified dates it can be subject to penalites of up to $10 million, plus $500,000 each day the breach continues. The telco has already asked for three variations, which have been granted by ICT Minister Steven Joyce following a submission process. Submissions to the latest variation request closed last Friday.