Telecom holds out for national solution on govt fibre network

Telco hopes to sign heads of agreement in October

If Telecom fails in its bid to become the government’s sole partner in the $1.5 billion fibre network, it would be unlikely to participate at all.

At the company’s fourth quarter finanical briefing today, Telecom CEO Paul Reynolds appeared to rule out any suggestion the telco would participate in only some of the country’s regions, and forgo others to rival bidders such as Vector in Auckland.

“I don’t see any scenario for not doing Auckland, it’s just half the country... the package here is about a national proposition,” he said.

Telecom is hoping to sign a heads of agreement with Crown Fibre Holdings — the government agency charged with enacting the Ultra Fast Broadband plan — in October.

If it is successful, Reynolds says the process to structurally separate Telecom into two companies — one to run the network (dubbed Chorus2) and the other Telecom Retail — could be approved by shareholders by mid-2011.

The company is looking for legislative and regulatory certainty to be contained within that “heads of agreement”, as chief finanical officer Russ Houlden explained. “You can’t just have a commercial piece or a regulatory piece or a legislative piece... we need that package to be capatured in the heads of agreement.”

(Houlden resigned in May, but is serving out his notice).

Reynolds hit out at current regulation in the sector, claiming New Zealand’s regulatory regime “is the most onerous in the world.”

“New Zealand can’t afford every flavour of regulation in the world, all running concurrently and some new stuff that the world’s never tried before and think there’s no cost to that. There’s colossal and gigantic costs that flows to consumers from that.”

Telecom is currently seeking relief on some the undertakings it's expected to deliver under the Operational Separation requirements. Known as Variation 4, the majority of the industry are opposed to most of the requests put forward by the telco.

Reynolds says he’s hoping for a decision from ICT Minister Steven Joyce on Variation soon and says it can be made independent of the UFB process.

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