Industry slams Telecom's request for relief

Competitors and ComCom say undertakings must stand

The telecommunications industry is almost united in opposing Telecom’s latest request to delay its operational separation undertakings.

Telecom has requested that it be let off migrating 500,000 customers to the same broadband service as its competitors until after decisions about the Ultra Fast Broadband network are made. In addition it has asked to be relieved from the undertaking to migrate 17,000 customers to VoIP by the end of the year and to create two distinct systems for Telecom Wholesale and Chorus. See Telecom seeks relief for three-way split.

In ten of eleven submissions posted to the Ministry of Economic Development website, the industry appears united in urging ICT Minister Steven Joyce to reject significant parts of the Variation 4 request or, in some instances, the entire proposal. As previously reported, TUANZ has given Telecom a conditional “OK”, while InternetNZ’s submission is against granting relief. See User groups split on Telecom’s request for leniency.

In their submissions, WorldxChange and Woosh claim that the current broadband service that Telecom Retail customers receive is superior to what they are offered. Both companies are highly skeptical about some of the information put forward in Telecom’s proposal. Woosh says it doubts some of the figures, such as the 25 percent error rate of migrating customers to the new broadband service. WorldxChange says that Telecom’s claims that it can't provide a VoIP service are “fictitious”.

CallPlus, TelstraClear and Vodafone in their submissions claim that delaying migration to new operational systems causes uncertainty in their own investment plans. While Telecom's rival in the Ultra Fast Broadband process Axia NetMedia says that a decision on whether to grant the Variation 4 request shouldn’t be made until after the UFB partner selection process has been completed.

The submissions can be read on the MED website, but here’s a snapshot of what the Commerce Commission and the industry players say about Telecom’s Variation 4 proposal.

Commerce Commission

“It is the Commission’s view that the proposed variation represents a significant change to the Undertakings that will indefinitely delay a number of key deadlines that were intended to ensure the development of a competitive wholesale telecommunications market.

In the Commission’s view, competitive distortions would be created as a result of Telecom’s proposal to delay for an unspecified period (in the case of UBA services), or to remove altogether (in the case of PSTN service), key milestones for migrating to the Equivalence of Inputs (EOI) standard that underpins the Undertakings.”

Axia NetMedia

“Axia’s view is that prior to the conclusion of the partner selection process, the Government should not provide relief to Telecom that could be interpreted by Telecom as the Government either changing the current Ultra Fast Broadband (UFB) process or wavering on its determination to proceed with UFB, if necessary, without the cooperation and/or participation of Telecom.”


“If accepted by the Minister the impact of this variation is significant. In particular this variation leaves us with the same problem that Telecom themselves are seeking to avoid through the variation. We will be faced with developing our systems and processes to interface with telecom under CMO (Current Mode of Operation) in the certain knowledge that at some time in the future (as no specific date is in the variation request) we will have to substantially rework the interfaces, or more likely abandon, and start the development again, once FMO (Future Mode of Operation) is available.”

New Zealand Regional Fibre Group

“It is interesting to note that Telecom is not proposing to delay its fibre to the node programme nor systems that will improve its internal processes. Consistently applied logic would suggest these programmes are similarly affected by the prospect of UFB and structural separation. It appears that the clear distinction is that these programmes increase Telecom’s competitive strength while the programmes proposed for suspension reduce it.”


“As the UFB policy is a ten year program of work, it will be a number of years before the final outcome is delivered and before the competitive benefit is available across the whole of New Zealand. In the interim, the current regulation will continue to deliver improving competition.”


“Telecom’s current difficulties appear to stem from project management shortcomings and neglect of the investment required to meet its obligations. In the absence of any good reasons to support it, Telecom’s request looks like a purely self-interested attempt to obtain regulatory relief, and smacks of an intent to confuse and stall the fibre process. We see no reason why the Undertakings should be amended in the form Telecom have requested in order that Telecom can mitigate risks and difficulties of its own making.”


“Telecom has successfully delivered (or is on track to deliver) many aspects of Operational Separation that benefit it, such as the cabinetisation program which has successfully discouraged unbundling of half of all lines. But if Telecom is to be repeatedly let off elements of the Undertakings that it finds more challenging and costly to meet, there must come a point at which the Undertakings should be renegotiated such that all parties are impacted in a fair and equivalent manner.”


“We believe the desire to retain the PSTN network is motivated by revenue protection. The complex billing structures and particularly high national transport charges are a genuine barrier to entry for challenger voice operators. Modern Voice Operators are transporting calls as VoIP, and should be able to terminate them without having to invest heavily in PSTN conversion equipment and local interconnects which is a direct result of Telecom’s lack of progress in this area.”


“We strongly disagree with the statements made by Telecom regarding why they should have this (removal of requirement to migrate 17,000 customers to VoIP) removed and we are also surprised that they have actually put their name to such a complete set of fictitious claims regarding carrier grade VoIP service.”

Kordia’s submission has yet to be made public.

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Tags VodafoneAxia NetMediainternetnztelecomKordiaVectorTUANZWooshvariation 4WorldxChange

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