ICT industry welcomes government broadband plan

InternetNZ calls on Telecom to consider structural separation of Chorus

User-focused ICT interest groups hailed the government's broadband announcement today, with one saying it represented a "fundamental" break from the past.

The government finally released the structure of its broadband investment proposal this morning.

“This ushers in the biggest and most fundamental change to telecommunications in New Zealand since the privatisation of Telecom 20 years ago,” TUANZ CEO Ernie Newman said in reaction to the news.

“The paper builds very constructively on the work done previously,” Newman says. “It takes into account most of the key issues raised in submissions, and sets a timetable with milestones. It is an excellent blueprint on which to build."

TUANZ says it is especially pleased with the balance between investors' need for a predictable regulatory regime and user demand for a competitive market.

"By dealing up front with competition issues related to fibre investment, and incorporating them in the design of the commercial structures, it should be possible to minimise the regulatory intervention that has been an unfortunate but necessary feature of the copper and mobile markets," Newman says.

"It is interesting that New Zealand and Australia are on parallel tracks and are ahead of many western countries, a fact that reflects the added value of connectivity to countries that suffer inherently from geographic isolation," Newman says.

InternetNZ also welcomed the plan, saying it is "delighted" with today's announcement of a regionally-based approach to investment.

"This is a world-leading programme that can be expected to deliver the infrastructure New Zealand needs," spokesperson Jordan Carter says.

"Steven Joyce and the Government have put in place a framework that over time can deliver a widespread fibre rollout across urban New Zealand."

Later in the day after studying the plan in detail, InternetNZ said its priority was that the architecture of the new networks would be consistent with open access principles, allowing effective competition.

"The Government has agreed with this their open access requirements specify that individual lines must be able to be unbundled. While InternetNZ would have preferred a mandated point-to-point architecture, the cost savings that other architectures allow may be worth pursuing so long as real, cost-effective unbundling at layer 1 is possible," Carter says.

InternetNZ submitted that local fibre companies should be able to provide layer 2 services lit fibre wholesale services to avoid a re-monopolisation of the lit fibre level.

"We are pleased the government has maintained this option," Carter says. "The government has stated that only the private funds the investment partner brings can finance the deployment of layer 2 services Crown funds will build infrastructure only. This would appear to be an elegant solution."

InterentNZ, however, also notes tensions between the principles on which the plan is founded, principally avoiding overbuild.

"The practicalities of building a viable network will require some degree of overbuild, and the paper is right to highlight this. Where commercial deals cannot be done with other infrastructure owners to provide for the open access that the government is seeking, overbuild is inevitable and rightly so."

See also: Play ball or we will overbuild networks, says government
InternetNZ also notes the government has "left the door ajar" for a national deal.

"It is clear that a situation where Telecom competed directly with the new fibre networks would not be an ideal outcome for New Zealand," Carter says.

"InternetNZ notes that it has always supported the structural separation of Telecom as an ideal outcome for the New Zealand market: by completely severing any links between the network and the services operations, structural separation is the strongest guarantee possible of fair and equal treatment of all service providers by the network.

“If Telecom wants to make a serious pitch for taking part in this Initiative, then it should look at what is happening over the Tasman and consider the voluntary structural separation of Chorus from the rest of the Telecom group. Such a step could lead to Chorus being a viable investment partner in rolling out the high speed fibre New Zealand needs."

The New Zealand Regional Fibre Group also welcomed the announcement.

Northpower CEO Mark Gatland said that there was a lot of detail to be worked through, but the group was looking forward to participating in the process.

"Since the group’s inception we have worked to define an operational structure that will ensure maximum operational efficiency, combined with local solutions to meet local needs," he says.

Gatland emphasised the group’s aim of linking up schools and hospitals as a key priority.

"We believe that schools need to be connected to their communities, not just to the Ministry of Education. This ‘bring fibre to all’ philosophy differentiates us from the incumbent players," he says.

Aurora Energy chief executive Grady Cameron says that the government has made the right decision in retaining the regional structure and was particularly pleased with the inclusion of Queenstown.

"Without this approach the process would become a one horse race and would effectively preserve the existing monopoly. The NZRFG offers New Zealand a genuine wholesale-only open access network," Cameron says.

TUANZ is now asking for more focus on the creation of new on-line content to encourage maximum early uptake of high-speed broadband. It says the benefits of investment will come through in health, education, business productivity, telework, government services, security, environmental management "a host of other components of people’s economic and social well-being".

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