Government unveils Telecom separation blueprint

No secret deal to sell Telecom's fixed line network, says Cunliffe

Communications Minister David Cunliffe has released the Government's long-awaited separation determination that will form the blueprint for the split of Telecom New Zealand into three operational units.

Cunliffe says the determination reflects the model of separation set out in the Government's April discussion document and sets the separation date at 31 March, 2008. He also refuted a report published today that a deal had been struck to sell Telecom's fixed line network.

The model of separation is, he says, informed by the BT experience in the UK and has been drafted in close consulation and cooperation with new Telecom CEO Paul Reynolds.

"Some amendments have been made to improve the efficacy of separation and to provide positive incentives to upgrade the network, with appropriate safeguards," he says.

Cunliffe also made it clear that regulation of the network will apply to all current and future networks including future fibre or wireless networks operated by Telecom.

The determination, he says, "removes the ability and incentive for Telecom to discriminate at a wholesale level".

He also says Telecom prefers an operational split to a structural one. This is contrary to the company's proposal in April that it split structurally. He adds that Telecom had "changed its mind" since describing operational separation as "unworkable".

The separation will be overseen by an internal watchdog committee comprised of three independent members and two Telecom members which will be able to report directly to the Commerce Commission.

Telecom's CEO can direct the three separate units subject to requirements for transparency, Cunliffe says.

Telecom has 20 days to prepare its draft separation plan which will be open for public comment in October.

Cunliffe says separation in New Zealand will occur in around half the time it took to separate BT and on the fastest timetable independent experts say is possible. All local loop unbundling services and unbundled bitstream access services have to be compliant by 2011 and progress must meet six-monthly benchmarks.

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Tags separationtelecomPaul ReynoldscunliffeNetworking & Telecomms ID

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