Telecom To Participate in Ultra Fast Broadband Initiative

( Telecom has today confirmed that it is fully investigating structural separation in order to participate in the Government’s Ultra Fast Broadband (UFB) initiative.

“Telecom’s strong preference is to align the interests of its equity and debt holders with those of the Government and New Zealanders,” said Paul Reynolds, CEO, Telecom. “The Government’s UFB initiative will fundamentally reshape the structure of the entire telecommunications industry in New Zealand and Telecom is therefore undertaking a thorough assessment of the merits of structural separation.

“In making a thorough assessment of structural separation we need to have a detailed understanding of the regulatory environment, and this warrants detailed discussion and analysis with Government before any decisions regarding its viability can be made,” he said.

“We are conscious that we should all be focussed on how best to create New Zealand’s fibre future.

“However Telecom is required by legislation to deliver significant system and technology projects envisaged for a pre-fibre world. A large proportion of these projects must be deployed this year, so it seems sensible at this time to reassess these projects to avoid significant congestion and waste.

“As a result we have asked the Minister to consider a variation on three components of Telecom’s Undertakings that we believe will no longer be relevant in a fibre future.

“These three amendments will not impact on the service levels experienced by our end user and industry customers, and will not detract from the EOI level playing field. Rather, they reflect how fast the policy and technology environment is evolving in telecommunications.

“In these three areas Telecom, industry participants and New Zealand consumers face significant costs and risks of disruption that were not foreseeable at the time the commitments were made. They also lock Telecom, the industry and the Government into some choices which should be considered as part of the UFB initiative and the potential structural separation of Telecom,” he said.

The proposed changes are to:

– Suspend the forced bulk migration of existing broadband customers onto a new copper-based broadband service. We will, however, continue to supply this new broadband service to all new customers;

– Remove the requirement for Telecom to migrate 17,000 customers onto a new VoIP over copper service by the end of this year; and

– Remove the requirement for Telecom to build a new set of wholesale systems that are not consistent with the industry structure implied by UFB.

Telecom’s fibre-to-the-node programme is not impacted by the variation requests.

Media Release 24 May 2010 from Telecom New Zealand.
Contact: Ian Bonnar, Telecom Media Relations, 027 215 7564
Contact: Mark Watts, Telecom Media Relations 027 250 4018