Minister approves variation of Telecom separation

"Following a review by the Ministry of Economic Development, which included a call for public submissions, I wrote to Telecom's chief executive Dr Paul Reynolds indicating that I was not prepared to accept the variation as originally proposed," began Joyce.

"However I indicated I was prepared to approve a number of changes to the undertakings, subject to Dr Reynolds' acceptance of certain conditions.

 Joyce said that Reynolds has since provided a revised proposed variation that addresses all the conditions, which the Minister has approved.

"I believe these changes will serve the best interests of consumers and also allow Telecom to develop services and systems that are consistent with changes being brought about by the Ultra-Fast Broadband Initiative," he concluded.

Structural separation would mean that two entirely separate companies would replace Telecom as we know it today.

A Telecom presentation given to shareholders explained the possible structural separation of business in the event that they do a deal with the Crown for UFB.

Today's announcement by the Minister relates to a variation of an existing agreement between the Crown and Telecom which sees Telecom operationally separated.

Chorus2

A nationwide fixed line access network infrastructure operator that will offer services to retail service providers on an open access basis. Essentially, Chrous2 will be similar to the existing Chorus business with the addition of layer 2 services (copper and fibre) and related assets.

ServCo

A retail focused telecommunications business comprising Telecom's fixed, mobile and ICT businesses. ServCo will build and deliver services to end users using the Chorus2 network, just like every other retail service providers. It will also wholesale some services and own mobile infrastructure.

In May Telecom proposed the following amendments to address the risk of disruption and the high costs of investment in systems that would become redundant with the roll-out of ultra-fast broadband:

• Suspend the forced bulk migration of broadband customers being served by the old wholesale broadband service onto the new wholesale broadband service
• Remove the requirement for Telecom to migrate 17,000 customers onto a new VoIP over copper service by 31 December 2010
• Remove the requirement for Telecom to build a new set of wholesale operational support systems that are not consistent with the industry structure implied by UFB

On September 14th, the Ministry offered advice to the Minister on whether to accept, or not, the amendments proposed by Telecom on May 24th.

Later in September Joyce wrote to Reynold's indicating that he was not prepared to accept the variation as proposed, but was prepared to approve a number of changes subject to Telecom's acceptance of certain conditions.

On October 11th, Telecom resubmitted and this was accepted by Minister Joyce on 13th October 2010.