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Telecom’s separation – one step forward, one step sideways

18 Dec 2009

Telecom has met the deadline to produce accounting separation reports – but is asking for a variation on milestones its wholesale service is required to meet.

According to the Commerce Commission, under the Telecommunications Act Telecom must publish financial statements that provide information to industry stakeholders about the operation and behaviour of Telecom under separation.

Telecom CFO Russ Holden says the company is delighted to have met the Commission’s deadline for delivering the report, which he claims is a tighter deadline “than that applied in the first year of such reports in other countries.”

Meanwhile Telecom Wholesale CEO Matt Crockett has written to Communications Minister Steven Joyce to request changes to its undertakings on operational separation until further details of the government’s Ultra Fast Broadband (UFB) initiative are known.

“Our 2010 Undertakings delivery programme is already extremely challenging and we are under enormous pressure to meet the current dates. The result is there is no room for Telecom, or its customers, to pause and understand UFB in order to build the necessary flexibility into our system designs.

“Nothing in our request for a variation changes Telecom’s bedrock commitment to delivering our equivalence milestones, at the heart of the Undertakings, on time and in full. There will be no backsliding,” he says.

Telecom's proposal suggests that the June 2010 and December 2010 Wholesale milestones be deferred, and that they be re-focused "so that equivalence can now be delivered on either new or existing systems."

Crockett says Telecom Wholesale will still achieve full 'equivalence of inputs' by the end of 2011 as per the original undertakings.

Last month the Minister approved a nine-month reprieve on Telecom delivering six key understandings relating to the control of internal access to confidential customer information held by Telecom Wholesale and Chorus.

The Minister had received six submissions on the request with the Commerce Commission, Kordia, TUANZ and TelstraClear broadly supportive of the delay. Vodafone and Vector were opposed.

In the December issue of Telecommunications Review Telecom CEO Paul Reynolds claimed the Operational Separation undertakings are rigid and were created in a hostile environment. Reynolds compared the New Zealand undertakings to those carried out by British Telecom when it voluntarily separated.

“Telecom NZ has embraced operational separation, but because it was born out of an adversarial relationship, the detail of it is much more proscriptive than the UK model,” he told TR.