Telecom's rivals will be able to compete on a level playing field under a plan released by the Government yesterday, meaning faster broadband and cheaper phone calls.
The announcement by Communications Minister David Cunliffe finalised the split of Telecom into three operational divisions - a network unit, awholesale unit and a retail arm.
The changes - part of wider Government reforms aimed at improving competition in the telecommunications market - mean phone and internet companies can buy access to Telecom's network on the same commercial terms it sells services to its own retail arm.
Mr Cunliffe said the separation meant Telecom could no longer discriminate between its own business and competitors' networks when selling wholesale services.
"That means a truly level playing field," he said.
"It means that other players will be able to buy wholesale services, come up with new products for consumers and compete more effectively. That should mean lower prices and a wider range of services available."
Telecommunications Users Association chief executive Ernie Newman said the announcement was "predictable but definitely going in the right direction".
"What it's doing is transforming the industry from being essentially a one-company monopoly in some key services to being truly competitive across the board."
He expected a "major transformation" of the telecommunications industry in New Zealand over the next five years.
"The key here is telecommunications has become a pervasive part of people's lives.
"It's really about more choice and more value over time than simple cost reduction, and the best measure of the success of this will be the extent of new investors."
Scott Bartlett, chief executive of local internet service provider Orcon, said Telecom customers would from next year have access to "significantly faster broadband", cheaper national and international calls and "a much better customer experience" through alternative providers.
"This means broadband up to 12 times faster than Telecom's fastest broadband for consumers, it means cheaper prices, as second and third-tier carriers tend to have lower cost structures than the likes of Telecom, and it means we will finally see things like flat rate national and international calling enter the market," said Mr Bartlett.
The split would also provide a degree of transparency by which Telecom could be measured.
