Stakeholders get say if Telecom splits

Communications and IT Minister Steven Joyce. Photo / Sarah Ivey

Telco players are being given the chance to shape the regulation of Telecom should it split in two.

Communications and IT Minister Steven Joyce said the potential split-up of Telecom had repercussions for the regulation of the existing copper network, Telecom's current operational separation undertakings and the telecommunications service obligation (TSO), which ensures the universal availability of phone services.

He has sought feedback on these issues in a discussion document prepared by the Ministry of Economic Development.

"Should Telecom decide to structurally separate, any changes to the regulatory regime the Government may adopt would be robust and well-informed and tested by the industry and key stakeholders," said Joyce.

The ministry said that even with the split-up of Telecom there was still likely to be limited competition at the network level.

"Regulation is likely to remain necessary to avoid monopoly pricing, unless competition from alternative networks emerges," it said.

InternetNZ's Richard Wood said the organisation had always been in favour of Telecom's structural separation.

"If it does happen then we want to see the right environment going into place," he said.

"We are certainly very much welcoming this process because we were obviously concerned at the lack of public discussion."

Telecommunications Users Association chief executive Ernie Newman said issuing the discussion document was a big step.

"It's quite clear they believe the voluntary structural separation of Telecom is something that is a serious likelihood and that is good news for everyone. On the face of it, it's a comprehensive and workmanlike paper that identifies all the correct issues."

Last week Telecom made the shortlist of 14 companies in the running to roll out the Government-backed ultra-fast broadband scheme in urban areas. In order to participate, Telecom would need to demerge, creating two standalone companies - a network business, Chorus2, and a retail business, ServiceTel.

In addition, its bid for a nationwide ultra-fast broadband roll-out proposes the bundling of the separate rural broadband initiative and regulatory and legislative change.

Simon Allen, chairman of the Government's investment vehicle Crown Fibre Holdings, said last week it was only mandated to consider the fibre initiative and any issues for Telecom outside that were complexities the company needed to deal with.

Telecom chief executive Paul Reynolds said yesterday that finding a broadband solution that met the Government's objectives while being financially sustainable was "challenging".

Telecom shares closed steady at $2.06 yesterday.