KEY POINTS:
Why is Telecom separating?
In December the Government passed the Telecommunications Amendment Act that will split Telecom into three units: retail, network and wholesale.
The aim of the Act is to force Telecom to open its network to competitors - the basis for local loop unbundling.
The Government believes the Act will develop a more competitive market for broadband and cheaper, faster and more reliable service for consumers.
Will Telecom disappear and become three separate companies?
No. That ideas was floated but the new Act only requires an "operation split".
This means Telecom will stay as one company but have three operating units with strict "arms-length" separation.
Today's announcement gives some of the detail on who this will work.
Has this kind of split been done anywhere else in the world?
Yes. In 2005 British Telecom was accused of having a natural monopoly and an "enduring bottleneck" by UK industry regulator Ofcom.
Ofcom recommended BT will need regulation if competition is to thrive and suggests voluntary separation.
BT signed an undertaking to create Openreach, the network company, which opened for business the following year.
So what is today's announcement by communications minister David Cunliffe about?
The Telecommunications Amendment Act provides the broad framework for how Telecom will split its business into three parts - today's announcement gives more detail on what Telecom needs to do to comply with the Act.
The consultation document and any feedback received will help set the priorities and timetable for the Telecom split.
Is this the final plan?
No. We will see another six months of to-ing and fro-ing before the final plan is set in place for Telecom's split.
The public get four weeks to comment on today's draft plan from the communications minister David Cunliffe.
Following the finalisation of the Government's guidelines for Telecom's split, Telecom will release a draft plan of what it will be doing to implement the three-way break-up.
The public will also get to comment on Telecom's plans.
The final separation plan will be accepted by the Government before the end of the year.
How long will it take for consumers to notice changes?
Even though the plan will be in place by year end, Telecom will have between three and five years to implement the changes. In the words of Rachel Hunter: "It won't happen overnight, but it will happen."
So what are the key features of today's draft separation plan?
As outlined in the Telecommunications Amendment Act, Telecom will split into three parts:
* An access unit, a completely new unit within Telecom, responsible for Telecom's network and the implementation of local loop unbundling.
* A wholesale unit to sell Telecom's services to wholesale customers, for example, broadband services to other internet service providers (ISPs), and Telecom's retail operations.
* A retail unit to sell services like phone lines, mobile phone services and internet to business and home customers.
Each unit will have its own management and staffing who will not be able to work for other units.
Likewise, the management will report to the Telecom chief executive but not share information with the other units.
The access unit is required to be physically separate to the other parts of Telecom.
How do I get a copy of this document and comment?
All members of the public are able to view the consultation document on the Ministry for Economic Development website.
Any comments need to be sent to the Ministry of Economic Development before 5pm on April 27 either by email or mail to:
The Manager
Information Technology and Telecommunications Policy
Ministry of Economic Development
PO Box 1473
Wellington
- NZHERALD STAFF
