NZ Telecom to split into three divisions

AUCKLAND – New Zealand’s government has approved the splitting of the private phone monopoly, Telecom NZ, into three divisions in the hopes of speeding up the installation broadband service across the country.

Telecommunications and ICT minister David Cunliffe announced Monday that a “robust plan” for the operational separation of the utility into network wholesale and retail units – all of which it will still own for the time being – has been given the green light.

“Telecom resubmitted its Amended Separation Plan. In accordance with the Telecommunications Act 2001, I have decided to approve the plan which is legally enforceable,” Cunliffe said in a statement.

He said the separation has been a priority for government and is one of a number of measures to deliver a more effective telecommunications sector.

The Commerce Commission is now responsible for ensuring implementation of the approved undertakings.

“Within one year we have seen this complicated and important process reach a successful conclusion. I am pleased that the undertakings can now be fully implemented as of our target separation day of 31 March,” Cunliffe said.

However, some outstanding issues remain, including the reporting lines for Telecom’s retail unit head. The minister is also able to change his determination at any time, requiring Telecom to provide a new Separation Plan.

Cunliffe’s statement said a significant number of drafting amendments have been made to Telecom’s undertakings since these were rejected in December.

These include reduced levels of group-based incentives for some executives. For wholesale division managers these have been restricted to no more than 30 per cent of total income. Such incentives have been a major sticking point in finalizing the separation plan.

Among other changes, milestones for next generation broadband network (NGN) rollout have been clarified.

Cunliffe also warns that work will be ongoing on the Telecommunications Service Obligations, the broadband pathway, the Digital Strategy refresh and several other regulatory matters.

Among the technical milestones agreed in the accepted plan are:

— No less than 84 per cent of the country’s phone lines will receive at least 10Mbps broadband by 2012

— By 30 June 2010, more than 1,500 distribution cabinets will be installed or equipped with ADSL2+ or equivalent DSL capability (for example, VDSL capability) in Telecom’s Zones 1,2 and 3 with DSLAMs installed and operational

— By 31 December 2010, more than 2,200 distribution cabinets will be installed or equipped with ADSL2+ or equivalent in Telecom’s Zones 1,2, and 3 with DSLAMs installed and operational

— By 31 December 2011, 99 per cent of lines in Telecom’s Zones 1, 2 & 3 (which equates to 80 per cent of existing PSTN lines) will be engineered to have a maximum line loss of 60db measured at 1,024Kbps at the external termination point

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