User groups oppose Telecom request for relief

InternetNZ and TUANZ opposed to the Variation five request that was part of RBI negotiations

InternetNZ and TUANZ are united in opposing a request by Telecom for a fifth variation to its operational separation requirements.

Telecom made the request during negotiations with the government over the $285 million Rural Broadband Initiative, which it successfully bid for, in conjunction with Vodafone. That agreement was signed last week, and in a statement announcing the deal ICT Minister Steven Joyce mentioned the request – known as Variation five.

“Concerns about the clarity of Telecom’s proposed variation were raised by submitters. On that basis, I will be making a counter proposal with minor changes to Telecom to clarify the intent of the variation, which I expect to be responded to quickly,” Joyce says in the statement.

“The revised undertakings will ensure that operational separation is upheld while enabling Telecom to offer RBI prices for services provided over government subsidised RBI infrastructure.”

When Joyce made the announcement, those submissions - understood to be six in total - had not been made public. An MED spokesperson told Computerworld the submissions will not be posted on its website until after the Minister has made a counter proposal to Telecom and the telco has responded. The timeframe for that is “very soon”.

According to its operational separation undertakings, Telecom Wholesale is required to provide services at non-discriminatory prices. However, Telecom claims under the RBI it will have to do the opposite – provide a lower price to high priority users such as schools, hospitals, farms and marae in a specific geographic area. In other words, Telecom wants to ensure fibre services that are technically the same or similar to what it offers under the RBI won’t have to be offered on the same terms as those subsidised by the government.

When submissions to the request were first sought on March 29 InternetNZ and TUANZ were publically supportive of the Variation five request. However, in InternetNZ’s submission, which has been posted on the organisation's website, it recommends the Minister reject the request.

“From the information we have been given, it is not clear why a variation with blanket coverage is appropriate. It is necessary to look at each service and then assess what steps should be taken. We may well be supportive of the detail of the variation, if we are provided with a further draft and more detail,” the submission reads.

InternetNZ labels the information on the variation request “hard to follow, ambiguous, missing key information and disconnected from the covering explanatory letter”.

Among concerns raised in the InternetNZ submission is the issue of cell site backhaul pricing.

“The objective, as MED notes, is healthy competition in the interests of rural consumers, ensuring that Telecom cannot favour the Telecom and Vodafone retail divisions. However, reduced pricing for cell site backhaul would favour those two providers. A level playing field to encourage competition is needed from the rural end of the fibre backhaul. In other words competition is possible from the end point of the clear natural monopoly: the fibre backhaul,” the submission reads.

TUANZ CEO Paul Brislen says his organisation fully backs InternetNZ’s submission, and that TUANZ didn’t put forward its own submission because of a lack of resources. He says that when MED contacted him initially to talk about the Variation five request it appeared reasonable, but then InternetNZ explained “that there’s actually quite a lot more going on under the surface.”

“Ultimately Telecom’s asking to be let off a whole bunch of conditions that they agreed to, to avoid being broken up,” Brislen claims. “Here we are in a situation where they are agreeing to be broken up and asking to be let off things and asking for more money, it seems to be a step too far.”

He claims the RBI contract is “out of step with its own legislation”, because the Telecommunications Amendment Act has yet to be passed, and that will include clauses that will allow Vodafone and Telecom to work together on RBI.

“They’ve signed the contract before they’ve got the legal framework in place.” Brislen claims.

“I guess it’s chicken and egg. Do you need the legal framework in place or do you need the contract in place that then requires the legal framework, clearly they’ve chosen one way over the other.”

See also Industry coalition has alternative to UFB regulatory holiday

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Tags RBIinternetnzSteven JoyceTUANZ

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