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BDFL - Memuneh
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# 123471 9-Jul-2013 09:10
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Just received:

TSO discussion document released

Communications and Information Technology Minister Amy Adams has today released a discussion document on possible changes to the Telecommunications Service Obligations (TSO).

The TSO regulatory framework established under the Telecommunications Act 2001 provides for basic telecommunications services to be available and affordable. Under the Act, a review of the TSO is required to take place before the end of 2013.

Ms Adams says the telecommunications market has changed dramatically since the TSO was introduced in 2001.

“Improved competition and well-targeted supply side initiatives like the Ultra-Fast Broadband and Rural Broadband programmes mean most consumers now have a wider choice of providers and services.

“Given the changing telecommunication scene, I am now seeking public feedback on the extent to which the TSO should be modernised and reshaped to meet the current environment and likely future changes in the sector.”

Four broad options are outlined in the discussion document for future TSO provisions. This includes the status quo remaining, as well as three options for change – minimal, medium and significant.

The full discussion document and a summary version are available on the Ministry of Business, Innovation and Employment website at:

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BDFL - Memuneh
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  # 851350 9-Jul-2013 09:16
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This is Hon Amy Adams speech this morning at InternetNZ Nethui 2013 in which she expands a bit more on the TSO review:


All this is driven by the speed and pervasiveness of communications, the ever increasing power of computers, the new ways we think about accessing services, and the explosion of new applications covering every aspect of our lives and businesses.

At the same time we are seeing whole new industries grow – cloud computing, software as a service, remote sensing, mobile applications, big data analytics, game development, and digital effects.

As well as new industries, digital technology is driving change and value creation in existing industries. For example: precision irrigation in agriculture; robotics in manufacturing; driverless trucks in Australian mining; and the increasing viability for medical treatment to be customised to your home.

This changing landscape means that nothing stands still, including the way we regulate the physical, and use aspects of the digital world.
This is one of the reasons why earlier this year, I announced that two scheduled reviews of the regulatory framework for telecommunications services would begin this year.

The first is a review of the Telecommunications Service Obligations required under section 101A of the Telecommunications Act 2001. The second is a wider review of the policy framework for regulating telecommunications services in New Zealand.

The first of those reviews is now ready to be advanced to the next step. This morning at NetHui I am announcing the release of a discussion document on possible changes to the local residential Telecommunications Services Obligations.

Under the TSO, Telecom is required to continue to provide voice and dial-up data services to all residential premises that had an active Telecom line in December 2001.

Telecom must also keep the line rental for those services, in both urban and rural New Zealand, at or below the 1989 price in real terms, which equates to the $51 per month many of us pay today.

And of course Telecom must offer people a calling option under which local calls are unmetered – the so-called free local calling option which almost all of us use.

The TSO requirements as they stand create some issues.

The current TSO does not allow Telecom to use the most cost-effective and modern technology to provide TSO services, effectively locking in copper and potentially delaying the availability of cheaper and more innovative services.

The TSO arrangements – particularly free local calling combined with a relatively high monthly rental charge – may have slowed the progress and uptake of newer services. We may be seeing higher prices, less innovation and fewer new products compared with other countries that do not have these settings.

Let me give you some further context about why a review is needed.

In 2001, the year the TSO was agreed to, only 37 per cent of New Zealand households had access to the internet.

And when I talk about having access to the internet, few of those connections would be today recognised as broadband quality.

As I highlighted earlier, the latest figures now show that 80 per cent of New Zealand households now have access to the internet. The vast majority of these connections are broadband.

In much of the country, we now have better mobile coverage and better mobile services, people can watch the news while on the bus, share photos on social media sites, or send unlimited text messages as part of their telecommunications bundle.

Many people are now moving away from having home landlines at all, and others are accessing VOIP equivalents in preference to the traditional copper service.

The driver of this change is an increasingly competitive market and well-targeted supply-side initiatives, which together, are delivering affordable, reliable telecommunications services to a large number of New Zealanders.

The implication of this change for the TSO is the issue that the Government’s discussion document explores.

It asks whether, given market developments, we continue to need the protections of the TSO, or whether having them may be unjustifiably stifling innovation, and if it is needed, whether it needs updating.

There are several key aspects that need to be considered.

First, competition has developed throughout the telecommunications market. In 2001, Telecom had the lion’s share of all areas of the market, particularly fixed voice and Internet access.

Today, Telecom is a retail service provider amongst many others, with less than 50 per cent market share of retail broadband connections and it is facing increasing competition for voice services.

Second, the Government has introduced well targeted supply-side initiatives like the Ultra-Fast Broadband Initiative and the Rural Broadband Initiative, to provide access to faster broadband for the majority of New Zealanders.

And thirdly, as I have previously highlighted, technology and the way we use telecommunications is changing rapidly, and this change is expected to accelerate.

The current TSO was established based on PSTN fixed-line calling being our primary mode of communication. But now we have, as I have mentioned, more than one mobile phone for every New Zealander and much higher functioning internet services.

Similarly, the minimum speed requirements for internet access in the TSO are measured in kilobits per second – 14.4 kilobits for 95 per cent of lines and 9.6 kilobits for 99 per cent of lines. Compare that to today where fibre offers peak speeds of at least 100 Mbps.

The TSO can’t be frozen in time. The underlying principles for the review are to ensure that any future TSO provisions are technology-neutral, focusing on the services people want to have available, rather than dictating the way those services must be provided, and to ensure that the framework promotes the development of competitive pricing and services rather than acting as a barrier to innovation.

Against this background, one of the first things the discussion document does is to consider what might happen if all the TSO protections were removed and not replaced. This allows us to see what potential problems would still remain, and to tailor any future TSO protections to these residual problems.

The discussion document concludes that, if there were no TSO protections at all, it is likely that consumers in isolated smaller communities and rural areas could face reduced service availability and quality, or higher prices, or both; and that free-local calling could come with conditions, such as a cap on use.

Because of these residual problems, the discussion paper outlines four broad options for future TSO protections.

These options include the status quo, and three options for change – minimal, medium and significant.

Other possible changes canvassed in the discussion paper include whether Telecom should continue to be required to provide a copy of the White Pages telephone directory to every household covered by the TSO.

A recent opt-in pilot in Auckland suggested that many people are comfortable with finding this information online, and as a result, about 95% fewer phone books will be distributed to Auckland households this year.

I want to make it clear, though, that no changes are proposed to Telecom’s obligation to provide residential customers with free 111 calling, a free directory listing or deaf relay obligations under the TSO.

There are also no plans to remove the requirement that an option to have unmetered local calling is offered to consumers.

Consultation on the discussion document will close on Tuesday 20 August, and I am looking forward to hearing your views on the future options.

As I mentioned earlier, the second review we are commencing is a wider assessment of the policy framework for regulating telecommunications services in New Zealand under section 157AA of the Act.

Throughout the establishment of the Government’s UFB and RBI initiatives, user groups were clear in their calls for the need for fibre connectivity as a priority.

The Government is committed to world-class fibre infrastructure, and the long-term gains it will bring. Increased certainty around the transition path from copper to fibre will promote development of retail fibre products, boosting the ability of New Zealand homes, businesses, schools and hospitals to maximise the transformative potential of these technologies.

The first phase of this review will look at whether the existing pricing framework we have in place is properly calibrated for the once in several generations transition period, as we shift from the legacy copper to the new fibre network, with the significant gains in speed, quality and reliability this will deliver for users.

Investing in a new fixed access network is challenging. To make sure the new services are ready when people are going to need and value them, you have to start building ahead of demand, which is expensive and risky.

If you do not have the right regulatory settings in place to enable infrastructure providers to invest in new replacement technology, there is a real risk that consumers will not have access to it, or not have access to it for a long time.

Over the past few months I have had a range of productive discussions with a number of stakeholder groups around these issues which have been very useful.

It is my intention to issue a discussion document on the first phase of the telecommunications regulatory review in the next month or so, and I look forward to your feedback on the issues it will raise.

That document will focus primarily on how the regulatory framework can best provide certainty of costs, at the appropriate levels, over the transition period from now until the fibre build is complete. Subsequent phases of the review to be undertaken in the years ahead will consider the longer term aspects of telecommunications regulation.

In the meantime of course the rollout of the UFB and RBI programmes continues at pace and we are looking forward to the auction of the 700Mhz spectrum later in the year.

So, there is a lot going on across this vibrant and successful New Zealand sector. We are living in a period of rapid change and change will always present us with challenges, but even more excitingly with opportunities that are limited only by our imaginations.

Can I once again thank InternetNZ for organising this event and wish you well for the remainder of your conference.

Thank you.

BDFL - Memuneh
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  # 851446 9-Jul-2013 11:34
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From Telecom:

Telecom has welcomed the release by Communications and Information Technology Minister, Amy Adams, of a discussion document on possible changes to the Telecommunications Service Obligations (TSO).

We support the proposed review of the TSO framework, and believe that it is timely to assess whether there is a continuing need for a TSO in all parts of the country. We believe the current copper-based TSO should be updated to allow TSO services to be delivered over other available technologies such as mobile and fibre.  

The telecommunications landscape has changed enormously in recent years, driven by extended take-up and coverage of fixed and mobile access networks.  It makes sense for regulation to better reflect this new technological landscape.

Telecom recognises the critical role that fixed line telecommunications services play in keeping New Zealanders connected and is proud to be the TSO provider of residential access services to New Zealand. We are committed to continuing to provide essential telecommunications services to communities and businesses across New Zealand.

We will respond to the discussion paper and look forward to further development of the Government’s TSO policy.

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