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Govt asks Chorus to resubmit deed for copper network undertaking

Communications and Information Technology Minister Steven Joyce has declined to approve Chorus’ open access deed of undertaking for its copper network.

The minister’s office said he had decided the deed did not meet the requirements as set out in the amended Telecommunications Act 2001.

Mr Joyce wrote a letter to Telecom chief executive Paul Reynolds which outlined several issues with the deed.

In a statement released today, the minister said he had asked how the equivalence of inputs standard applies within Chorus, which would not have separate business units.

He said he had asked Chorus to improve transparency in the deed, particularly in relation to the disclosure of the information to the Commerce Commission.

In his letter to Telecom, the minister said the deed limited the commission’s information gathering powers to cases where an access seeker had lodged a complaint. 

“The Deed would better provide for transparency and enforcement of the non-discrimination and equivalence obligations if the Commission could require information regardless of whether a complaint has been made.”

Telecommunications Users Association of New Zealand (Tuanz) chief executive Paul Brislen said the minister’s concerns broadly agreed with Tuanz’s submission on the open access deeds of undertakings, particularly the equivalence of inputs concerns and the former position of Crown Fibre Holdings as de-facto regulator.

He said it was good to see the Ministry taking on board what the industry thought and putting it into place.

Mr Brislen said whatever deeds fibre providers came up with, with relation to the UFB build, needed to have the same kind of clarity and reporting to the Commerce Commission.

Mr Joyce said he had also asked Chorus to provide more transparency as to how the contract between Crown Fibre Holdings and Chorus would interact with the deed, as requested by many submitters.

Mr Brislen said that was still a big issue, since Chorus was apparently no longer defined as a Local Fibre Company, as set out in the Act, but were known as a partner. He said he had asked them to explain what that meat but had been told they could not because it was a forward looking statement.

“I’m still looking for clarity around just how they’re being funded, what the mechanism is and what relationship Chorus have with Crown Fibre, they’re not an LFC, they’re not governed by a lot of the government’s new telco act, they’re something else entirely.”

InternetNZ chief executive Vikram Kumar said the letter contained a lot of information and would require cross referencing between the Act, the deeds and the contract to get to the bottom of the implications of the letter.

He said the letter was “terrific.”

“It’s a signal that the Minister is taking open access more seriously than we first thought and that some of the serious deficiencies are going to be corrected.”

Telecom spokesman said the company was relaxed about resubmitting its deed and would characterise what the Minister had asked for as “drafting changes.”

“We’ll make the changes the Minister has asked for and resubmit in plenty of time for the deadline.”

The minister has asked Chorus to amend and resubmit its deed by October 21.

Equivalence of Inputs
IDC telecommunications research director Rosalie Nelson said Equivalence of Inputs limited the ability of network owners to discriminate against access seekers in favour of its own business - it effectively removes any possibility of discrimination.

"Equivalence of Inputs (EOI) requires network owners to provide regulated services to access seekers on the same terms and conditions as it would to its own business. This is more than pricing; the network owner must use the same processes, systems and provisioning arrangements to prevent any potential for discriminatory behavior. Equivalence requires the network owner to access its own services on the same terms and conditions as access seekers.  This ensures that the network owner is on a level playing field with competitors when selling Layer 2 services. Chorus is already subject to Equivalence under operational separation."

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