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Consultation: Review of the TSO for local residential telephone service

Submissions closed at
5pm on Tuesday, 20 August 2013
Full discussion document PDF Document 877kb
Summary discussion document PDF Document 322kb


The Ministry of Business, Innovation and Employment (MBIE) is inviting written submissions on a discussion document that puts forward options for the future of the Telecommunications Service Obligations (TSO) for local residential service. The period for public submissions closes at 5pm on 20 August 2013.

The discussion document is available in two forms: a full, detailed version; and a shorter, easy-to-read version. Respondents should feel free to respond to either or both of these versions.

The discussion document begins by asking whether the TSO protections remain necessary and relevant, or if competition and government supply-side initiatives have rendered them redundant (by ensuring the supply of basic telecommunications services).

It finds that competition and government supply-side initiatives would not on their own ensure access for all residential customers to basic telecommunications services. As a result, it canvasses four options for future TSO protections:

  • The status quo
    • the TSO protections continue to apply only to homes that had active Telecom lines in December 2001;
    • Telecom continues to use its legacy network (the PSTN) to provide TSO services so they can support dial-up Internet and dial-up fax services; and
    • Telecom can continue to raise its monthly line rental every year in line with the Consumer Price Index or CPI.
  • Minimal change
    • the TSO protections would apply to all homes that are connected to the Chorus network in 2013;
    • Telecom would have the freedom to move away from the PSTN to provide TSO services over more efficient data networks, such as the RBI fixed wireless network or the XT mobile network;
    • Telecom can continue to raise its monthly line rental every year, but by an increment that better reflects cost than the CPI (for example, the Producers Price Index or PPI).
  • Medium change
    • as for minimum change option, but with TSO protections (such as the cap on monthly line rental charges) restricted to defined coverage areas (“TSO-Zones”) where protections are still considered necessary, such as in remote rural communities;
    • outside these areas, Telecom’s only remaining TSO obligation would be to offer free local calling, but it would be able to set a commercial price for monthly line rental;
  • Significant change
    • as for medium change option initially, but at a later point a tender is held for the supply of TSO services in the defined coverage areas, meaning Telecom and Chorus would no longer necessarily be the TSO providers.



A TSO is established through an agreement under the Telecommunications Act between the Crown and a TSO provider.

Currently there are two TSOs. Telecom (with support from Chorus) is the TSO Provider for the local residential telephone service, which includes charge-free local calling. Sprint International is the TSO Provider for the New Zealand relay service for deaf, hearing impaired and speech impaired people.

The discussion document concerns the TSO for local residential telephone service only.

Last updated 17 October 2013

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