Foreword
Universal telecommunications services for all New Zealanders are critical for enabling economic growth and the development of a knowledge-based economy, as well as providing essential social benefits and timely access to emergency services.
When the Government privatised Telecom in 1990, the crucial importance of local telephone service for New Zealand households was recognised through "Kiwi Share" Obligations (KSO) that Telecom agreed to at that time. The KSOs require Telecom to ensure the availability and affordability of basic telecommunications services for New Zealanders. The KSOs have enabled New Zealanders to retain a degree of control over a network that generations of public funding had developed. It is unlikely that the privatisation of our national telephone service business would have transpired without the assurance offered by the KSOs.
Aspects of the KSOs were re-negotiated during 2001 as part of the Government's review of the telecommunications regulatory environment. The Telecommunications Service Obligations (TSO) regulatory framework was introduced by the Telecommunications Act 2001 and the telecommunications services obligations in the original KSO were subsumed into the Local Service TSO Deed. The Local Service TSO reinforces the principles outlined in the original Kiwi Share agreement, by clarifying requirements, setting service standards and updating to reflect the changing needs of New Zealand society at that time.
What is included in "basic telecommunications services" has continued to evolve since the KSOs were first agreed. In 1990, the emphasis was on residential telephone voice call service. By 2001, it was recognised that dial-up internet calls were an important feature of the basic service. In 2007, it is pertinent to ask the question of whether there should be TSO requirements for broadband access.
The availability of advanced and affordable broadband services is widely considered to be an important enabler of economic growth and the development of a knowledge-based economy. Given New Zealand's high dependence on its rural sectors for economic growth and productivity improvements, the benefits of broadband to rural New Zealand could be very significant.
Digital Subscriber Line (DSL) is a technology that enables high speed digital data transmission over the copper wires of the local telephone access network. This is the most common broadband service in New Zealand, with DSL based broadband access service available to most households in urban areas.
In rural areas, however, the situation is less favourable. Approximately 50% of Telecom's rural telephone lines are currently capable of offering DSL broadband services to users, compared with at least 98% for urban telephone lines.
The local telephone access network was originally designed to support voice. Over the last decade some investment has been made by the telecommunications industry in access and backhaul infrastructure to support broadband provision. However, there is some evidence that reinvestment levels in key telecommunications access and backhaul infrastructure in New Zealand may be low, particularly in rural areas. Substantial investment either in fixed network or wireless based technologies will be required to extend broadband capability into rural areas.
A broadband TSO is one of several possible mechanisms for improving the availability of broadband access services in rural areas. The full range of options for meeting rural broadband needs is to be considered in the context of developing an overall New Zealand broadband framework to meet the connectivity requirements of the Digital Strategy refresh.
Telecommunications technology continues to evolve. As key network infrastructure reaches the end of its economic life it is expected that the service provider would replace the infrastructure where there is an ongoing requirement to supply service. Typically, new telecommunications infrastructure has considerably greater communications capacity. For example, where a multi-pair copper feeder cable is replaced with a fibre optic transmission system, the capacity would be substantially increased and the end run access loops shortened thereby substantially increasing the broadband capability.
It is therefore important that a TSO Provider has a commitment to renewing key network infrastructure over time, at a level that is consistent with international norms for telecommunications infrastructure life. Disappointing ratings in recent OECD country comparisons for broadband and telecommunications sector performance have provided firm evidence that New Zealand needs to increase investment in improving infrastructure for telecommunications services that we need to compete in the global market.
The review considers a range of possible changes to the Local Service TSO. However, the review specifically excludes changes to the unlimited local calling option that is an element of ordinary local telephone service for residential users.
The ideas and options outlined in this paper are intended to provide a basis to update and enhance the TSO framework so that it continues to be relevant to our changing telecommunications needs, and to ensure it is conducive to New Zealand progressing into the top quartile of OECD ratings in line with our Digital Strategy goals.
Your views are welcome on whether the draft proposals outlined in this paper will achieve the purpose of producing a revised TSO that is relevant in 2007 and going forward, by ensuring New Zealanders continue to have universal access to "basic" telecommunications services.
Hon David Cunliffe
Minister of Communications
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