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Summary of Changes to Telecommunications Information Disclosure Regime
Separate Financial Statements
- remove the requirement to disclose twice yearly financial statements relating to Telecom New Zealand Ltd;
- require Telecom to publish twice yearly, within three months of the end of the financial year, and within three months of the end of the first half of the financial year separate financial statements for its "local loop" and "other telecommunications services" businesses, and reconciling with the accounts of Telecom Corporation of New Zealand;
- require Telecom to prepare the financial statements on the basis of the avoidable cost allocation methodology and to comply with generally accepted accounting practice (except that there shall be no requirement to publish comparative data for the previous financial year in the first year that the regulations apply), with the separate businesses to be regarded as independent and unrelated companies;
- require the financial statements to include the following specified performance measures; accounting return on total assets (pre-tax), accounting return on equity (post-tax) and accounting rate of profit (post-tax);
- require Telecom to have audited the end of year financial statements;
- define the "local loop" as the provision, support and maintenance, including as relevant the necessary billing, sales, marketing, fault reporting and repair etc, of the following telecommunications services:
- telecommunications circuits, including telephone access circuits, between customers premises and the Telecom network;
- telecommunications switching between local telephone exchanges in the same local calling area including transmission between exchanges;
- telecommunications switching between local telephone exchanges and the long distance calls network access point in the local calling area;
- telecommunications value added services which are either primarily supported by local telephone exchanges or are provided as an integral component of telephone service, and for which there are no widely available competitive alternatives, including directories.
- require Telecom to disclose the full methodology used for preparing the financial statements (including any models used, all significant assumptions and estimates underlying the calculations, and the nature of, reasons for and financial impact of any changes in methodology);
- require Telecom to retain all data, including calculation models and associated documentation, for at least seven years.
- require Telecom to disclose the following items (costs, revenues, assets and liabilities) in its financial statements:
- all material transfer payments between the local loop and other telecommunications businesses, including:
- a detailed description of the good or service provided;
- the price and quantity and/or frequency of each good or service provided (both the unit price and the total amount paid per year would be required);
- the terms of the payment for each good or service provided;
- the period during which the good or service was provided.
- a range of specified items, including GAAP requirements;
- those items which form the basis of the financial performance measures; and
- all items that are of such a size, nature or incidence that their disclosure is necessary for an understanding of the business.
Kiwi Share Obligations
- require Telecom to disclose:
- any losses incurred in complying with the Kiwi Share obligations (KSOs), including details of: (i) the amount of the losses that are attributable to each component of the KSOs; and for each of these components, (ii) the amount of the losses that are attributable to individual customer groups;
- the way it recovers the KSO losses, including: (i) the sources (internally and externally) that Telecom recovered these losses from; (ii) the amounts that Telecom recovered from each of these sources; (iii) and the components of any charges (internal or external) that Telecom uses to recover these losses from.
- define the KSOs for costing purposes as covering all residential telephone lines, residential directory services, directory listings and emergency call centres supporting emergency telephone numbers;
- require the calculation of KSO costs to be in accordance with the following principles:
- The cost of the KSOs is the unavoidable net losses incurred by an efficient operator in providing the KSO-mandated services to the customers or groups of customers required.
- The net cost calculation must be based on objective, transparent, non-discriminatory and proportionate procedures and criteria.
- The net cost calculation should identify the cost, less revenues and associated benefits of providing services covered by the Kiwi Share obligations, to a customer or group of customers.
- When calculating net cost, a quantification of the intangible benefits of being New Zealand's only universal service provider, an implicit requirement of the KSOs, should be added on the benefit side;
- The net costs of emergency services, directory services, directory listings and the provision of special equipment or services must be identified separately;
- No account may be taken in calculating the net cost of Kiwi Share obligations of obligations which are outside its scope other than those specifically included.
- require Telecom to publish an audited calculation of its KSO costs twice yearly in conjunction with the publication of its financial statements under the financial information disclosure regime;
- require Telecom to disclose the full methodology used for calculating its KSO costs (including any models used);
- require Telecom to retain all data used to calculate KSO costs, including calculation models and associated documentation, for at least seven years;
Prescribed Services
- add Telecom's 0800 service to, and delete international calls from, the list of prescribed services;
Interconnection Agreements
- require Telecom to disclose along with interconnection agreements any operating agreements, side letters, and associated documentation which form a material part of such interconnection agreements;
Publication Requirements
- remove the requirement to publish any changes to prescribed services tariffs quarterly and to make the information available at Auckland, Wellington, and Christchurch offices;
- remove the requirement to publish prices and terms and conditions of supply at the end of September in each alternate year from 1990 on;
- require disclosure of the standard prices and terms and conditions of supply for prescribed services information (including a list of current prescribed services) by way of Telecom's List of Charges, with publication of any changes within one month of any change, and the information to be available for public inspection at Telecom's Head Office, and by publication on an internet web site;
- require disclosure of the principles or guidelines applied in determining whether or not to allow a discount, the maximum discount available to a customer, and in the case of discounts of 10 per cent or more, the principles or guidelines applied in allowing that discount, the actual discount allowed, and any variation of terms and conditions represented by the discount, to be available for inspection at Telecom's Head Office and by publication on an internet web site.
- require interconnection agreements and associated documentation to be published within 15 working days of completion and be available at Telecom's Head Office and on an Internet web site, and to remove the existing publication requirements;
- require publication of Telecom's financial statements and KSO information on an internet web site;
- require information provided on an internet web site to be maintained for three years.
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