Telecommunications Information Leaflet No. 2: Network Operator Designation for Telecommunications and Broadcasting Services

Please see Network Operator Designation for Telecommunications and Broadcasting Services for more up-to-date information.

Introduction

The objective of the New Zealand Government is efficient markets in telecommunications goods and services. To this end, the Government has adopted policies and promoted statutory measures to facilitate competitive entry into those markets and to maintain the conditions for effective competition trading.

In deregulating telecommunications the Government was concerned that all network operators should have the same rights of access to land resources to lay lines or cables. A statutory process was enacted to enable any operator, where necessary, to be declared a network operator and to enjoy special rights of access. This provision was later extended to operators of a broadcasting service transmitted by lines.

This leaflet outlines the process of network operator designation. It is issued for information purposes, and is not a substitute for the precise wording of section 2A of the Telecommunications Act 1987 (as amended, see below) or for professional legal advice.

Legislation

The relevant legislation for designation as a network operator is section 2A of the Telecommunications Act 1987 as inserted by section 4 of the Telecommunications Amendment Act 1988, and amended by section 86(2) of the Broadcasting Act 1989. This last amendment extended the scope of the designation to include providers of facilities for broadcasting transmitted by lines.

The purpose of an Order in Council declaring a person to be a network operator "is to facilitate entry into and competition in telecommunications markets", (section 2A(1) of the Telecommunications Act 1987, as amended). Later this provision was extended to cover persons providing broadcasting services by lines.

The most important statutory privilege provided by network operator status is the special rights of access to land, and in particular the road reserve, to lay or construct lines where this is required to commence and carry on a telecommunications business, or a broadcasting business. To gain these rights a prospective network operator has to apply to the Minister of Communications making a case in terms of section 2A(2) of the Act.

Section 2A(2) reads as follows:

Where the Minister is satisfied that declaration is necessary to enable a person to commence or carry on a business of providing -

(a) Facilities for telecommunications between 10 or more other persons, being facilities enabling at least 10 of those persons to communicate with each other: or

(b) Facilities for broadcasting to 500 or more other persons, being facilities that enable programmes to be transmitted along a line or lines to each of those persons,

the Minister shall make a recommendation under subsection (3) of this section.

If the Minister is satisfied that the application meets the criteria specified in the Act, a recommendation is made to the Governor-General, for an Order in Council, declaring the applicant to be a network operator. The Order in Council is published in the Gazette.

Section 2A(4) of the Act provides that where the Minister is satisfied that a network operator has ceased to provide facilities for telecommunications or cable broadcasting, the Minister shall make a recommendation under section 2A(5) of the Telecommunications Act. Under section 2A(5) the Governor-General may from time to time, on the recommendation of the Minister, by Order in Council published in the Gazette. revoke a declaration made under section 2A(3).

Under the Telecommunications Act 1987 (as amended by the Telecommunications Amendment Act 1988) the term network operator is used in the following sections:

• relating to the protection of networks from the connection of unauthorised equipment (section 6) and the rights to seek damages (section 20D) or injunctions (section 20C) in the event of the contravention of section 6.
• relating to the admissibility of evidence (telegrams, telexes and toll calls) (section 9).
• relating to the rights:
  1. of entry to any land to construct lines (section 11): i.e. to appeal to a District Court in the event of unreasonable refusal by a landowner to negotiate terms and conditions for entry;
  2. of entry with respect to existing lines and existing works (section 12);
  3. to remove trees (sections 13 and 14);
  4. to construct or repair lines on roads (section 15);
  5. to request payment for altering lines or works on a road (section 16);
  6. to construct and maintain telephone cabinets, etc on roads(section 18); and
• relating to the foregoing matters:
  1. monitoring for the purpose of maintaining telecommunications (section 10);
  2. avoiding interference with public traffic (section 17);
  3. compensation for injurious affection (section 19); and
  4. protection of title to lines and works (section 20).

Network operator status is not a prerequisite to providing either telecommunications or broadcasting services; that is, these services can be provided without declaration as a network operator. A person contemplating entering the telecommunications or broadcasting markets, therefore, is able to provide its services without network operator status, but, if special rights of access to land that network operator status provides are necessary, the operator may apply to the Minister making a case in terms of section 2A(2) of the Act.

Before making a recommendation under section 2A(2) to the Minister, the Ministry must be satisfied that network operator status is necessary. In this regard, the Minister must be satisfied that without the declaration granting network operator status the proposal would not proceed. Further, the Minister must be satisfied that the applicant's proposal will, in fact, place it in the business of providing the facilities contemplated in section 2A(2). Declaration as a network operator does not imply Government endorsement of the company's business proposal.

Applications

The processing of applications for designation as a network operator is managed by the Telecommunications Section of the Communications Division, Ministry of Commerce, which advises the Minister of Communications.

To assist the processing of applications, it is suggested that applications include:

• details of the actual business to be provided, including anticipated customer levels;
• a copy or details of the company's business plan, showing how the business development is to proceed;
• details of costings and financial planning regarding the development and implementation of the proposal; and
• details of geographic areas in which cable laying will be necessary, and
• the number of customers that will be reached by that cable.

The Minister should also be assured that any application for network operator is substantial. To this end any application should also include:

• a copy of the company's certificate of incorporation, (this is essential to establish that the company is a legal entity);
• a list of the company's managers, directors, and major shareholders; and
• a brief company history.

Assuming the information provided is complete, the Ministry of Commerce will prepare a report to the Minister. If the Minister is satisfied that it is necessary for the applicant to be designated a network operator, the Minister is required to recommend that the Governor-General, by Order in Council published in the Gazette, declare the applicant to be a network operator for the purposes of the Telecommunications Act. The Parliamentary Counsel Office prepares the draft Order in Council. Depending on this drafting process, the Ministry's objective is to have this whole process completed within six weeks of receiving the application and the full information requirements.

Once the necessary Order in Council has been made, it comes into force twenty-eight days later.

The Ministry is willing to answer any questions or to meet with prospective applicants. Inquiries about the process should be directed to:

The Manager
Telecommunications Policy
Communications Division
Ministry of Commerce
PO Box 1473
WELLINGTON
Telephone: 04-472 0030
Facsimile: 04-499 0797

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