Telecommunications Service Obligations
The Telecommunications Service Obligations (TSO) regulatory framework established by the Telecommunications Act 2001 is the regulatory mechanism which enables services to be made available to supplement the range of services that are commercially available.
The government is currently reviewing the Local Service TSO for local residential telephone services. The TSO review is being undertaken as part of the government's regulatory review programme [link to Treasury website].
On 29 September 2009, Communications and Information Technology Minister Steven Joyce released a proposal for reform of the Local Service TSO [link to Beehive website] and for funding telecommunications development for public comment.
These proposals, along with the Government's Rural Broadband Initiative comprise the Government's Rural Telecommunications Strategy.
Submissions on the TSO Reform discussion document and the Government's Rural Broadband Initiative discussion document close at 5.00pm on Friday 30 October 2009.
Background
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 (KSOs) 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 Telecom 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 services obligations in the original KSO were subsumed into the Local Service TSO Deed which reinforces the principles outlined in the original Kiwi Share agreement by clarifying requirements (including recognition of dial-up Internet access) and setting service standards.
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 TSO framework has two essential features:
- enables the supply of certain telecommunications services which would otherwise not be made available commercially; and
- enables levying the telecommunications industry to recover the subsidisation cost for the supply of TSO services.
The TSO for local residential telephone service is based on Telecom, as TSO Provider, supplying ordinary telephone service under a specific set of conditions. This includes continuing to offer the option of free local calling for residential customers.
The Government's 2006 strategic review or "stocktake" of the telecommunications sector identified that accessibility of broadband services for users in rural areas could be adversely impacted by the regulatory reforms. The TSO review was signalled as one of a range of measures necessary to future-proof the regulatory regime to technology change and market dynamics. In particular, the Local Service TSO needs to be updated to reflect increasing expectations for telecommunications access services and to ensure the wider population can benefit from technology enhancements.
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