TeamTalk Mobile Radio - NZ's leading national two-way mobile radio network provider.

Transcription

1 Submission to the Ministry of Business, Innovation and Employment on the Review of the Telecommunications Service Obligations (TSO) for local residential telephone service. 20 August 2013.

2 TeamTalk Ltd. TeamTalk Ltd is a publically listed company on the New Zealand Stock Exchange. It comprises of the following businesses: TeamTalk Mobile Radio - NZ's leading national two-way mobile radio network provider. TeamTalk owns and operates a national digital microwave backbone as well as operating at more than 250 high site radio transmission facilities. It is the leading Mobile Radio Network Provider in NZ. BayCity Communications Ltd (trading as Farmside) - NZ's leading Rural Broadband specialist. Farmside is NZ's leading Direct to Home (DTH) satellite Internet provider. Farmside is rural New Zealand's leading telecommunications company, providing fast broadband via Satellite, RBI Fixed Wireless and Fixed Line solutions. CityLink - The pioneering Wellington based fibre provider and operator of NZ's main Internet Exchange Points (IXP). CityLink has Metropolitan Fibre Network Assets in Wellington and Auckland and has led the way in terms of urban fibre networking since the 1990 s. It plays a key role in the telecommunications sector by operating the Internet Exchange Points in Auckland, Wellington, Hamilton, Palmerston North and Christchurch. Araneo - An independent national wireless broadband and wireless wholesale network. Araneo focuses on providing rural and provincial wireless IP connectivity solutions from a customer s door to a retail service provider via TeamTalk Group transmission assets. It provides wholesale ethernet backhaul from remote and rural locations to over a dozen Retail Service Providers around the country. Across the four companies, the TeamTalk group is the 5 th highest contributor to the Telecommunications Development Levy for the period July June TeamTalk Ltd would like to thank the Ministry for the opportunity to make this brief submission. We would like to make it clear that we support Option 3: A contestable TSO in defined areas.

3 The Marketplace We concur with the Ministry that the telecommunications marketplace has changed dramatically since the TSO commenced in Competition has increased markedly at both an infrastructural level and also in the retail service provider space. In other areas: Voice over IP Telephony has entered the mainstream. Whilst it may be argued that this is not the case domestically, we assert this is certainly the case internationally. Voice Service Providers in NZ are increasingly offering not only local calls (that are included in the fixed monthly fee), but also national calling. There is a general trend moving away from per minute billing towards including the cost of calls in the monthly access fee. Facsimile functions have been combined into multifunction devices that handle digital scanning, printing and facsimile (and in some cases ). The nature of the Internet itself has progressed to information rich content that is largely unusable over low speed communications (i.e. dial up). The World Wide Web is no longer being designed to ensure good performance over dial up. Progress in the urban areas has created pressure on OTT providers (burglar alarms, medical alarms, EFTPOS etc) that rely on dial up to support transport over IP. This has a positive spillover effect nationally and eases the need to support Dial Up services significantly. We regard the need to support Interactive Television Decoders (specifically the pay- per- view capability) over dial up as a corner case and not worthy of further detailed consideration. Development of small cell technology combined with satellite backhaul has enabled improved telephone service in rural and remote areas. A notable example of this approach is Softbank (a leading provider in Japan). Call switching in the small cell has mitigated to an extent the issue of the latency of satellite networking on localised calls. Clustering of small cells in an area via local terrestrial network further mitigates this aspect. Managed Spectrum Parks in NZ have increased options that Wireless Service Providers have in delivering service in rural and remote areas. Social Inclusion is being increasingly met by access to the Internet rather than access to a phone line.

4 A Contestable TSO in Defined Areas. It is clear from the discussion document that the areas where a Contestable TSO may be held are the same areas that are currently considered by either Chorus or Telecom as uneconomic to serve. It is observed that both Chorus and Telecom have significant expectations to ensure that uptake of services in the UFB and RBI are a success. It is also observed that in a sense a precedent has already been set for this model. The notion of competitive patches was at the centre of the UFB process that saw the award of 33 candidate areas to four different providers. A contestable TSO in defined areas therefore is consistent in principle with this precedent. Recognising however the challenging economics to serve TSO Zones, we submit that it is desirable that the winning bidder should provide both the access (infrastructure) and services to these areas. In other words a bundled service offer in TSO Zones. Whilst what could be generalised as a competition at many levels policy works well for the majority of the country, we submit it is not a panacea. Both the government and the industry should be prepared to look at a different model in the hard to serve areas of the country that delivers both improved services to the consumer and delivers a reasonable return on investment to the provider. Whilst the bundled service approach might be seen by some as an about face on the existing policy framework and present some risks to the consumer, it is our view that this risk can be effectively managed by the competitive tendering process that ensures that the outcomes are no worse than the status quo both commercially and technically. We see no need to artificially delay the introduction of this model (e.g. to the date of completion of the RBI) any longer than it needs to be. The rationale is to ensure we do not artificially increase the disparity of service availability in rural/remote areas (comparative with Urban) any further than they already are. The affected parties (Chorus in particular) should remain focussed on the successful rollout of their element of the UFB and RBI. TSO-Zone Services In general our view is that we agree with defining TSO- zone services at a high level as per the definition in Option 3 of the discussion document. We agree in particular with the need to provide an improved level of service in terms of Internet Access, consistent with our position that social inclusion is addressed more adequately today by access to the Internet than it was in We don t see the need to include mobile services as part of the TSO- Zone services requirement but do note that the TSO provider would be free to offer any other services it wished... As mentioned prior due to the economic hard to serve aspects of the TSO- Zone, we don t support the necessity to provide wholesale access services in the TSO- zone.

5 Other Aspects: Defining the TSO-zone We submit that the Ministry resists the temptation to define the TSO- zone prior to engagement with the supply side of the marketplace. However, assuming Option 3 is the preferred approach, we suggest the process consists firstly of Chorus nominating areas (which may be subsets of local calling areas) that they consider to be uneconomic (or near uneconomic) to serve. That information would then be used to inform the supply side of the general areas that could be candidates for TSO- zones. The supply side would then submit their proposals - which would be function of supply meeting demand. These proposals would not necessarily be limited to areas defined by Chorus as uneconomic to serve. For Chorus to nominate uneconomic areas is an implicit acceptance of potentially having stranded assets, and would mitigate some of the issues identified. This nomination process could be complimented by a competition assessment by the Commerce Commission. Cost of Connections: The cost of new connections should be set to a maximum cost for a specific TSO- zone and may vary on a zone- by- zone or region- by- region basis. This cost would be negotiated as part of the competitive bid process. Internet Speeds: Internet Speeds should be set to a minimum and benchmarked in terms of performance against the lowest performing urban regulated equivalent i.e. UBA. White Pages. As consumer participation in the white pages is not mandatory, we do not see the need to make provision of physical a copy of the directory mandatory either however this is only applicable assuming an increased service level of access to The Internet is part of a revised TSO framework. 018 Directory Calls. We have a similar view on provision of a directory service to our position on provision of White Pages. Free Local Calling. We support this concept within a contested TSO- zone. The definition of this zone should take into account (but not be constrained by) existing local calling areas. Consumers may have the ability to selectively increase the size of their free local calling area by electing to pay an increased fixed monthly fee. We also would like to make it clear that Free Local Calling is not free. It is merely covered by the fixed monthly fee local calling does come at a cost.

6 In conclusion, TeamTalk would like to reiterate that we strongly support Contestable TSO Zones. These zones should include both infrastructure and service provision as a complete service to offset the economic challenges of service provision in rural and remote areas. Improved delivery of Internet access should be a part of a revised TSO framework. Technology has significantly progressed since 2001 to enable new innovative services using a combination of fixed wireless, satellite and cellular infrastructure. Allow Chorus to focus on the UFB and its part of the RBI. The rest of the industry is capable of servicing the rest of New Zealand. Yours Sincerely David Ware Managing Director TeamTalk Ltd.