UFB AND RBI NEW ZEALAND S INITIATIVES FOR NATIONWIDE BROADBAND DEPLOYMENT

Transcription

1 ITU REGULATOR S ROUNDTABLE MELBOURNE7 NOVEMBER 2011 UFB AND RBI NEW ZEALAND S INITIATIVES FOR NATIONWIDE BROADBAND DEPLOYMENT DR ROSS PATTERSON NEW ZEALAND COMMERCE COMMISSION

2 Ultrafast Broadband Initiative (UFB) UFB Objective To accelerate rollout of ultrafast broadband (100Mbps/50Mbps) p to 75% of New Zealanders over 10 years.

3 Ultrafast Broadband Initiative (UFB) Principles Make a significant contribution to economic growth Neither discourage nor substitute private sector investment Avoid entrenching the position, or lining i the pockets, of existing broadband network providers Avoid excessive infrastructure duplication Focus on building new infrastructure and not unduly preserving the legacy assets of the past Ensure affordable broadband services

4 Key Aspects of UFB Initiative Open access fibre infrastructure $1.5 billion of Government funding through Crown Fibre Holdings (CFH) alongside private sector coinvestors Creation of private Local Fibre Companies (LFC) 33 candidate areas Priority to schools, hospitals, and businesses over the first six years LFC s to provide Layer 1 and 2 services and are prohibited from entering the retail market Therefore, to participate in UFB, Telecom is required to structurally separate

5 Process for implementation of UFB September 2009 October 2009 July 2010 December 2010 May 2011 June July 2011 Overview of UFB Initiative Invitation to participate in partner selection process Amended Invitation to Participate Selection of Northpower (1 area) and Wel Networks (6 areas) Selection of Enable (2 areas) and Chorus (24 areas) Telecommunications Amendment Act 2011 passed Initiative commenced 1 November 2011 Open Access undertakings accepted by Ministeri 30 November 2011 Telecom Separation Day

6 Auckland UFB Candidate Areas Whangarei Candidate % of Waiheke Island Areas UFB Pukekohe, Waiuku Tauranga Whakatane Hamilton Rotorua Tokoroa Gisborne New Plymouth Taupo Napier Hastings Hawera Wanganui Palmerston North, Feilding Levin, Kapiti Masterton Nelson Greymouth Blenheim Rangiora Ashburton Christchurch Wellington Queenstown Timaru au Oamaru Dunedin UFB partnerships will cover all 33 candidate areas (75%of NZ population) by end 2019 Invercargill areas (75% of NZ population) by end 2019

7 Regulatory framework Invitation to Participate To be established by way of behavioural undertakings between the LFC and government by a Deed of Undertaking [Invitation To Participate (ITP), Appendix 4, 2] LFC must operate consistently with the open access guiding principles; [ITP 13.1(e)] LFC must abide by the equivalence and non-discrimination requirements. [ITP 13.1(a), 13.3] LFC must enable co-location at specified parts of the network [ITP 13.1(b)] Protected by Government s Share which entrenches open access obligations

8 UFB Undertakings LFCs to achieve non-discrimination in relation to relevant services EOI-capable build EOI supply of unbundled d layer 1 services from 1 January 2020 Arm s length dealing between LFC and UFB partner LFC must enter into undertakings to provide for: Rules for treatment of confidential access seeker information Disclosure of relevant information to the Commission Commission has a monitoring and enforcement role

9 Legislative Reforms Non-Discrimination Non- Discrimination Provision means that the service provider must not treat access seekers differently, or, where the service provider provides itself with a relevant service, must not treat itself differently from other access seekers, except to the extent that a particular difference in treatment is justified and does not harm, and is unlikely to harm, competition in any telecommunications market

10 Legislative Reforms - Equivalence Equivalence Provision means equivalence of supply of the service and access to the service provider s network so that third-party access seekers are treated in the same way to the service provider s own business operations, including in relation to pricing, procedures, operational support, supply of information and other relevant matters

11 Legislative reforms Information Disclosure The Commission must require LFCs to prepare p and disclose information annually about the costs and characteristics of relevant services and LFC fibre networks used to provide them The Commission may require (among other things) disclosure of financial i statements, t t contracts, t asset valuations, transactions with related parties, prices, transfer payments, terms and conditions, network capacity, costs and cost allocation methodologies, financial and nonfinancial performance measures The Commission may publish reports on and summaries of this information to increase the level of transparency and assist the Commission in its monitoring of compliance by Chorus with its undertaking

12 Legislative reforms Information Disclosure Undertakings must provide for the disclosure of information to the Commission to support the Commission s assessment of compliance with the undertakings Commission consultation paper proposes that compliance monitoring information should focus on areas where noncompliance would constitute a material breach Non discrimination in the supply of relevant services KPIs to test product and service level performance From 2015, explanation of how network will provide for equivalence of supply by 2020 Disclosure of related party transactions Policy governing access to information Commission will finalise its requirements following consultation

13 Legislative Reforms Other Details Unbundling of layer 1 point to point available immediately Unbundling of Layer 1 service on point to multipoint available only from 31 December 2019 The Commission is to be consulted by the Minister when varying and terminating an undertaking.

14 Demerger process August June August August September 2011 Telecom agreed in principle to split into a network company (Chorus2) and a retail company (ServCo) to participate in UFB Chorus chosen for 24 candidate areas Application to the High Court for initial orders Debt prospectus issued Scheme booklet released 26 October 2011 Shareholders approved demerger 30 November 2011 Separation day

15 Telecom Structural Separation Asset allocation plan 26 July 2011 Telecom submitted plan to the Minister for approval and published an overview of the Plan. The specifies how assets will be allocated between ServCo and dchorus2, how they will be used, and key terms of any intended sharing arrangements 30 August 2011 Minister i approved the Asset Allocation Plan Demerger must be in accordance with asset allocation plan

16 Telecom Structural Separation Asset sharing regime To be negotiated on Arms-length basis between Chorus and ServCo Must be provided to the Commission in writing no more than 10 working days after Separation Day Must be unlikely to harm competition in any telecommunications market Must ensure the protect ion of confidential commercial and customer information Commission can issue non-compliance notice Chorus must commit to a reasonable timetable for an end to asset sharing arrangements

17 Telecom Structural Separation Line of business restrictions No participation i or supply of retail services Commission to maintain register of non-retail users No services above layer 2 No end-to-end services Other requirements (copper network only) KPIs to measure equivalence and non-discrimination Quarterly customer surveys of performance Director certification of compliance Internally audit effectiveness of confidential information policies

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21 Telecom UFB Funding Model Total CFH funding of $929 million CFH equity securities: g g $464.5m Issued progressively as build progresses No voting rights No dividends before 2025 Right to dividends increases if uptake 20% or less CFH debt securities $464.5m Unsecured Non interest bearing redeemable between 2015 and 2036 Right to redeem increases if uptake 20% or less CFH Warrants: CFH can purchase additional shares between 2025 and 2036 if total p shareholder returns exceed 16%

22 UFB Technology GPON for mass market P2P for premium business and priority users ITU-T T G.984 standard split 1:24 (allowing 100Mbps downstream and 50Mbps upstream) Standard Optical Network Termination (ONT) configuration; 4 Ethernet ports and 2 legacy Voice (ATA) ports Dedicated service to a single premise (supplying speeds up to 10Gbps)

23 Products/pricing for home/retail users (GPON technology)

24 Products/pricing for corporate/enterprise end users (P2P technology)

25 Products/pricing for schools

26 Rural Broadband Initiative (RBI) RBI Objective Improve coverage of fast broadband to enable 80% of rural households and businesses to access services of 5Mbps or better and the remaining 20% able to achieve speeds of at least 1 Mbps Connect 97% of schools to fibre enabling speeds of at least 100Mbps with the remaining remote schools able to achieve speeds of at least 10Mbps

27 Rural Broadband Initiative (RBI) The RBI complements the UFB initiative and targets the remaining 25% of New Zealanders The RBI is provided d by way of a grant of $300M recognising i that t providing fast broadband to rural communities is commercially unattractive to investors yet vital to NZ s economy

28 Process for implementation of RBI September 2009 April 2010 August 2010 November 2010 February 2011 April July November 2011 Proposal for comment Expressions of interest National coverage proposals sought Telecom and Vodafone announce joint bid Government commences negotiations with Telecom/Vodafone Contract with Telecom and Vodafone signed RBI Rollout commences RBI Undertakings approved by Minister

29 2 Rural Broadband Initiative (RBI) 2.Rural

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33 Summary FTTN (2007) Undertaking for FTTN rollout of 3660 cabinets to provide minimum 10Mbps to 80% of all lines (all towns 500+) by Dec At Sept 2011, 3480 cabinets installed (80% coverage) UFB (2011) 100 Mbps to 75% of New Zealand over fibre over 10 years RBI (2011) Targets remaining 25% of NZ 80% at 5 Mbps or better 20% 1 Mbps 97% Schools 100 Mbps 3% Schools at 10 Mbps National Maori Broadband Working Group (Nga Pu Waea) established to National Maori Broadband Working Group (Nga Pu Waea) established to provide advice about Maori development opportunities associated with RBI and UFB