KEY POINTS:
Telecom says final pricing for wholesale broadband services and local loop unbundling will be a crucial ingredient in the plan to build a $1.4 billion high-speed network.
The phone company yesterday announced a roll-out of high-speed broadband technology, including ADSL2+ and fibre to the street, as part of its plans for operational separation.
Chief executive Paul Reynolds said the company would be arguing very carefully to set the right prices for local loop unbundling - the core service provided by the soon-to-be created access network unit.
"Good value prices, but one that continues to encourage Telecom to invest because this type of investment is needed for us, for our wholesale customers, our retail customers and for New Zealand," said Reynolds. "So the pricing discussion is not over and we intend to engage in it very energetically over the coming weeks."
A draft outline of how the company would split into three units - retail, wholesale and network - was handed to the Government late on Thursday.
Originally the company had opposed the Government plan, describing it as unworkable and creating a $1 billion shortfall in meeting the Government's digital strategy goal to have broadband speeds of 5 Mbps delivered to 90 per cent of New Zealanders by 2010.
Yesterday, Reynolds said the company had undertaken a replanning process, part of which was looking at its annual investment strategy and determining how much could be pointed towards the IP (internet protocol) network.
"We're planning to create a world class next generation network and broadband footprint for New Zealand - it's as simple as that," he said.
The plan, which forms part of the legally binding commitment to the Government, will see Telecom build a next generation network capable of providing speeds of up to 20 Mbps to all towns with 500 or more phone lines.
Details of which areas would benefit from investment in fibre to the street were still being worked on and could not be revealed yesterday, said a company spokesperson.
Communications Minister David Cunliffe said the announcement signals the incumbent is facing the future and investing.
"I think that ups the ante on the rest of the sector to get in as well," he said. "The real challenge now is for the public and the sector to get their heads around the fact that a sea change is occurring."
Telecommunications research manager at IDC, Rosalie Nelson, said the announcement was a potential watershed for New Zealand.
"It really demonstrates the turn-around in approach," she said. "Telecom has been like many other incumbents globally in that it has had something of an approach of walking slowly backwards from the regulator."
Nelson said Telecom has an ageing copper network and internationally the driver to upgrade networks has in part been equipment manufacturers and vendors no longer supporting older technology.
The future
* Telecom has committed to spending $1.4 billion on building a next generation broadband network.
* The plan is to deliver broadband speeds of more than 10 Mbps to towns with 500 or more phone lines.
* The rollout forms part of its draft operational separation plan delivered to the Government on Thursday.
