Separation day and what it means

Today is March 31, the day Telecom and the Government have for months had in mind as the day the operational separation of Telecom's into three divisions becomes official.
Pushing the time limit to its maximum, the Government has just today rubber-stamped Telecom's revised strategy for separation after previously knocking back a proposal based on the criticism of parties like InternetNZ.
InternetNZ is now celebrating separation day: "The plan appears to contain strengthened requirements on Telecom compared with the version released in February, and InternetNZ is pleased that the Minister and Telecom have been able to resolve a range of outstanding issues that prevented the earlier adoption of operational separation."
Telecom is positively glowing about it (publicly anyway).
So what does it all mean for you the broadband and phone user? Hopefully access to better priced, better quality services faster and from a larger number of alternative providers. That's the idea anyway.
Separation in theory means that Telecom's traditional stranglehold on the telecoms market is greatly reduced because Telecom's retail division will have access to Telecom Wholesale and the new access network group Chorus, on the same basis as every other player in the market.
Despite a wholesale regime already existing under the principles of separation for the last couple of years, Telecom has had an advantage over competitors buying services from it because its various divisions have been able to work in close cooperation and share all information.
That's no longer the case. Telecom employees now work in three separate divisions and, from a professional standpoint anyway, they'll be kept apart.
The Telecom group as a whole keeps investing in its network - through Chorus, which is pushing fibre out to 3600 roadside cabinets to improve broadband performance. Wholesale services are bought and provisioned the same way whether the order comes in from Telecom Retail in the next building or from Ihug or TelstraClear.
It also means that Telecom has to tidy up its act to become more competitive in the retail space as its rivals take advantage of the new rules of play. You may then see a more aggressive, innovative Telecom as a result. It has everything to lose here - the fat local calling market and the lion's share of broadband connections.
Telecom's share price has dropped 24 per cent ($2.3 billion in market value wiped off) in the last couple of years, since separation was announced. It can't afford to slide any further as competitors increase their interaction with Chorus and the wholesale group.
Operational separation is also a logistical nightmare and just separating out the computer systems alone will take years. A Telecom insider suggested to me that the total cost of separation for the company will be as much as $500 million.
So despite the positive spin, Telecom boss Paul Reynolds is putting on it, Telecom is in turmoil. There's also nervousness that it hasn't got a leadership team fully in place - the Aussie press hammered Telecom over this last week.
Still, separation is a major boost to Telecom's competitors and forces everyone to improve their performance which ultimately, over time, will deliver the results we as consumers want - better quality phone and internet services at cheaper prices.