IOG Meeting Overview - March 2009

    Milestone Status Update

    The IOG considered the status of milestones due between 1 October 2008 and 31 December 2008, and received an update on matters outstanding from previous quarters.  The IOG also reviewed Telecom’s progress towards meeting 31 March 2009 milestones.

    The IOG noted that Telecom had reported that all December quarter milestones have been met. The IOG Support Office have independently reviewed evidence supplied by Telecom and noted that, at the date of the meeting, a number of issues remain outstanding.

    The significant outstanding matters from the December quarter were:

    Unmet Broadband Demand Schedule 1 Milestone 11.1 D
    Telecom advised that the Unmet Broadband Demand policy is well understood and known by all staff, however Chorus did not have a written Policy. The IOG asked the Support Office to write to Telecom to request a written policy within seven days (note the Policy was subsequently received and the Milestone Accepted as Met).

    UNS over Ethernet available to Telecom and Service Providers Schedule 1 Milestone 10.1 B
    The IOG noted that the Support Office received evidence of delivery of a product that Telecom has called HSNS over copper.  Telecom believe this product meets the same service description as UNS over Ethernet and provided the Support Office with a technical explanation of the products to support their argument. The IOG resolved to obtain independent technical advice to determine whether the Milestone has been complied with and to request that Telecom report back to the Support Office within 10 days. (Note that technical advice was obtained by the Support Office and the Support Office was able to conclude that HSNS over copper met the requirements of UNS over Ethernet)

    DSTN Schedule 1 16.1C
    The IOG noted previous reports received from the Support Office on the status of the DSTN milestone and specifically the failure to withdraw DSTN services for one customer prior to 31 December 2008. The IOG formally noted that they had resolved in December 2008 that this is a trivial breach, subject to reviewing Telecom’s report on the status of all other migrations. The IOG noted that Telecom have now reported on the full service withdrawal for all customers and have advised the Support Office that all required DSTN services have been withdrawn except for the one reported customer. The Support Office reported that they have reviewed the evidence provided and has some concerns with respect to some 14 other DSTN circuits.

    The IOG directed the Support office to discuss the matter with Telecom and conclude its investigations as soon as possible. The IOG also asked that a report on the status be provided to the IOG as soon as possible but no later than the next IOG meeting.

    The Support Office report also included updates on issues outstanding from the previous quarter 1 July to 30 September 2008.

    Compliance with Incentives Arrangements Clause 35 and 60
    The Support Office reported that it has updated the review of Telecom Incentive Arrangements to ensure that the actual Business Unit targets, that have now been set, comply with the requirements of clauses 35, 60 and Schedule 5. The Support Office found them to be compliant.

    Compliance Framework
    This has now been fully implemented. The IOG noted that Telecom have proposed moving the annual compliance certification date from 31 March 2009 to 30 June 2009.

    Telecom Investigation Procedures 
    These have been finalised on 23 February and a copy provided to the IOG. The procedures include guidelines for Telecom staff on how to determine as trivial or de minimis breach and as non-trivial breach.

    BUBA
    The IOG considered the status and requested that the Support Office write to Telecom requesting that it either provide a certification that it has met the soft and full launch requirements within 10 days or request that Telecom Internal Audit perform a review on behalf of the Support Office. (note that certification has been subsequently received).

    9.3 (e) (ii) Requirement to separate shared systems information
    The IOG raised an “issue of concern” with the Telecom Board (clause 79.1(j)) on 8 December 2008.  Telecom responded and advised they would present an update on current status to the 12 March 2009 IOG meeting. Accordingly Telecom provided a detailed update on the status of this milestone.

    Workforce Management Schedule 1 5.1E
    At the 2 December 2008 IOG meeting the IOG had requested that Chorus submit a proposal for new interim milestone plan no later than 31 January 2009. The Support Office reported that the proposal was received and new tracking milestone dates suggested. The IOG resolved that the proposed new tracking milestone plan be accepted.  The Support Office wrote to the Commission indicating that the IOG find the proposed tracking milestone plan dates to be acceptable.

    Milestone Conclusion
    The only outstanding milestone is DSTN (as described above).  The UCLL Backhaul soft and full launch has been delayed until 20 days after Chorus receives the first order (currently no customers have taken up the service).

    At Risk
    1 January – 31 March 2009

    The IOG reviewed the status of milestones due in the current quarter, 1 January to 31 March 2009, and noted that Telecom is reporting 2 Tracking Milestones at risk as outlined below. The General Manager Telecom Separation Office presented in detail on each milestone.

    The Milestones are:

    • B2B online Portal pilot for UCLL commences with at least one Service Provider in each pilot Schedule 1 5.1 I
    • B2B Online Portal pilot for BUBA/EUBA commences with at least one Service Provider in each pilot Schedule 1 8.1 G

    (Post meeting Telecom have reported that they have met both milestones, the Support Office have yet to review.)

    Operational Separation Update

    Telecom presented an Operational Separation Update paper.  The IOG noted the contents of the Operational Separation status is amber.  This is based on the current outlook between March and June 2009 where six out of 11 milestones have either red or amber status.  A number of milestones are highly complex and inter-dependent; however, as a result of the planning and mitigation strategies in place, the overall Separation status remains amber.

    The IOG requested that it be kept informed on the progress of these matters, agreeing that no further action was required at this stage in relation to these matters but the issues are to continue to be monitored by the Support Office and would be considered by the IOG again at its next meeting or sooner if necessary.

    The IOG also requested that the Support Office stay close to Shared Information System Compliance issue.

    Audit and Assurance Reviews

    There were no separate Audit and Assurance reviews completed for the period 1 October to 31 December 2008.

    Complaints and Honesty Box Summary

    Service provider complaints
    No complaints have been received by the IOG from Service Providers during the reporting period and there are no outstanding complaints from Service Providers to the IOG.

    Non-trivial breaches
    The IOG Support Office did not identify any non-trivial breaches during the reporting period.

    WAVE
    The WAVE (Wholesale Access Visibility Exclusion) system was introduced by Telecom Retail to report on any instance of Retail employees accessing Wholesale records on the core system, ICMS.  This removes the reliance on self reporting.

    With a total of 169 WAVE related submissions from September 2008 to January 2009 being processed in Dec/Jan, this resulted in a spike in the total number of Honesty Box submissions.

    Investigations – overview
    Excluding the addition of the WAVE submissions (above) and another one-off event of Wholesale Customer Survey responses (40) being entered in the Honesty Box; the normalised number of Honesty Box submissions has continued a decreasing trend with normalised submissions averaging 165 for the three months November 2008 to January 2009.

    The distribution of submissions across business units continues to be very constant with Telecom Retail accounting for 87% of the submissions for the six months August 2008 to January 2009; and Chorus, Technology and Shared Services, and Wholesale averaging just 3% each by comparison. 

    The majority of submissions continue to primarily involve unintentional viewing of Wholesale Customer Confidential Information, a circumstance that will continue until system separation of the core system (ICMS) occurs.  A typical example being a customer calling Telecom Retail with an enquiry and when their quoted phone number is looked up, it is found to be under the name of a Service Provider (this is treated as compliant behaviour).

    Submissions sent directly to the IOG, as opposed to the Business Units or Group Compliance, were just six between November and January and they were minor issues that would normally be raised to the Business Unit.

    Industry Perspective

    No external visitors were invited because of the volume of material to be considered at the March meeting.

    Key Performance Indicators (KPI's)

    Telecom has supplied KPI reporting for the period 31 October to 31 December 2008, covering four aspects of Customer Surveys, Staff Training in the Undertakings, PSTN Migration and Product Equivalence.

    Of note was the low percentage (39%) of new employees who had undergone Undertakings training, which was influenced by the Dec/Jan holiday period and Product Equivalence favouring Service Providers with 87% at or above equivalence vs Telecom at 73%.  Subsequent to the meeting the IOG wrote to Telecom requesting further information on these matters.

    Other Matters Considered

    Commerce Commission Protocol
    The IOG directed the Support Office to meet with the Commission to discuss the protocol.  Subsequently the meeting took place and recommendations around behavioural principles and reporting will be presented to the 1 May 2009 IOG meeting.

    Breach Definitions
    The IOG resolved to adopt three categories of behaviour, consistent with the Undertakings, being:

    1. Compliant behaviour – clearly not a breach
    2. Trivial or de minimis breach – a breach which is trifling (ie has no consequence).  Noting that the Undertakings specifically state that trivial or de minimis breaches are not a breach for the purposes of the Undertakings breach requirements
    3. Non-trivial breach – all other breaches

    The IOG noted that Telecom have chosen to use four categories being:

    1. Compliant behaviour
    2. Trivial
    3. Minor breach
    4. Material breach

    Telecom note that it is for the IOG to decide whether all breaches (whether minor or material), or only some of them, are “non-trivial” and therefore reportable to the Commerce Commission and the Board.

    The IOG requested that the Support Office convey to Telecom the potential confusion that could be caused by it adopting different breach classification categories to those used in the Undertakings.

    IOG Annual Report
    The IOG approved a draft IOG Annual Report 2009 structure and design, and agreed that the Annual Report for the reporting period to 30 June 2009 should target being published on 21 October 2009.  

    Service Provider communications
    The IOG agreed that the following should form the basis of communicating with Service Providers:

    • Individual Service Providers or other stakeholders will be invited to every IOG meeting.
    • The IOG will hold an annual event where all Service Providers can meet IOG members.
    • Email updates will be provided to Service Providers every six months covering:
      • a high level overview of key IOG findings over the past six months;
      • a reminder of the IOG’s complaints function; and  
      • contact details and a link to the IOG website.
    • The IOG website will include:
      • information about how the IOG monitors Telecom’s Undertakings compliance;
      • summary information on:
        • Telecom’s progress towards the milestones;
        • the outcome of any Service Provider complaints;
        • any non-trivial breaches - including information about steps taken by Telecom to rectify the breach;
        • information about equivalence trends; and
        • information on how to complain to the IOG.
    • IOG members and the Support Office will be available to meet with Service Providers on request.

    Telecom Wholesale Presentation
    Matt Crockett, CEO Telecom Wholesale, presented to the IOG on the Wholesale business and its approach to compliance with the Undertakings.

    IOG Evaluation
    The IOG agreed a process to evaluate their performance for the period ended 30 June 2009.

    Briefings from Telecom
    The IOG received a briefing from Telecom on the Shared Information Systems workstream and updates on Telecom’s compliance, Honesty Box and KPI processes.

    Post Meeting Communication
    The IOG wrote to the Commerce Commission and Telecom on 1 April 2009 outlining the key decisions made at the meeting.

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