IOG Meeting Overview - November 2009

    Milestone Status Update

    Issues outstanding from previous periods

    Noted that the following items outstanding from the 30 June 2009 Milestone Status report are now closed:

    • UBA Backhaul full launch (S1-9.1A): Incorporating UBA Backhaul soft launch (outstanding from 1 May 2009 Status report)
    • IOG reporting to the Board and the Commission complies with the reporting requirements of clause 79.1(k)(ii).

    Milestones and Undertakings - 1 April to 30 June 2009

    1. Noted that the following Milestones have been met for the quarter ending 30 September 2009:

    1. IP Interconnection plan published (cl 66.7)
    2. Retail to make available a new business grade managed network layer data service consuming HSNS (S1 15.1)
    3. UCLL Backhaul Soft Launch (S1 6.1)

    2. Noted that the following Milestones are pending closure for the quarter ending 30 September 2009 with no current cause for concern:

    1. Wholesale has launched and is using the Service Management Service Desk EOI building block (S1.8.1)
    2. Retail Voice external trial (S1.12.1).
    3. New UPC orders based on December 09 requirements (S1.10.1)

    3. Noted that the following Milestone is pending closure for the quarter ending 30 September 2009: 

    • December 09 requirements met for supply of BUBA/EUBA, HSNS and UNS over Ethernet (S1 8.1, 9.1, 10.1). Additional work is required to determine whether current arrangements comply. The IOG Support Office is discussing the matter with Telecom and the Commission.

    4. Noted that voluntary tracking milestone Workforce Management EOI Building Block completed for ANS unit was not met and it is also likely Telecom will miss the next voluntary milestone but has proposed alternative dates (as confirmed by Ms Tina Hammond).

    5. In respect of clause 66.4(b), noted that this clause required the TCF managed IP Interconnection Working Party to produce a final report to the TCF Board by 31 July 2009. This was not completed as the TCF Working Party ceased work in March 2009. The TCF have advised they plan to re-form the Working Party with a reduced scope. Wholesale have continued the process in the absence of the TCF Working Party. The fact that this clause of the Undertakings has not been strictly complied with was notified to the Commerce Commission in the IOG's regular post-meeting letter.

    Future Milestones - 1 July to 30 September 2009

    Noted that December 2009 has a number of very significant deliveries, setting the platform for moving towards full equivalence. A number of the projects are currently flagged at risk and Telecom reports the deadlines for delivery remain tight.

    Discussed that the next significant bottle-neck, following the December 2009 milestones, is around completion of the June 2010 milestones. Implementation risk may increase if Telecom fails to meet the December 2009 milestones because for some milestones they are contingent upon one another.

    Issues of Concern still outstanding

    Noted that Telecom is in the process of drafting a report which provides a status update on each outstanding Issue of Concern raised by the IOG. The IOG Support Office expects to receive this report shortly (letter was received on 16 November 2009).

     Variation

    The data-compliance variation has now been approved by the Minister. 

    Audit and Assurance Reviews

    Resolved that the control weaknesses noted by Telecom Internal Audit with respect to the processes to manage outsourcers, agents and contractors' compliance with the Undertakings, as required by clauses 96 and 97, be considered a trivial breach. Note that Telecom has underway actions to resolve these issues.

    Complaints and Honesty Box Summary

    Honesty Box (Whistleblowing)

    Noted there have been no ‘non-trivial' breaches determined from the Honesty Box submissions reviewed to date in the reporting period.

    Honesty Box Submissions

    Updating ‘The List'

    Noted that Telecom is carrying out a substantial review of The List, (ie. those staff able to access Wholesale and/or Chorus customer or commercial information for operational purposes) especially for those in the TT&SS Group, as a part of Telecom's work to maintain compliance with the requirements of clauses 90.1 and 91.1.

    Short-leads

    The IOG resolved that the overall occurrence of 909 non-compliant short-lead orders between 1 July 2008 and 30 June 2009 is a trivial or de minimis breach of Clause 88.2 due to:

    • the average of 76 non-compliant short-leads per month representing 0.0002% of the (average) 365,000 orders processed by Telecom Retail per month; and
    • no systemic intention to short-lead orders has been identified; and
    • Processes have been verified by the IOG Support Office to identify short-lead orders, auto-populate them into the Honesty Box, provide coaching / discipline to staff and to audit short-leads.

    It was further agreed that the IOG Support Office should annually monitor short-leads to confirm they have not become a non-trivial breach.

    Key Performance Indicators (KPI's)

    Noted that the Telecom KPI report for the quarter ending 30 September 2009 was not available at the time the meeting pack was prepared and a full report will, therefore, be sent post this meeting.

    Noted, in response to a Letter of Concern issued by the IOG, the (draft) percentage of new employees completing training in the Undertakings has risen from 43% to 56% in the quarter ending 30 September 2009; however this is still low and will continue to be closely monitored.

    Requested information on what Telecom's targets are for completion of training.

    Industry Perspective

    Mr Geoff Hunt and Ms Susie Stone provided the IOG with Kordia's perspectives on Telecom's compliance with the Undertakings.

    Other Matters Considered

    KPMG
    Paul Herrod and David Gates from KPMG provided background on the engagement and its scope, and provided an overview of their findings. There were no matters of significance.

    Commerce Commission
    Mr Ross Patterson and Ms Anita Mazzoleni spoke to the meeting.

    2010 IOG Assurance Plan
    Mr Chandler from Ernst & Young spoke to the meeting, summarising the draft Risk Assessment and Audit Plan.


    Mr Chandler advised that as part of developing the Plan, EY interviewed seven market participants (service providers and Telecom). He talked through key themes that emerged from those interviews, including that:


    1. The views of those interviewed were polarised by their views of the loyalty offers. However, interviewees were of the unanimous view that the loyalty decision proved the IOG's independence.
    2.  
      There is a range of understanding about the Undertakings and the IOG's role in the market-place. Interviewees are keen for the IOG to have a higher profile and they would like to receive more information from the IOG (particularly around whether Telecom will meet future milestones). Rectifying existing misunderstandings around the IOG's role will be important to maintaining the IOG's strong, independent brand.


    The IOG:


    1. Noted the Plan is very comprehensive and that it is difficult at this stage to determine whether the IOG Support Office has sufficient resourcing to carry out the Plan in-full, which will be largely dependent on Telecom's compliance with December 2009 milestones and any unexpected issues that may arise.

    2. Noted that monitoring enforceable milestone compliance is the most important part of the Plan.

    3. Agreed that a final Plan will be circulated for approval via circular resolution.

    Compliance Update
    Ms Vanessa Oakley, Telecom's Director of Regulation, Competition and Litigation, spoke to meeting:


    1. Advised that in respect of Undertakings training, Telecom is monitoring and reporting to the Executive on a monthly basis on improvements to training levels. On a more positive note, there has been a 98% completion rate of refresher training.

    2. Provided an update on issues identified in respect of clause 96 and The List. While it is necessary for a large number of Telecom employees to remain on The List (due to the need for TT&SS staff to have access to systems), the level of information able to be accessed by each individual has been significantly reduced, further limiting access to that information which an individual needs to do their job.

    3. Discussed learnings from the loyalty process.
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