Telecom New Zealand's local loop to be unbundled next week

, posted: 28-Apr-2006 18:32

Rumours from Wellington - and that's all what they are at  the moment - say the New Zealand government is not just fed up with Telecom's slow progress when it comes to rolling out broadband in the country but will actually do something about it next week.

Telecommunications minister David Cunliffe was quoted on TV3's Campbell Live current affairs programme saying he has had "a gutsful" of Telecom's recalcitrance. Perhaps as a reflux to that, sources close to officials in the Beehive say that Cunliffe has speeded up his "industry stocktake", announced after Telecom said it had missed the wholesale broadband target by two-thirds and tried to worm its way out of that commitment by saying it only applied to new connections - something both the minister and the regulator, the Commerce Commission immediately denied, saying Telecom had committed itself to delivering one-third of all broadband connections minimum via wholesale or resale.

Here's the dynamite though: the sources say local loop unbundling is on the table when Cunliffe's stocktake is presented to the cabinet. A structural separation of Telecom's retail and wholesale operations is also included, but little else is known.

The local loop unbundling is apparently a firm decision, but the structural separation my be jettisoned if Telecom squeals too loudly. If that's the case, the new regulation may not be very effective for reining in Telecom, which has already rolled out its Next Generation Network, which is considered almost "unbundling proof" in the usual meaning of the term.

Next week will tell if the country can expect some long-awaited action to improve competition and services in telecommunications, an area in which New Zealand is now at the bottom of the OECD after over a decade of un-regulated privatised monopoly. There is also concern that the government and Telecom have secretly agreed to a largely ineffective LLU as a sop to public opinion, while compensating the incumbent telco through increased Telecommunications Servce Obligation (TSO) levies which competitors have to pay to subsidise "unprofitable" customers in remote areas. The TSO is levied as a part of a competing telco's revenue, and a succesful competitor will pay more that way, even though it doesn't have any landline connections like Vodafone.

Other related posts:
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Apropos that new Telecom logo

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