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Telecom’s statement illustrative of monopoly

Telecom’s statement illustrative of monopoly

Econet Wireless New Zealand (Econet) has observed that Telecom’s annual statement illustrates Telecom will continue behaving as a monopolist and that urgent regulation is required to ensure meaningful and effective structural separation that ensures real competition in the broadband market.

“It is entirely predictable and self-serving of Telecom to infer that regulation isn’t necessary to clarify the exact details of structural separation” says Tex Edwards, Chief Project Director, Econet.

“New Zealand is 20 years behind the UK’s telecommunications regulatory regime. Telecom will never mimic BT without a meaningful regulatory framework behind it,” said Edwards.

Econet insists it is absurd the Internet industry will be relying on the Telecommunications Carriers Forum (TCF) when that organisation has been one of the incumbents’ primary tools for obstructing competition since its inception. It has taken more than four years for the TCF not to agree a co-location code that does not even include the critical issue of price.

“It is interesting to note that the structural separation proposed by Telecom has no benefits in the form of co-location of cell sites or backhaul transmission for non – LLU carriers. Without regulatory enforcement of meaningful structural separation, Telecom will continue to do the minimum possible,” said Edwards.

Many of Telecom’s statements have confirmed what Econet has been saying for years in its regulatory submissions. Specifically:

• that the New Zealand consumer has been subsiding the Australian consumer through the failed AAPT venture;

• that Telecom will eventually be forced to build a W-CDMA ( 3GSM ) network; and importantly

• that the price of a new network (which it now estimates at “circa $300 million) is nothing like the minimum $1billion it has talked about in the past.

“The former Telecom Chairman finally acknowledged Telecom’s decision to go with CDMA was a massive blunder when he left the hot seat. Given the much higher cost structures of CDMA, Telecom has steadily capitulated the mobile market to Vodafone’s GSM monopoly. Vodafone now has 64% market share. There has been no competition, because Telecom has not been able to compete.

“Your perspective on the costs of building a new network change when the realisation strikes that you are no longer an incumbent trying to discourage new entrants, but a new entrant yourself.

“The Telecom strategy of confusion and delay has simply been polished and repackaged by the new Chairman, whose experience in maximising the returns of an airport monopoly is now being applied to telecommunications,” concluded Edwards.


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