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Telecom Upgrade Will Impact ISP Business Case

Wireless & Broadband Forum

Telecom Upgrade Will Impact ISP Business Case

Thursday 22nd November 2007

The Wireless and Broadband Forum today commented that the forthcoming fibre–optic Internet backhaul upgrades to about 2000 urban street side cabinets over 2 years is a double edged sword for New Zealand broadband viability. This initiative reduces the length of the copper lines to homes and businesses, which enable higher Internet service delivery.

ISP’s who are investing in network exchange equipment need to look at their business case for the viability to provide fast ADSL2+ services on the Telecom copper network as the existing situation means that the LLU provisions may not apply to the fibre-optic upgrade.

"We see this as mostly positive as it delivers New Zealand an infrastructure that it can finally claim will be on par with many of the mature markets internationally. We’ve always been a cheerleader for upgrades to any broadband system in New Zealand that lets Kiwi’s climb the ladder for broadband viability,” said Steve Simms, President of the Wireless and Broadband Forum, "the Telecom investment gives an obvious advantage and we suspect that competitors may slow their rate of investment for infrastructure while they look at how this could affect their business plans”.

The Wireless and Broadband Forum are taking a more cautious approach when it comes to state of competition in the market. There are still many unknown factors yet to be determined which include the regulatory bodies position on such an investment and a competitors ability to access it. The current situation under the LLU (local loop unbundling) ruling means that ISP’s who are investing heavily in exchange equipment to service copper lines may have their effective coverage somewhat shrunk to hundreds of metres in comparison to many kilometers.

“Fibre to the street side cabinets is fantastic to help New Zealand propel forward in the Broadband rankings globally so we think that any ISP who is putting infrastructure investment in place needs to be realistic about the potential return for any high speed Internet investment,” adds Simms, “this upgrade could add longer return time frames for ISP’s that go down the track of a copper loop ‘only’ strategy. We hope the industry will work together to ensure all New Zealanders benefit from this type of fibre-optic upgrade with hopefully minimal Government intervention”.

Broadband innovation will come with many upgrades to broadband delivery services, which ultimately drive a positive economic outcome. New Zealand is still finding its feet in a maturing market and the ICT industry can help drive Internet Service Providers toward a fair playing field.


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