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Unbundling of the Local loop


Unbundling of the Local loop

Dear Sir,

I am amazed at how so many business groups and telecommunications entities are so "over the moon" at the latest nonsense perpetrated by the Commerce Commission in recommending the removing of Telecom's monopoly over the local copper wire network.

The hope of all is that it will stimulate the roll out of broadband services in New Zealand, provide the incentive for greater competition in all telecommunication enterprises and provide the consumer with a better deal than has been the perceived case to date.

The expectation is that by ending Telecom's monopoly on the local copper wire network it will allow the emergence of innovative, cheap, high-speed telecommunications services for both rural and urban customers.

Well, let me acquaint those detractors of Telecom with a few salient facts.

The only reason so many groups are seeking the unbundling is to gain a free or cheap ride into a very lucrative market. They all know that having to overlay the Telecom local loop network themselves would make the exercise prohibitively expensive.

This is made more so by the fact that many communities do not want more copper or fibre cables strung on power or telegraph poles obscuring their views and the so called entrepreneurs would be forced to place them underground.

This is extremely expensive unless it can be done in conjunction with other underground services work and this would eat into their anticipated rate of return and increase the period in which they would achieve their return on investment.

More importantly though, is the fact that Telecom is not the beneficiary of an "inheritance" local loop as many of the Telco's in the OECD study were or are, but they bought it. That is, in paying the New Zealand government the $4.2 billion purchase price paid by the original purchasors Bell South and Ameritech, they bought the Telecom Corporation of New Zealand lock, stock and barrel.

Apart from the "Kiwi Share", which guaranteed continued free local calling, there were no other strictures placed on the purchase. There was no reference to the future ownership of the local loop or the possibility it would, in effect by this decision, be nationalised or a "quasi-compulory purchase order" placed on Telecom by the Commerce Commision or government at artificially low prices, for what amounts to unrestricted access, for the benefit of other Telecommunication entities wishing to cash in on the market.

Telecom has every right to be incensed over this latest ruling. I am sure that if the likes of Watties, Fisher and Paykell or the major banking institutions were suddenly to be told that there are other competitors wishing to enter the New Zealand market but, because they do not have the canning factories, production lines or banking outlets, they must make those facilities available to each and every competitor at a price to be determined by the regulator.

This would go down like the preverbial "lead ballon".

Business is business and if the likes of TelstraClear can not stand the heat "stay out of the kitchen".

Mirek Marcanik - Wellington

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