Orcon: Comcom broadband decision fails consumers

Please find attached Orcon’s response to the Commerce Commission’s sub loop decision, which is available here:
http://www.comcom.govt.nz//MediaCentre/MediaReleases/200809/commercecommissionissuessubloopdec.aspx/

Media statement comcom – 1
June 18, 2009

Orcon: Comcom broadband decision fails consumers

New Zealand broadband consumers have been let down by the Commerce Commission determination announced today, according to Orcon CEO Scott Bartlett.

“The commission has failed to protect the interests of consumers, instead opting for a pricing structure that inevitably will lead to market domination by one player.

“The commission’s decision not only prices Telecom competitors out of the game it also lacks any alternatives for continued investment in local loop unbundling, taking us back to the ‘bad old days’.

“All of the improvements in broadband price, speed and service Kiwi consumers have benefited from during the past two years have been as a result of competition brought about by unbundling. Those days may be coming to an end.

“With this determination, any player would need between 25 and 30 per cent market share to engage in sub-loop unbundling. That’s about as much as the entire non-Telecom industry players combined.

“The determination is flawed.

“The service is prohibitively expensive – we simply cannot see any one player having the necessary fixed-line market share to deploy new infrastructure, certainly no single player does today.

“The commission admits the service is more expensive but says it will be paid for by high value services. This is a very big assumption, given the state of the economy and the pressure we are all seeing on prices.

“In determining prices, the commission has failed to factor in the Telecom “Loyalty” offers. These offers clearly demonstrate that Telecom’s costs aren’t as high as they say they are. Because Orcon led the unbundling of the local loop, the so-called loyalty offers have been structured in such a way as to prevent us from taking advantage of them. This is a blatant breach of the separation undertakings.

“Every player in the broadband market agrees that fibre to the home is the right solution eventually. But we’ve just had one of the rungs of the ladder of investment pulled from under us.”

ENDS

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