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Telecom faces limited competition in wholesale broadband

Telecom faces limited competition in wholesale broadband, regulator says

By Paul McBeth

Sept. 2 (BusinessDesk) – Telecom Corp. faces limited competition in wholesale broadband markets and its cabinets that are used to provide fast broadband over the ageing copper network will continue to be monitored by the antitrust regulator.

The Commerce Commission has ruled Telecom’s unbundled bitstream access service, which lets rival telecommunications companies differentiate their products from Telecom’s retail offerings, doesn’t have strong competitors and will continue to be regulated nationwide.

“In the wholesale market, there is no effective competition for the more than 50% of end user lines served from cabinets,” Telecommunications Commissioner Ross Patterson said in a statement.

“We concluded that the unavailability of this service has resulted in limited competition in the broadband access market. As a result, the terms of the STD (Standard Terms Determination) will continue to apply across all areas in New Zealand,” he said.

That means Chorus will still be obligated to meet the existing terms, even after Telecom carves itself up in a bid to tap tax-payer funds to build a nationwide broadband network and shed some of its regulatory burden.

The competition review will be the regulator’s last for the next three years, though the commission will continue to monitor competition in the market.

Patterson said the lack of competition in the wholesale market filtered through to the retail end, as “access seekers cannot provide voice services over cabinetised lines using their own exchange-based equipment in conjunction with UBA from Telecom.”

Last month, the regulator said it wanted Telecom to offer slightly lower wholesale prices on its UBA service, which will be locked for three years as a result of legislation to enable the phone company’s structural separation.

Shares in Telecom fell 1.6% to $2.50 in trading yesterday, and have gained 17% this year.


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