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  Reply # 227115 21-Jun-2009 11:46 Send private message

+1 BABAGOI

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  Reply # 227152 21-Jun-2009 16:05 Send private message

Too bad Telecom has already built a bridge in the only usable place.

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  Reply # 227155 21-Jun-2009 16:26 Send private message

Screeb and others, just take a breath,  Telecom would be negligent to not have invested the money to move their current network to FTTN, honestly what options to increase speed to they have? If you look back over the comments by both Orcon and Voda, after taking a good look at the options they too have agreed, there is no choice to but to move to FTTN, which eventually will allow easier progress to FTTH.

The real complaint from Orcon and Voda (and quite rightly in my view) is that the cost of backhaul is prohibative if you only have a small number of subs in any specific node, and I agree, purhaps they (ComCom) need to re think how backhaul is charged, ie as part and reflection of number of LLU subscribers rather than per cabinet/link. I am sure the ComCom have concidered this but are waiting to see how hard the oppostion hollars.

Reality is though, the 1-2k for backhaul is not un realistic or dissimilar to the cost of renting a GigE ptp link around any city environ. But in a commercial situation its justified to provide a corporate of many employies with access to remote servers and offices etc, this simply does not add up when trying to serve two subscribers out in the burbs, hence creates a barrier to access.

Edit, I as someone who lives 3.5km from our local exchange would be very annoyed if I was limited to my current connection limitations simply to allow competition, especailly when a perfectly profitably wholesale solution exists.

Cyril

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  Reply # 227165 21-Jun-2009 17:18 Send private message

The reality here is that wholesaling of Telecom services will be the future for many ISP's.

It's simply not cost effective for ISP's to place their equipment in every cabinet, whereas their currently does exist a business model for placing the equipment at an exchange covering a larger number of customers.

I suspect very soon we'll see ISP's agreeing to share subloop gear - a single DSLAM offering VDSL/ADSL2+ that can handle multiple ISP's. A single ISP putting a DSLAM in a cabinet to service 50 customers will be unprofitabe but that's hardly Telecom's problem now is it?

ISP's sharing equipment just like Vodafone opening up their red network is exactly what we'll see happening.


To be honest I'm sick of ISP's attacking Telecom. I am no Telecom fanboy and have no involvement in Telecom other than having owned shares in the past but the constant attacks annoy me. I don't see any other telco's investing anywhere near what Telecom are investing in their NGN which WILL deliver most customers exceptionally good broadband.


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  Reply # 227232 21-Jun-2009 23:50 Send private message




To be honest I'm sick of ISP's attacking Telecom. I am no Telecom fanboy and have no involvement in Telecom other than having owned shares in the past but the constant attacks annoy me. I don't see any other telco's investing anywhere near what Telecom are investing in their NGN which WILL deliver most customers exceptionally good broadband.





 


So am I. The fact is that when the same ISPs were lobbying government a few years ago to force telecom to unbundle, they promised cheaper faster broadband for their customers. Now that it has been unbundled, this simply hasn't occurred. Infact Orcon have doubled their bandwidth charges. The main reason they wanted it unbundled, was so their made bigger margins. SLingshot was one of the biggest lobbists, however they have gone very silent since unbundling occurred.


I also don't like the way orcon are trying to use the public (who aren't as informed, and don't have all the facts) to put pressure on the government and commerce commission.


Orcon have also used some pretty shallow argurements. One of the worst is telecoms shareprice, which they said jumped after the commerce commission was announced. Well Orcon, 10 cents is hardly a jump , and the next day the shareprice lost much of that  previous gain, so that argument is moot. Also the financial commentator on TVNZ  said the Comcoms decision was expected as a fair one by the market. It is nothing compared to what happened after the 'unbundling' was announced a few years ago, which caused telecoms shared price to nose dive, and it has never recovered, it is still near it's all time lows, which shows that investors can't see a quick turn around in Telecoms profits.


The fact is that Orcon and Vodafone, and other ISPs would have complained no matter what the comcoms decision was, as they are like an opposition party in parliment, they will also argue for better conditions.


What I would like to ask Vodafone and Orcon, is why don't they setup their own cabinets and install cable from the unbundled gear in the exchanges, to those cabinets. They will probably say it is too expensive, and cost prohibative. But isn't that exactly what telecom have done, by seting up these cabinets. Why should telecom be penalised for investing in NZs infrastructure, and being forced to subsidise other ISPs for the full cost. Vodafone is flush with cash, so if they are serious about fixed line broadband and being a long term player in NZs market, they should be investing in their own cabinets and cables, or their own alternative technologies.


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  Reply # 227328 22-Jun-2009 11:59 Send private message


So am I. The fact is that when the same ISPs were lobbying government a few years ago to force telecom to unbundle, they promised cheaper faster broadband for their customers. Now that it has been unbundled, this simply hasn't occurred. Infact Orcon have doubled their bandwidth charges. The main reason they wanted it unbundled, was so their made bigger margins. SLingshot was one of the biggest lobbists, however they have gone very silent since unbundling occurred.


I have to disagree with you here. While unbundling obviously did need to be a profitable exercise to make it worthwhile and that was/is our primary 'motive' for unbundling, prices have come down as a result, data caps have increased and service performance has improved.

If you check out the commissions latest quarterly broadband performance report there is extensive commentary on the performance improvements that have been made in the past 18 months. You can see all their research here: http://www.comcom.govt.nz/IndustryRegulation/Telecommunications/MonitoringandReporting/DecisionsList.aspx#962

In addition we have also seen the introduction of things like 'all you can eat' calling services (e.g. our international add ons that let you call a country as many times as you like for just $10 per month), and all Orcon unbundled customers get access to voicemail, call waiting and caller ID at no extra cost - services you have always had to pay for with Telecom.



I also don't like the way orcon are trying to use the public (who aren't as informed, and don't have all the facts) to put pressure on the government and commerce commission.



Sub-loop unbundling is an extremely complex process, and something that in general is difficult to explain to the public. What the public is (quite rightly) interested in is what this means for them. No competion in cabinets means that we go back to the situation where innovation is stifled, technology is slow to roll out, and prices remain artificially high.

Having said that I believe we can do a better job of explaining the sub-loop situation, and we have started that process by doing things like creating the saveourbroadband.co.nz website.



Orcon have also used some pretty shallow argurements. One of the worst is telecoms shareprice, which they said jumped after the commerce commission was announced. Well Orcon, 10 cents is hardly a jump , and the next day the shareprice lost much of that  previous gain, so that argument is moot. Also the financial commentator on TVNZ  said the Comcoms decision was expected as a fair one by the market. It is nothing compared to what happened after the 'unbundling' was announced a few years ago, which caused telecoms shared price to nose dive, and it has never recovered, it is still near it's all time lows, which shows that investors can't see a quick turn around in Telecoms profits.




The share price illustration was used to show that it isn't just us that thinks that the decision favours Telecom. The market made a clear statement.



The fact is that Orcon and Vodafone, and other ISPs would have complained no matter what the comcoms decision was, as they are like an opposition party in parliment, they will also argue for better conditions.




Had the determination allowed us to build a viable business case to go into the cabinets I can assure you we would not be complaining. When the original UCLL/LLU decision was made we were not 100% happy with it, but we got on and built a network. In this case we are not able to make the economics work, and that means less competition in the New Zealand broadband and telecommunicatinos market (which then means lower quality, higher price services).



What I would like to ask Vodafone and Orcon, is why don't they setup their own cabinets and install cable from the unbundled gear in the exchanges, to those cabinets. They will probably say it is too expensive, and cost prohibative. But isn't that exactly what telecom have done, by seting up these cabinets. Why should telecom be penalised for investing in NZs infrastructure, and being forced to subsidise other ISPs for the full cost. Vodafone is flush with cash, so if they are serious about fixed line broadband and being a long term player in NZs market, they should be investing in their own cabinets and cables, or their own alternative technologies.




There are several reasons we are not in a position to build our own cabinets. At the end of the day though it just doesn't make sense. Why would you dig up the neighbourhood twice, or three times when you can all share the same infrastructure? Would you want two or three different cabinets sitting on the front lawn outside your house? (Chorus has enough trouble getting one on a street) That is supposed to be the point of this regulation, to efficiently use the resource that is already there. We are quite happy to share, and pay a reasonable fee to do so. We just don't think that the fee proposed is reasonable.

It is worth pointing out also that our major issue is with the backhaul charges. Sure we think the port costs are too high also (just as we think the port costs at the exchange are too high), but the backhaul is the part of this equation that destroys the business case. The determination dictates that we HAVE to use GigE backhaul. We had proposed (and I believe the Commission originally accepted in the draft determination) that we should be able to use dark fibre as backhaul from the cabinets.

Thanks to all those who have added messages of support. I am really pleased to see a good debate going on around this. This is definitely a complex issue, and the more we can get people interested and understanding the complexities the better.





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  Reply # 227375 22-Jun-2009 14:18 Send private message

It's like the cost of gas, it goes up and alternative fuels become a realist option.

So the cost in the cabinets goes up and the WiMax like technology jumps past that whole.



VDSL, really is its added vaule really worth that much to the consumer.
My ISP has trouble giving me 8mB at anytime of the day without the dream of 50mB



I also think the Comcom has made errors within the report.
Without being technical, can you see any mistakes with this cover?

copper



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  Reply # 227631 23-Jun-2009 09:30 Send private message

Orcon has just issued an open letter as follows:


Open letter to Commerce Commission 
23 June, 2009

Open letter from Orcon to:
Dr Mark Berry
Chair
The Commerce Commission of New Zealand
PO Box 2351
Wellington 6140

Dear Dr Berry,

Commerce Commission must review sub-loop decision

Last week’s Commerce Commission decision on the unbundled sub-loop will create a non-competitive broadband market from which there will be only one beneficiary – Telecom.  The decision effectively removes the preceding two years’ improvements to the competitive broadband and fixed line telephone landscape in New Zealand.

Orcon was the first to unbundle the local loop. The resulting competitive pressure applied by both Orcon and Vodafone means consumers and commerce have received the following flow on benefits:

• Telecom’s Total Home product was introduced first in Auckland and then nationally in response to the Orcon Gold+ plan – this significantly lowered the cost of home-phone and broadband bundles nationally.
• The performance of Telecom broadband products has been improved nationally in response to faster LLU products.
• Telecom has fast tracked new technologies (specifically VDSL2) to compete with LLU-based providers.
• Telecom Wholesale has introduced aggressive “loyalty” offers to non-LLU carriers in an effort to prevent a competitive wholesale market from developing.

It would appear the Commission has failed to appreciate these consumer benefits did not result from Telecom’s agenda, but rather occurred only because of competitive pressures. 

The pricing and terms set out in the commission’s sub-loop determination fail to protect consumers from a dominant player and risk returning Telecom to a monopoly position. 

Orcon does not expect Telecom to subsidise the industry, nor that special rights or terms be afforded to any segment of the market.

We believe the decision is flawed for a number of reasons:

• It relied on unaudited inflated cost information provided by the dominant player in the market.
• It has taken the short term view of Ethernet backhaul as opposed to dark fibre.
• It has accepted information from Telecom after the sub-loop conference concluded and without any industry feedback.
• International benchmarking has been ignored when reviewing Telecom’s efficiency and costs.
• It has assumed that a sub-loop investor could raise prices during the worst recession in 70 years.
• It enables the dominant company to proceed with its cabinet roll-out and by-pass the 24-month notice period required by law to give a fair go to those businesses that unbundled the telephone exchange loop (LLU);
• It affords no protection for LLU against technical interference from the cabinets service;
• It backtracked on sub-loop fibre backhaul (exchange to cabinet) prices following intensive lobbying from Telecom, raising them by some 10 times the price set out in the commission’s own draft.

Orcon believes that for New Zealand to compete in the future, our communities and businesses need a vibrant telecommunications industry.  In our view, this cannot be achieved when all carriers are forced to wholesale off Telecom.  It leaves little room for innovation, price competition and the introduction of new technology. 

Consumers are aware of this and we have not been surprised by the level of public interest and debate generated as a result of the determination. 

The Commission needs to explain its statements concerning the cost difference between UCLL and SLU.

While conscious of the significant resources and effort the commission and industry players have put towards reaching this decision we ask that you announce a review of the determination’s findings and inputs with a view to fully factoring in the views of non-Telecom stakeholders.

It could be 10 years before the government’s broadband-to-the-home plans become reality. In the meantime, should your decision stand, the majority of New Zealanders will be subject to 2nd class broadband from a monopoly provider.

Yours sincerely,

Scott Bartlett
Chief Executive Officer
Orcon





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  Reply # 227644 23-Jun-2009 10:17 Send private message

When unbundling was announced David Cunliffe said he had assurances of $2b worth of investment (excluding Telecom) ready once the decision was made. I'm interested to know how much of that has eventuated more than 2 years down the line.

I would also like to know how many exchanges have been unbundled and where they are located. Any offical information out there?

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  Reply # 227732 23-Jun-2009 17:37 Send private message

Well Telstra, who are one of NZ's larger ISPs, will have unbundled 40 by the end of the month, but they have only spend' tens of millions', which is a far cry from that figure. It appears that it is the ISPs that are slower, than the rate at which the excahnges are being released, as currently Telstra only have 26 unbundled, as at the 8/6/09/. I can't see private company, except for telecom willing to invest 'hundrends of millions' of dollars into NZs infrastructure. I am sure telecom don't have much more left either, after spending over 1/2 billion in the XT network.

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  Reply # 227887 24-Jun-2009 10:29 Send private message

At latest count I believe we are at 38 exchanges, 36 of which are in Auckland and 2 in Wellington. I can't give you an exact figure as to what this has cost us, but it is in the tens of millions of dollars.

The problem with this sub loop decision is that it not only means that we can't invest in sub loop, but also makes the business case to continue unbundling exchanges a whole lot more difficult to make.

Ben

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  Reply # 227888 24-Jun-2009 10:33 Send private message

Duncan, so I can understand: are the costs an issue because the number of possible clients is low? Would you need like half the lines in a cabinet to sign up to Orcon to make it reasonable, 1/4? Or how many?

Or are the costs unreasonable at any level? Even if somehow you put gear in a cabinet and every single line into that cabinet signed up to Orcon, would it still be too costly to support?

I ask, because if it's the latter, then I'll back you all the way. If it's the former, then surely you could nick clients of Telecom with a hyper-competitive plan?

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  Reply # 227949 24-Jun-2009 13:18 Send private message

Good question Ben.

We are actually ok (ish) with the ~$11 MPF fee in the cabinet itself. Compared to other countries, particularly our friends across the Tasman this still seems high, but we could probably live with it.

The problem we have is with the backhaul cost, which increased tenfold from the draft determination to the final determination. This is the bit that makes the business case unworkable because we would need to go in and capture ~30-40% market share minimum (when you consider that broadband penetration is ~60% right now, the figure might actually be closer to 50%) within a very short period in order to make it stack up. The backhaul is really the only reason that this is the case, as we are being forced to take Gigabit Ethernet backhaul @ ~$1350 per month.

The commission believes that this will be off set by higher revenue services. However what we know is that the majority users are not prepared to pay more just for more speed.

So, it?s catch 22 for us. To be able to offer the 'hyper-competitive? plans we need to own or own infrastructure, but the cost barrier to doing this is too high.

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  Reply # 228062 24-Jun-2009 18:56 Send private message

Duncan, just as a matter of curiousity, how many customers can be fit in a cabinet anyway? I see a lot of talk from Orcon, Vodafone, Telecom and the Commerce Commission talking up percentages, but the real question is, if you had 30% of the lines in a typical cabinet, how many people is that anyway? 20? 30?

It's quite interesting to me as the only figure I've seen to even provide a clue of what the figure is would be the Vodafone figure of ~$160 per customer to Telecom (which based on ~$1350 per month GigE backhaul and ~$11 per customer MPF would indicate to me that there is capacity for roughly 100 customers per cabinet total for all providers). Is this about right or is there some convoluted part of the equation I'm missing?




I finally have fibre!  Had to leave the country to get it though.


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  Reply # 228074 24-Jun-2009 19:34 Send private message

Hi Kyanar, NZ is not in the 3rd world we try not keep citezens or customers in small boxs on the side of the road, sadly it does sometimes happen, especially in these hard economic times. :)

On a serious note. The gear that Telecom has installed (ISAM) has 4cards per shelf, and each card will support 48 DSL ports, therefore 196 ports per self. As such cabinets have a considered capacity of 196 lines. Each self can terminate a GigE uplink, however if a host shelf it can terminate 7 GigE uplinks with upto 10 downlinks to 10other extention shelfs ( downstream cabinets). As such as I understand it Telecom has scaled each cabinet to serve 196 subs, however it may be more actual lines are terminated on the MDF of any one cabinet as not all will take up Broadband, logic says however that the planning is based on 196 lines all up per cabinet.

I understand there is enough room for 3 other competitors to install their gear, hence the reference to 33% divide of space if say 2 other operators install kit in addition to Telecom.

I can definitely see the gripe that access seekers dont want to pay full $ when all they want to support is a handfull of subs. That said for access seekers to provide a full range of independant services they will want to have a dark fibre backhaul so they can mux whatever services on it, as such unless they pull a fibre of their own out to each cabinet then typical commerical fibre costs would be what the ComCom are looking at, which kind of spoils the game.

Cyril



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