Telecom Failure to Meet Wholesale Broadband Numbers - Letter to ComCom & David Cunliffe

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Grantis

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Topic # 6546 2-Feb-2006 22:19

*Please Note:

I am posting this as a point of discussion, it is not intended to annoy people on these forums.

However, it is intended to express my own opinions & hope that others will also do so, in a "constructive manner".

Below is a copy of a letter that I sent to various people including David Cunliffe (Minister of Communications & IT), Commerce Commission (Douglas Webb), Ernie Newman (Chief Executive of TUANZ) Paul Brislen (Editor of Computerworld) & Colin Jackson President of Internet NZ;

As per the Commerce Commission website link; Telecom New Zealand “failed” to reach the required 83,000 Wholesale Broadband numbers, as per the Government & Commerce Commission recommendations.

Admittedly, they did acquire more than required for their “total broadband numbers”, but that was only part of the requirement asked of them, to avoid further regulation by the Commerce Commission/Government.

So I ask you, what is the Commerce Commission/Government intending on doing about this failure to reach the required 83,000 Wholesale Broadband customers, of which Telecom NZ only achieved 76.5% (or 63,495 customers)? Will Telecom NZ be regulated further & will New Zealand possibly see true competition at long last in New Zealand with Local Loop Unbundling (LLU)? Or will the New Zealand Government bow to another Teresa Gattung letter, threatening to destroy the New Zealand Share Market & Superannuation Fund? One must also remember of course that Telecom NZ is 75% owned by Foreign Investors, therefore New Zealand hardly benefit from Telecom profit anyway.

Also, with a painfully slow 128kbps upload speed on broadband connections with Telecom NZ, how can it really be called “Broadband” at all? Most overseas countries offer superior upload speed for their broadband customers, why does New Zealand have to be left out in the cold for even longer, by a Telco like Telecom NZ, who don’t really give a damn?

Come on, I urge you, please take some strong action against Telecom NZ now, as after they fight in the courts it will still take 2 years or more, before anything actually changes anyway. The Government wants New Zealand to be in the top 25% of the OECD for Broadband uptake by 2010 & with the price & speeds (particularly the painfully slow 128kbps upload) New Zealand won’t have a hope in hell. Looking at Australia who is currently being offered 24Mbit download & 1Mbit upload connections in certain parts, for the same price we pay here, you can see what benefits LLU can offer.

A further example of the “Broadband Lag” in this country is this; by the time Telecom NZ actually offer their fully implemented Next Generation Network by 2012; New Zealand will only be catching up to what some Australians are being offered “RIGHT NOW”, not in six years time!

Please, take some real action against Telecom, for the future economic benefit of the entire country, before future investors are scared off for good.

I would appreciate some feedback with regards to this letter, detailing any possible action that may or may not be taken against Telecom NZ.

Thanks for your time.

Also, this Internet NZ Media Release is along "similar" lines to what I stated above, however I read it after I sent my emails.

I am not expecting anything to eventuate from this email, of any significance, however at least I have expressed my points of view & at least attempted to do something about what I personally see as a major problem with "Broadband Internet" in this country. I also firmly believe that if people don't complain "in writing" & encourage others to do so, then the problem is never really adequately addressed if at all & is simply brushed under the carpet. Strength in numbers I say, hopefully some others in this forum will agree with me & also email the contacts below.

I am also acutely aware that there are many other problems that are far more significant than Broadband Internet in this country, however, that's another discussion, for another day.

*Contacts:

David Cunliffe:

New Lynn Office: [Moderator: remove email address to prevent spam bot harvesting]

Government Secretary: [Moderator: remove email address to prevent spam bot harvesting]

Commerce Commission:

Attention: Douglas Webb

[Moderator: remove email address to prevent spam bot harvesting]

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Reply # 27724 2-Feb-2006 22:29

The irony is that govt went soft on Telecom for fear of market and super impact, only for them to turn around and do it to themselves by writing down the value of AAPT!

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Reply # 27725 2-Feb-2006 23:11

I do have one question grantis......what the hell did Telecom do to you?

I am not convinced that regulation is the best thing for the telecomms industry in this country. You only have to look at the mess the U.S government made of AT&T. I think Telecom do a damn good job, they arent perfect, no big company is. But considering New Zealands small population spread over a large area, it becomes very expensive to make investments in technology that everyone can access. IMHO monopolies are not all evil and the running of telco industry should be lrft to those who know what they are doing not a government that has buggered the economy and messes up everything else it lays its eyes on.

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Reply # 27726 2-Feb-2006 23:27

So reaching the broadband target, but failing to get the divide between wholesale and direct customers correct by 23.5% is cause for the very next sentence to finally call for LLU?

If that figure was 100% of the wholesale target (acheived), would that have you deciding "well hey, we dont need LLU now" ?

New Zealand will only be catching up to what some Australians are being offered “RIGHT NOW”,

Who in turn, were only catching up to other parts of the world. There are providers here who offer equivilent or faster than current ADSL speeds...

Telstra offer 10Mbit cable - Woosh offer some half decent plans now, by all accounts Vodafone could if they wanted to (although that would strengthen TNZs case against LLU).

"But this technology is not available nationwide" you say?, >>>

Looking at Australia who is currently being offered 24Mbit download & 1Mbit upload connections in certain parts,

What bearing do densely populated parts of Australia have on just about any part of NZ? There are already viable competitors in certain parts of New Zealand.

Just because the rest of the world does something, doesnt mean New Zealand should. LLU would be of direct short term benefit to Consumer & SMEs, but would it really make sense long term (dozens of New players jostling for position, many being swallowed up by larger rivals), with prices and service fluctuating as widely as dialup over the past five or ten years, and more importantly, no real investment being made in alternative infrastructures.

Who will build Wimax if LLU happens now? Woosh? Annette Presley?

Jama

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Reply # 27730 2-Feb-2006 23:48

That is fine Grantis but who is going to pay for the network investment? No return - no investment simple economics. Would overseas investors keep their money in Telecom if the return wasn't there? Sure 75% of Telecom is foreign owned (as are most of our banks). However I think you are overlooking the fact that Telecom employ 6,500 skilled people who all pay income tax so there is a direct return to the economy in employment, skills and money.

The country needs investment and competition not regulation. Ernie Newman from TUANZ is famous for his 'It takes 3 providers to provide real competition' comment. Are wholesalers really competition? How is it competition when they all sell exactly the same product?

I have no problem with the minority of people in this country who need a 'faster upload' speed but I do have a problem with their simplistic approach and understanding of what is a complex issue.

Please enlighten all of as to what you use the Internet for and how faster broadband will benefit you as a user. I am interested to know.

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Reply # 27733 2-Feb-2006 23:55

Jama: Please enlighten all of as to what you use the Internet for and how faster broadband will benefit you as a user. I am interested to know.

My feelings also. I work in web design among other things and find 128Kb/sec upload is just fine. There is not much that requires a faster upload speed than that unless you are sharing all your pirated movies over P2P.

I sometimes find downloading a bit slow, but when you that most people had dialup until a year or so ago and still do, the speeds are great and there price is really good.

The vast majority of people, that is 99.99999999999999999% never really have need of huge upload speeds. And messing with the system just cos you have a bee in your bonnet over Telecom doesnt solve anything.

Grantis

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Reply # 27737 3-Feb-2006 01:26

Disenchanted: So reaching the broadband target, but failing to get the divide between wholesale and direct customers correct by 23.5% is cause for the very next sentence to finally call for LLU?

Actually, what I said was; "Will Telecom NZ be regulated further & will New Zealand possibly see true competition at long last in New Zealand with Local Loop Unbundling (LLU)?" Note: The "regulated further" which is in reference to what David Cunliffe has stated “In July last year, Hon David Cunliffe, Minister of Communications made the following comments:

‘Let me be very clear on this. This Government regards world-class broadband infrastructure as a critical national capability for the 21st century.’

‘The Government regards a healthy and competitive broadband wholesaling market as essential. Telecom New Zealand's wholesaling commitment is important, and a response will follow if it is not met.’"

I'm not purely suggesting the need for LLU, but considering the way the market is for most ISP's, things may only get worse, in the current regulatory environment, if it isn't done. Structural Separation of Telecom's Wholesale & Retail Sectors may well be a likely prospect, if LLU isn't implimented.

Disenchanted:
If that figure was 100% of the wholesale target (acheived), would that have you deciding "well hey, we dont need LLU now" ?

If I may quote Colin Jackson President of Internet NZ;

“This is further clear evidence that the existing light-handed regulatory framework is not delivering a competitive marketplace for broadband services. Telecom is still by far the dominant provider, and only fundamental regulatory reform will deliver better prices and faster services for New Zealanders.

“While it is commendable that Telecom have exceeded their total target for connections, the effect of this is simply to reinforce their dominance in the market."

I didn't write this letter as a flippant remark, I have been campaigning for this for a long time, as I believe it would be a better solution to what we currently have, with broadband pricing/speed/data caps.

Also, it is not just me that thinks like this, many people I know, outside of these forums believe the same, the Government wants to acquire certain goals with Broadband Uptake by 2010, organisations like Internet NZ, TUANZ & Computerworld/NZ PC World writers all have the same or very similar opinion, not to mention many, many others.

Disenchanted:
Telstra offer 10Mbit cable - Woosh offer some half decent plans now, by all accounts Vodafone could if they wanted to (but wouldnt because it would strengthen TNZs case against LLU).

TelstraClear offer some fantastic plans, I agree, especially with their 2Mbit upload & low latency which is ideal for gaming. I don't understand why you included Woosh in there, as they are very much a niche player, who only offer 500kbps down (I think), which is hardly competitive in todays market, nor is it suitable for online gaming (which is bigger than the movie industry, in terms of income generated).

Disenchanted:
Looking at Australia who is currently being offered 24Mbit download & 1Mbit upload connections in certain parts,

I used that as an example, Australia has implemented partial LLU & they have a far greater choice with speed/price/data caps & providers of various technologies.

The size of our country can't be used as a continual excuse to stop further development in New Zealand, New Zealand was once known as early adopters of new technology & we were one of the first to have ADSL in the world, but look where we are now, 22/30 in the OECD for broadband uptake, it's not what I would call a great situation to be in at all.

Disenchanted:
Just because the rest of the world does something, doesnt mean New Zealand should. LLU would be of direct short term benefit to Consumer & SMEs, but would it really make sense long term (dozens of New players jostling for position, many being swallowed up by larger rivals), with prices and service fluctuating as widely as dialup over the past five or ten years, and more importantly, no real investment being made in alternative infrastructures.

"No real investment being made in alternative infrastructures" you say? I believe the opposite would be true, in the medium to long term, as different Telco's would need to provide different services/new technologies to remain competitive with the competition & retain customers.

Disenchanted:
Who will build Wimax if LLU happens now Woosh? Annette Presley?

I know of at least three companies who are currently trialling WiMax in New zealand right now & could very well launch a Commercial Release by May of this year. Also Annette is Co-Founder of Call Plus, which is one of the comapnies currently trialling WiMax in the Far North.

Grantis

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Reply # 27738 3-Feb-2006 02:06

brad05:And messing with the system just cos you have a bee in your bonnet over Telecom doesnt solve anything.

Just because I personally believe in something that you don't (& I'm certainly not the only one) doesn't mean that you need to knock me down for trying to instigate change.

Just because I'm proactive about this particular issue, doesn't make it wrong. There are many things that I may disagree with, most of which have nothing to do with technology, but if I just accepted them, even though I thought it was wrong, then nothing would ever improve would it? I've heard for every person that complains, 100 or more people have the same/similar problem, but don't actually complain. If no one complained, then the companies/government would think that everything is fine!

Also, no system is perfect, you can never satisfy all of the people all of the time, only some of the people some of the time.

You say "mesing with a system just cos you have a bee in your bonnet over Telecom doesnt solve anything" is really a statement that is doomed to fail. At least I can say I have tried to instigate change, rather than sit back & do absolutely nothing at all.

Many famous people have changed the path of history, because the disagreed with a system, saying it doesn't solve anything, is a self defeatest attitude.

Please Note:

By the way, I'm not at all implying that I will change history in anyway whatsoever, but I hope you get the general idea, as per the above post. :-)

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Reply # 27739 3-Feb-2006 04:31

I wonder if the pro-Telecom users (most of them employees of Telecom strangely enough) would keep their pro-Telecom stance if they were just customers?

I'm pretty much agree with Grantis on this one - no need to type out rehashes of what he has already said. I think I might write a letter as well.

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Reply # 27745 3-Feb-2006 08:14

cokemaster: I wonder if the pro-Telecom users (most of them employees of Telecom strangely enough) would keep their pro-Telecom stance if they were just customers?

The answer is categorically yes.
(I just left my position within the industry, and am now merely a customer)

Jama

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Reply # 27747 3-Feb-2006 08:58

Again as I have said before just because we want to be in the top quartile of the OECD is not a sound reason to regulate a public company. Seriously this country has bigger issues like the highest interest rates in the OECD and some of the lowest wages.

I would rather pay $200 p/month for broadband if I was only paying 3% on my mortgage and if I earned more money.

And boo to you Grantis for bagging Woosh no wonder they are losing money - people like you don't take Woosh seriously. Therefore if Woosh go under it is your fault for being picky on what sort of competition you want to see. Woosh have a viable technology and offer a good alternative to Telecom.

As you say your mate at CallPlus is trialling WiMAX, good on them. That sounds like competition to me which really makes me question the soundness of your comments about structural separation and regulation of Telecom.

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Reply # 27758 3-Feb-2006 09:54

Jama: Again as I have said before just because we want to be in the top quartile of the OECD is not a sound reason to regulate a public company. Seriously this country has bigger issues like the highest interest rates in the OECD and some of the lowest wages.

And boo to you Grantis for bagging Woosh no wonder they are losing money - people like you don't take Woosh seriously. Therefore if Woosh go under it is your fault for being picky on what sort of competition you want to see. Woosh have a viable technology and offer a good alternative to Telecom.

Well said, Jama. We stand to gain far more from economic growth than from cheaper broadband services.

I can see how improving Internet access in rural areas may have some benefit to the economy, but most of the people who are advocating heavy handed regulation are simply moaning because their home broadband connections are too slow. How exactly does upgrading Joe Bloggs' home Internet connection from 500kbps to 10mbps and dropping the price by $20 per month improve New Zealand's economic prospects?

Grantis

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Reply # 27760 3-Feb-2006 10:05

Jama: Again as I have said before just because we want to be in the top quartile of the OECD is not a sound reason to regulate a public company.

Perhaps you should read this article from Computerworld, which was released today & see that there are many companies/organisations that want action, now that this milestone has not been met, not purely because of this milestone not being met, but more so that yet again "light handed regulation of Telecom NZ" is failing to reap rewards, both for companies & customers to a significant degree;
Calls for further regulation after Telecom misses target

Weather you or I think that this is a sound reason or not, it is most likely here to stay in the short term at least, as the current NZ Government have set goals to try & obtain by 2010. New Zealand needs to have some way of comparing itself with regards to it's performance in the world & I personally see no problem with the governments intentions at this time, weather they are realistic, only time will tell.

Jama:
Seriously this country has bigger issues like the highest interest rates in the OECD and some of the lowest wages.

I am fully aware of this, but like I stated in my original post "I am also acutely aware that there are many other problems that are far more significant than Broadband Internet in this country, however, that's another discussion, for another day."

Jama:
And boo to you Grantis for bagging Woosh no wonder they are losing money - people like you don't take Woosh seriously. Therefore if Woosh go under it is your fault for being picky on what sort of competition you want to see. Woosh have a viable technology and offer a good alternative to Telecom.

So your holding me personally accountable because a company like Woosh aren't delivering what the customer wants & they have a flawed business plan? Now, that's a good one. :-)
If Woosh delivered a technology that & not in any particular order;

A) Provided lower latency that is suitable for gaming, then they would of attracted a lot more customers, leaving gamers out of the equation altogether, wasn't a particularly good idea IMHO.

B) Provided coverage where I live.

C) Kept pace with what other companies are offering in terms of download speed.

D) Provided adequate reliability.

Then I "might" be interested. Don't get me wrong, I like what they are doing with VOIP & I like the fact that they are trying to get established in a very difficult market, but from what people post in the Woosh Forums & from what I have been told by users, it doesn't sound reliable enough for me. Where I spend my money is my choice.

Jama:
As you say your mate at CallPlus is trialling WiMAX, good on them. That sounds like competition to me which really makes me question the soundness of your comments about structural separation and regulation of Telecom.

It will be true competition, but it hasn't even been implemented in a Commercial Release yet, it's only been "trialled" by at least three comapnies that I know of.

Also, this article quotes Douglas Webb as saying;

NZ Telcos May Work Together

"At the Conferenz Telecommunications and ICT summit, held in Auckland last week, Telecommunications Commissioner Douglas Webb raised the idea of "structural separation" with regard to Telecom's network.

While Webb was discussing the idea of splitting an incumbents wholesale and retail arms from a regulatory point of view, the idea could well have spin off benefits from a network redundancy point of view as well."

Jama

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Reply # 27761 3-Feb-2006 10:35

The Computerworld article is the same tired old rhetoric and bleating from the same old ISP's. It is starting to sound like a skipping CD

Yawn - again where we are in the OECD and no real concrete economic reasons as to why this is important to our country.

This is again sensationalist dribble - Telecom missed the wholesale target by 23% which is hardly falling 'well short of the wholesale component of the pledge' as the article states. Lets put that in perspective shall we it wasn't Telecom who missed the target it was the ISP's, after all they are the ones onselling it. Telecom met their Target in fact they exceeded it by 29000 connections. Well done!

By the way how many broadband customers did TCL and Woosh add in the last year? We see what Telecom achieved but where are the numbers from the other providers? Lets regulate them all as well.

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Reply # 27764 3-Feb-2006 10:39

cokemaster: I wonder if the pro-Telecom users (most of them employees of Telecom strangely enough) would keep their pro-Telecom stance if they were just customers?

A very strong YES. I have never worked for Telecom, only ever been a customer.

jama:Again as I have said before just because we want to be in the top quartile of the OECD is not a sound reason to regulate a public company. Seriously this country has bigger issues like the highest interest rates in the OECD and some of the lowest wages.

I would rather pay $200 p/month for broadband if I was only paying 3% on my mortgage and if I earned more money.

Very well put. I think its is silly and shortsighted to be so concerned with the speed of a service that in my opinion works very well and is very reliable. Sure speed is going to be an issue in the future but Telecom are working on their NGN and 25mbits aint so bad.

Grantis: Many famous people have changed the path of history, because they disagreed with a system

Sure thats true, black civil rights in America is a good example. But so many more people who could have been great have been doomed to failure because they were narrowminded, shortshighted and could not see the bigger picture. New Zealand has much much bigger problems than broadband speed.

Grantis

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Reply # 27765 3-Feb-2006 10:52

Common Misconceptions about Local Loop Unbundling:

Please note that this information is taken directly from this website TUANZ

Some "parts" of the information are outdated, but it is obvious what is, particularly where ADSL speed & Telecom profit are mentioned, due to when the article was written.

Weather you agree or disagree, it's certainly food for thought.

SAYING IT LOUDLY AND OFTEN ENOUGH

DOESN’T MAKE IT TRUE
A number of myths about Local Loop Unbundling (LLU) are being pedalled
as conventional wisdom.

MYTH: LLU discourages investment

False: Surely it cannot be that New Zealand’s largest company is so fragile as to
be unable to invest unless endowed with an ongoing captive market? The reality is
that Telecom is far more likely to invest if forced to by competition. Competition,
always provided that it is fair, will result in the most cost-effective and economicallyeffi
cient investment.
Unbundling will stimulate investment. It will unleash opportunities for new
entrants to the market with choice, faster speeds, better prices, and improved services.
In Australia, for instance, there are 160 broadband service providers using a mixture
of their own access facilities, wholesaling, and access to Telstra’s unbundled local loop.
This is typical of the situation right across the OECD.

MYTH: LLU infringes Telecom’s property rights

False: Telecom has argued that allowing other companies to use its network would
be like requiring a dairy farmer to rent out his milking shed to another farmer.7
The analogy is trivial and fl awed – there are thousands of milking sheds in
New Zealand but only one legacy bottleneck local loop. Under LLU, no property is
taken. Access is sold at cost plus a fair profi t margin, not given away. The issue is
not seizing Telecom’s property, just restraining them from using it in anti-competitive
ways. Isn’t that the heart of why we have competition law?

“I believe fundamentally that local loop unbundling is an essential
element of a competitive market.”
David Colville, Vice Chair, Canadian Radio-Television
and Telecommunications Commission

MYTH: LLU will mean everyone offering the same thing

False: The truth is quite the reverse. Currently, competitors can resell some Telecom
services. ‘Resale’ means that users are buying Telecom services from other companies
– the same service, the same speed, and, basically, the same price. Unbundling would
allow all service providers, not just one, to offer their own services direct to the user –
that’s different services, different speeds, different technologies, different prices, and
earlier availability of innovation.

SAY YES TO LOCAL LOOP UNBUNDLING

MYTH: LLU is bad for Telecom

False: How can growing the market be bad for an incumbent reaping nearly 70 per cent
of revenues from the contestable voice and data market? How can encouraging customers
to spend more be bad for a company that made $365 million net profit in the six months to
31 December, 2003? When did an incumbent need protection? Besides, there’s more than
a touch of irony about such a misguided belief, considering Telecom is currently being taken
to court by the Commerce Commission for allegedly misusing its dominant market power.

MYTH: LLU is too hard

False: Tell that to the New Zealand businesses suffering because of high prices,
inadequate competition, and innovation at the whim of the incumbent. Being among
the last countries in the OECD to consider LLU, New Zealand can draw from plenty
of experience, both good and bad. Yes, unbundling is a complex process, but it can
be made to work effectively as countries like Japan and Canada have demonstrated.
If we, several years after the bulk of the OECD unbundled, can’t get it right, who can?

“Local loop unbundling is an essential catalyst for innovation in the
broadband market, especially in countries where competition from
alternative infrastructure is limited.”
Richard Medcalf, Senior Consultant, Analysys Consulting

MYTH: Wireless is the answer

False: Wireless solutions are showing real promise and initiatives, such as those
from Woosh Wireless, Wired Country, and BCL, are certainly to be applauded.
However, international wisdom is that wireless will for the foreseeable future be a
niche technology rather than a serious competitor to land lines. It’s far too early to
mortgage New Zealand’s future on a technology that has yet to be proven. In fact,
sadly, Woosh Wireless has already been warned that it could lose Probe business if it
lets delays in contract signing affect the roll out of infrastructure. It has also delayed
voice services. Wireless solutions are unlikely to be a credible substitute for
fixed-line technology in the next five years, but simply an extension of existing
services – a conclusion accepted by the Commerce Commission.

MYTH: Cable can help

False: Cable broadband networks have proved the worth of competition in the limited
parts of the country where they are available. Where TelstraClear competes with
Telecom in Wellington and Christchurch line rental prices have fallen by about a
quarter. But this benefit is trivial compared to the wider issues. Unfortunately, the
expansion of cable networks in New Zealand has now come to a halt and there’s little
immediate prospect for resumption in the short or medium terms.

MYTH: The local loop is a declining technology

Not so! TUANZ has stated consistently for years that the local loop is the most costeffective
and effi cient way forward for next-generation mass telecommunications and
Internet services. Anyway, the argument that it is a declining technology is selfdefeating
– if the local loop has “had its day” why is Telecom fighting so strenuously
against unbundling? Telcos recognise the substantial economic benefi ts of using
Telecom’s local loop, compared to building new forms of local access with all the
extra costs and environmental issues that entails.
If New Zealand is to make up for lost ground we must embrace every possible means
of delivering broadband including the key step of getting better utilisation from
the existing local loop infrastructure. Telecom’s copper local loop will remain a
cornerstone of New Zealand’s broadband service for a considerable time, and a natural
monopoly. It is crucial that competitive services be allowed on this infrastructure
through an unbundling process.

“Without unbundling it is difficult to see how convergence, and a
resulting increase of market power of those now holding bottleneck
positions, can take place without substantially weakening competition.”
Dr Herbert Ungerer, Competition Directorate of the European Commission

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