Telecom NZ to be unbundled!

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#34696 3-May-2006 20:41

Just wondering, between now and when the LLU law comes into effect, would the current broadband offerings become static? (not change) or maybe telecom become nasty and start charging everyone to get DSL connected and no free modems anymore?

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#34699 3-May-2006 20:51

Jaffa: It was a massive cultural shock... TG has already had a slap over the wrist about aapt but now ull doesnt make it too 5hit hot that all of this has happed under her as the ceo, but dont get me wrong she is a wonderfull person and it wasnt her decision it was comcom's but I guess it depends on how the board sees it. Fingers crossed she stays she is the type of person who creates a buzz when she walks into the room :)

The Commerce Commission had nothing to do with todays decision. It was a Government Policy change.

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#34700 3-May-2006 20:53

Jaffa I must have been in a different room to you when Theresa walked in.

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#34701 3-May-2006 20:54

Hawkins:
Telecom will be experiencing a huge culture shock right about now. They have relied on their position for far to long and their arrogant monopolised culture which disseminates right through the business will be the death of them regardless how much money they throw at it.

It won't be long before TG is asked to move on. let's wait and see.

I think what you are saying is a little unfair, Telecom is not "arrogant", and in a case of a National Network, it is expected for there to be a natural monopoly, basic economics. You must understand its not Telecoms role to increase economic growth, which seems to be the basis for LLU as far as the government is concerned, not for someone who wants to download illegal movies really fast. Theresa Gattung has done a good job during her time with Telecom. She is leading thousands of loyal kiwi workers, and i confess, myself included towards a common goal, and that is to provide New Zealand’s telecommunications needs. The aim of Telecom is not to slow down your internet, it is simply as with all business, trying to maximise its profit's.

Hawkins, I believe you need to back up what you are trying to say with some facts or economic theory. It is very easy for the general public to say a monopoly or a natural one in this case is bad, but in cases like Telecom they can provide cheaper services than if there is a competing network.

The next question must be, how long does Telecom plan to continue to operate a PSTN network, and what effect will Telecom’s planed NGN (Next Generation Network) have upon all this??

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#34702 3-May-2006 21:02

Jaffa: But i cant help but feeling sorry for woosh they are (or probably were) a great company I hope they survive...

I wouldn't write them off too quickly. They own some good spectrum and there are WiMAX vendors interested in producing kit around that frequency.

If Telecom has stopped rural DSLAMs then there is a new market opening up and with the lower frequency they can get through trees and around corners better than the companies buying the 3.5 GHz spectrum.

Besides which, since they already have an infrastructure with lots of radio backhaul links, I would expect them to be a good candidate for putting DSLAMs into exchanges and roadside cabinets.

In particular the roadside cabinets that are connected by fibre to the exchanges. The announcement was only about unbundling the copper loop. What IINET has learnt from the Aust market is that even through you have gear in the exchanges, you can't reach the roadside cabients joined by fibre and hence to the customers. So if I was Telecom i would build a more distributed network with intelligence away from the central exchange so the unbundling becomes harder for others. The RSPs then have to lease capacity off you to reach these roadside cabinets and they can only afford to take naked ADSL and not ULL.

Whoosh has 632 radio licences according to the RSM website so they can reach the roadside cabinets easier than others and so unbundling might be a good scenario for them.

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#34705 3-May-2006 21:17

In particular the roadside cabinets that are connected by fibre to the exchanges. The announcement was only about unbundling the copper loop. What IINET has learnt from the Aust market is that even through you have gear in the exchanges, you can't reach the roadside cabients joined by fibre and hence to the customers. So if I was Telecom i would build a more distributed network with intelligence away from the central exchange so the unbundling becomes harder for others. The RSPs then have to lease capacity off you to reach these roadside cabinets and they can only afford to take naked ADSL and not ULL.

SLU (Sub-loop unbundling ie putting gear in fibre fed cabinets) is also covered along with unbundling of copper at the exchange. This is discussed in the cabinet papers released by Cunliffe.

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#34706 3-May-2006 21:21

Hawkins, I believe you need to back up what you are trying to say with some facts or economic theory. It is very easy for the general public to say a monopoly or a natural one in this case is bad, but in cases like Telecom they can provide cheaper services than if there is a competing network.

I think in this case the proof will be in the pudding. And clearly the powers that be think its going to be a tasty pudding.

Once upon a time I may have agreed with you, however in this day in age a number of analysts would put more weight behind the theory of 'where a natural monopoly makes sense, it will naturally occur'.

I think the deregulation of the NZ Postal service a number of years ago shows a good case for the natural monopoly story. A number of competitors have tried to take a large share into that market, without success (even with direct price competition).

Many people said the regulation of the power industry would break a natural monopoly - clearly the opposite has been seen to happen and we now have healthy competition.

If a monopoly makes commercial sense in NZ then competitors will find it hard to enter the market - and this is probably why they are for casting 2-3 years before we see any movers.

Alternatively, if the regulation has it wrong this time, we could be bailing out out TCNZ much like Air NZ after Ansett bailed from our market. Personally this seems to have limited risk as unlike the airline industry, there is already a pr oven competitive model in this space - all they are doing is breaking down the major barrier to this competition developing.

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#34707 3-May-2006 21:22

Jaffa:

And yes it was comcom's findings the asked the government to ULL. If comcom said hey lets leave them to it they know what they are doing ull wouldnt of happened but they suggested ull and the government jumped to that.

I'm not quite sure where you keep getting this idea from that the commerce commission recommended ULL from because they didn't.

Here's a snippit of the final report presented to Paul Swain

Following careful consideration of the issues the Commission provided a final report to the Minister on 22 December 2003 that:

recommended the designation of an unbundled fixed PDN service in the form of access to an "Internet grade"¹ADSL² bitstream service and a "retail minus" pricing principle;³
recommended designation of access to a backhaul transmission service⁴ complementary to the designated ADSL bitstream access service and a TSLRIC pricing principle.⁵
did not recommend full unbundling of Telecom's local loop;
did not recommend designation or specification of a partial private circuits service (for use in PDN access) but noted that should a satisfactory service not be introduced by Telecom within the next six months, the Commission considered it appropriate to re-evaluate the merits of regulated unbundling of a partial private circuits service at a long-run incremental cost price as an alternative means of addressing the access bottleneck in the fixed PDN.

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#34708 3-May-2006 21:24

Hasn't Telecom already invested a large chunk for the NGN... I wonder how much of that they can/will/try to roll back again?

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#34709 3-May-2006 21:25

I see really no need for Telecom to worry, The griping customers who will switch to ripoff scams such as Telstra's "homeplan" and these other small telco's are probably the ones whom hate Telecom, have all their tolls with XYZ provider and ring 3 times a month into the 123 call centre just to moan about "you overcharged me a $7.50 late payment fee as I didn't pay my bill".

How long before the small telco's actually get wound into setting up DSLAMS and get everything up and running, network, billing systems, staffing, marketing, staff to handle the call influx, Back end processes, etc, I can see it's going to be a very messy excersise.

Telecom have already planned to phase out copper and the standard space consuming, Complicated, expensive to maintain and power hungry Nippon Electric NEAX exchanges for something far more streamline and easy, something that can be upgraded at the touch of a button.

Telecom also currently have the only reliable high speed mobile data network in the country that can indeed pass through buildings, over hills and make it though trees, where fibre and other high speed systems (the last mile) won't quite reach i'm sure they can spark up something that utilizes the fantastic signal reach of CDMA.

In saying all that,, I will be playing with these alternative networks, VoIP and other cool stuff. I have a data connection with Vodafone, A woosh phone and data, though the bulk is with Telecom. I enjoy playing with these things. I'm glad to see all thet copper will be retained and used rather than ripped up for scrap. I wonder if anyone can "borrow" it? This could get quite fun for us geeks.

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#34711 3-May-2006 21:30

Pernod:
Hawkins, I believe you need to back up what you are trying to say with some facts or economic theory. It is very easy for the general public to say a monopoly or a natural one in this case is bad, but in cases like Telecom they can provide cheaper services than if there is a competing network.

I think in this case the proof will be in the pudding. And clearly the powers that be think its going to be a tasty pudding.

Once upon a time I may have agreed with you, however in this day in age a number of analysts would put more weight behind the theory of 'where a natural monopoly makes sense, it will naturally occur'.

I think the deregulation of the NZ Postal service a number of years ago shows a good case for the natural monopoly story. A number of competitors have tried to take a large share into that market, without success (even with direct price competition).

Many people said the regulation of the power industry would break a natural monopoly - clearly the opposite has been seen to happen and we now have healthy competition.

If a monopoly makes commercial sense in NZ then competitors will find it hard to enter the market - and this is probably why they are for casting 2-3 years before we see any movers.

Alternatively, if the regulation has it wrong this time, we could be bailing out out TCNZ much like Air NZ after Ansett bailed from our market. Personally this seems to have limited risk as unlike the airline industry, there is already a pr oven competitive model in this space - all they are doing is breaking down the major barrier to this competition developing.

All I am saying is not all monopolies are bad, and I wasn't specifically talking about LLU, I was merely saying that building an alterative PSTN network would not make good business. Hence a monopoly on the lines should remain intact (the ownership).

I feel for all the businesses out there now, their property is no longer safe, I guess we could not expect much more from a Left Wing Labour Government :@.

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#34713 3-May-2006 21:37

freitasm:
sbiddle: Wonder how many people sold their Telecom shares this afternoon? :-)
Are you implying something? The announcement was made after the closing of the stock market (in NZ).

Are you forgetting that the decision to unbundle was made by the cabinet this morning...? And that the only reason it was offically announced today was because of leaked information?

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#34714 3-May-2006 21:42

nzbnw: All I am saying is not all monopolies are bad, and I wasn't specifically talking about LLU, I was merely saying that building an alterative PSTN network would not make good business. Hence a monopoly on the lines should remain intact (the ownership).
I feel for all the businesses out there now, their property is no longer safe, I guess we could not expect much more from a Left Wing Labour Government :@.

Telecom will still have ownership of the copper circuits. All ULL does is let a 3rd party operator use that copper for an agreed rate.

In many ways ULL won't have a significant effect on Telecom at all - rather than getting say $20 off a custumer directly for the cost of the circuit you're simply getting that same $20 off a competing telco who is leasing your copper. What has the potential to hurt Telecom is the provision of naked DSL circuits because they will then get customers who decide they don't need a $42 phone line per month along with their internet. This is where Telecom's convergence is going to give them a big advantage - they will have a VoIP NGN in place by the time ULL happens and will be able to deliver a voice service to customer using a VoIP phone at home or their mobile.

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#34715 3-May-2006 21:49

nzbnw:

I think what you are saying is a little unfair, Telecom is not "arrogant", and in a case of a National Network, it is expected for there to be a natural monopoly, basic economics. You must understand its not Telecoms role to increase economic growth, which seems to be the basis for LLU as far as the government is concerned, not for someone who wants to download illegal movies really fast.

I think what you are saying is a little unfair, there is much more to high speed internet than just downloading pirated content... One of which is advertised is watching bands live over the net with video/audio (see recent xtra ads), so far has anyone seen this in practice? Because I haven't.

So please stop trying to use the high speed internet = piracy card. Perhaps you should ask a few of the Vista beta testers how much bandwidth they use downloading Vista images (same applies to Linux images too).

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#34716 3-May-2006 21:51

Jaffa

I have heard rumours on what went on behind closed doors I may be wrong but what my sources have said so far seams to stack up :)

I think you're getting a little confused between the Commerce Commission recommendation, the recommendation by Douglass Webb who were both anti full ULL and the general feeling that Paul Swain was pro ULL. Swain asked both Douglass Webb and the Commerce Commission to review their findings after both recommending that full ULL not occur. It's pretty well accepted that he went to the cabinet in 2004 with his recommendation that full ULL should happen but had his decision overturned by the cabinet.

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