NZ LLU: a flop?

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freitasm

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#8923 7-Aug-2006 09:29

On a story on Stuff today "No flood of investors after unbundling" (be aware they remove articles after a few weeks online), the summary is

New Zealand companies expecting a flood of investment after the Government's decision to unbundle the local loop will be disappointed in the lukewarm reception some industry players now forecast.

Who didn't see this coming? This is only a surprise for people defending the LLU from day 0.

The story is a collection of quotes, but in summary it is about how ICT companies interested in create services based on new opportunities brought by LLU may not have help from international VCs.

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#43406 7-Aug-2006 09:54

It was always going to be the problem with a small market like NZ. Ripping the balls out of the pricing makes it so much harder to get an ROI unless you have the volume. Look at iiNet ditching ihug and NZ altogether. The article is right that TCL are really the only ones who will have the scale to compete.

You could end up with 3 or 4 companies dominating the market which is similar to the electricity retail situation and electricity is not cheap. NZ'ers are an apathetic bunch, we complain about everything but we are not prepared to change provider when there is a viable form of competition. Woosh is a classic example of this.

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#43411 7-Aug-2006 11:00

Does the fact that there aren't companies willing to invest at present mean the playing field should never have been made level? The fact Telecom's ahre price plummted upon the announcement is only representative of the fact that in this part of the world shareholders & analysts are like sheep who all follow each other rather than looking at the big picture?

I've always said Telecom will still dominate a large % of the broadband and phone market in 3 years time.

juha

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#43412 7-Aug-2006 11:19

Heh. Well, that's a funny one.

First... it says "forecasts". Does that mean "actual things that happened"?

No.

Second, there are actually positive developments mentioned in the story. Are they reflected in the first para?

No.

Third, is the new regulation about LLU only?

No.

Fourth, are they mentioning investment plans like the one Orcon announced?

No.

Oh well, based on that, I suppose we should go back to an un-regulated and non-competitive market where Telecom calls all the shots.

Yep, LLU is such a flop, isn't it? I mean, it hasn't even been enacted in law yet, so of course we can already start saying it went badly wrong.

Juha

freitasm

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#43414 7-Aug-2006 11:27

The regulation is not there yet, but people are already complaining...

juha

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#43415 7-Aug-2006 11:29

Well, maybe they should stop complaining then if it's not there yet?

Juha

tstone

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#43480 8-Aug-2006 08:45

juha: Well, maybe they should stop complaining then if it's not there yet?

Totally agree.....it's just that consumers have had such bad time it is hard to be patient. Christmas is coming!

juha

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#43482 8-Aug-2006 08:48

Totally agree.....it's just that consumers have had such bad time it is hard to be patient. Christmas is coming!

Yeah... it's only taken what? ten years? to sort out the mess. Correction: to have put forward a proposition to sort out the mess. :\

Juha

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Jama

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#43484 8-Aug-2006 09:04

tstone: Totally agree.....it's just that consumers have had such bad time it is hard to be patient. Christmas is coming!

Yes pity the poor consumers who have had such a 'bad time' with the rising petrol and power prices. Whoops... sorry I forgot I guess we are talking about broadband again!

juha

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#43486 8-Aug-2006 09:13

Jama: Yes pity the poor consumers who have had such a 'bad time' with the rising petrol and power prices. Whoops... sorry I forgot I guess we are talking about broadband again!

Yeah... everything goes up in price, like the line rentals that were increased by Telecom by the maximum allowable under the Telco Act. I'm sure people really appreciated that, and think the "free local calling" they get for their $42.35 a month is a great deal.

What do you mean, it's not a good deal? You only make a few local calls? Oh well, too bad that Telecom removed the option to pay for local calls then.

Want to have a DSL only line and use cheap Voice over IP calling instead? Sorry, can't do that. Have to pay that $42 a month to get DSL first.

Juha

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#43493 8-Aug-2006 09:51

Yawn... same old chesnut Juha.

geekiegeek

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#43498 8-Aug-2006 10:49

Jama: Yawn... same old chesnut Juha.

I have to agree. Until we see some real investment its all just talk. My veiw is that none of the telecom bashing ISP's have the money or the bollocks to invest the type of money needed to provided the services you are talking about Juha. It'll be same old, same old - let Telecom build it and then try and get the govt to force them to sell it to you cheap so you can resell it to your customers.

What you seem to forget is that we live in a small country with basically one expensive pipe to the outside world. This means that it will cost a hell of a lot of money to roll out your own equipment to a small customer base in most locations and you are still held back on price because you have to pay big dollers for all of your international traffic. Its going to take along to time to realise your ROI.

nzbnw

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#43501 8-Aug-2006 11:21

Well said geekiegeek. It seems to be every ones favourite sport these days. Telecom bashing will not achieve anything. And why does everyone pick on Telecom? One would have to say, nothing more than money .

Time will tell if LLU is a flop, but IMHO the government has made a big deal out of nothing, all it seems to gain votes. My vote for one will not find it self in the Labour camp. At least National has said publicly that they would have at least considered Telecom's offer(s) before implementing LLU. Our current communications minister thinks for some reason he knows best and when his mind is make up, then that’s the end of the matter.

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#43506 8-Aug-2006 11:40

geekiegeek: I have to agree. Until we see some real investment its all just talk. My veiw is that none of the telecom bashing ISP's have the money or the bollocks to invest the type of money needed to provided the services you are talking about Juha. It'll be same old, same old - let Telecom build it and then try and get the govt to force them to sell it to you cheap so you can resell it to your customers.

What you seem to forget is that we live in a small country with basically one expensive pipe to the outside world. This means that it will cost a hell of a lot of money to roll out your own equipment to a small customer base in most locations and you are still held back on price because you have to pay big dollers for all of your international traffic. Its going to take along to time to realise your ROI.

If what you said was true, fine.

It isn't though.

1) Telecom was given an unfettered monopoly in NZ. It has had that monopoly for the past 16 years. It still has that monopoly. What's the result of that monopoly? Affordable telecommunications with many service options to choose from?

2) You can argue that the ISPs should build networks instead of trying to leech a margin off Telecom's one. That's sort of valid, if you ignore the fact that said small providers have to compete against a massive state-supported monopoly that gets a huge amount of money each month simply because it's the only game in town.

3) The Southern Cross is not the only pipe to the outside world. It has now been paid for as well. It's not anywhere near full capacity utilisation, and it's currently being upgraded.

I just don't get it... what's wrong with competition? Do you like paying through your nose for basic phone services? Or should phone/internet connections be reserved for a few rich people and big businesses in NZ only?

This isn't Telecom bashing btw. Telecom was presented with a golden opportunity by the government and made the most of it - which it was entitled to, and still is. That's fine, and I have no truck with it. However, the people who come up with Telecom's substantial income every month have a right to question the deal and try to negotiate a better one.

Juha

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#43513 8-Aug-2006 11:52

I can see it going the same way, A government "agent" which basically collects "fees" and pushes all prices up...

I remember 0800's, I used to be able to hook up a home 0800 through Telecom for $4.95...... Thanks to government intervention, that luxury now costs $45.

No more Telecom quality network carrying the service and upkeeping the lines, more a sort of a "free-for-all thing where "dondy" providers share different ezipment, line interference etc., line capacitance and leakage problems.... ARGH!

Then you will get a huge pile of the "fly-by-night, sink-by-day" providers.
and who's going to invest now? so far it looks like none of the moaning Microtelco's are even breathing at the thought.

bonkiebonks

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#43528 8-Aug-2006 13:00

Yes! I agree with Juha!

Telecom was given a chance to prove itself worthy, but now the time has come for the local loop to be unbundled. It's now the chance for other players to prove LLU is indeed the way to go. Who knows, maybe if they fail to prove their point, we will see the monopoly being given back to Telecom.

It's just fair that chances were given time and again (i.e. 2003) and Telecom have repeatedly failed to prove their case - although I must also be fair to admit that Telecom NZ is a long way better than Telstra in Australia. I found a nice link from GP Forums to a thread on Whirlpool where alot of the Australian posters are moaning about their 1.5mbit internet. LOL at that!

http://forums.whirlpool.net.au/forum-replies.cfm?t=562033

Again, I do not believe we should take this an a proof that LLU is not gonna work for NZ. It has worked in many countries, and I personally believe the reason it failed in Australia is because of the poor legislation their Government have laid out. Lets all keep our fingers crossed that the same would not happen in NZ.

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