KEY POINTS:
It's fair to say the regulatory reforms unleashed on the telecommunications sector over the past year or so haven't played out the way some people expected.
The unbundling of the local loop - the process of opening up Telecom's copper network to competitive broadband service providers - hasn't
yet been the dream opportunity many of the incumbent telco's rivals were hoping for.
They'd barely got the keys to the doors of a couple of Telecom's exchanges, let alone connected any of their equipment to the copper, when the concept of "cabinetisation" popped up.
Cabinetisation effectively moves more of the grunt behind the phone and broadband network out of central exchanges and into cabinets on the streets. In short, a cabinetised network makes life more difficult for competitors wanting to make money by tapping into Telecom's copper loop.
But not all of the incumbent's rivals are grumpy.
Paul Clarkin, director of WorldxChange, says his company is seeing a surprisingly healthy interest in its new "naked DSL" internet services, another upshot of the industry's recent regulatory overhaul.
Naked DSL is the provision of a broadband connection without having to sign up for a phone line through Telecom.
Now companies such as WorldxChange will sell you just the DSL service, but offer you internet-based phone connectivity to go with it.
Demand for naked DSL has far exceeded expectations, Clarkin says.
"We haven't even launched it publicly yet and we're already doing six times what our intended take-up rate was."
The company has been offering telco services since 2002, but somewhat ironically only began providing broadband services a couple of years ago.
"If you were to polarise the industry into those chasing local loop unbundling and those that are not, we would be very firmly in the 'we are not' [camp]," Clarkin says.
Another unusual aspect about WorldxChange, which today has more than 70,000 subscribers, is that it is spending big money upgrading its network infrastructure at a time when other ISPs are taking a more conservative approach.
The company has just spent "probably the equivalent price of an Aston Martin" buying high-performance broadband services routers and associated equipment from network technology company Juniper Networks.
"Demand for advanced services continues to grow, and we need to capitalise on that growth by driving down network costs and increasing ARPU [average revenue per user] with innovative new services," Carkin says.
Juniper's lead systems engineer, Ian Quinn, says he expects to make similar sales to other ISPs also looking to find better ways to improve profits in the new market environment.
"Margins on internet traffic are pretty slim so the path to creating more revenue and attracting more customers is really, as well as being able to sell internet, being able to deliver voice [over the internet] like WorldxChange are doing plus add other multi-play services. So you might offer a content service that, say, gives people access to TVNZ's video content without taking that out of your internet plan," says Quinn.
"The concept of being able to add more services on and sell those to your existing base is the way of increasing revenue to help the service provider invest in their network but also open up those new applications to the market as well."
Meanwhile, Clarkin says one of the issues the industry faces in the new environment is getting the right type of manager into leadership roles within telco and ISP companies.
The need for leaders who can get a grip on how to turn the complex and changing technological landscape into viable business opportunities has been highlighted as the industry has gone through the regulatory reshape of the past year or so.
"What was clear last year was that you need that elusive person in there that is a technologist but understands the commercial ramifications and is also senior enough in the company to make those decisions, and they're quite rare," says Clarkin.
"Consequently, I think it's fair to say that some of the industry players have had a disconnect between what they were agreeing to with the future at a technology level and what their business plans would do."
Let's hope the industry as a whole does find those leaders because it would be a shame if consumers were to lose out on the benefits of the reforms simply because the ISPs and telcos trying to take advantage of them failed to do so.
