Report points to local loop unbundling

By PETER GRIFFIN, IT editor



The Government is playing down the significance of a leaked report that points to local loop unbundling as the most efficient way of kick-starting competition in the market for high-speed internet services.

Part of the "Digital Strategy" initiative being led by the Associate Minister of Communications and IT, David Cunliffe, the document emerges as the Government finalises its position on the contentious unbundling issue.

The Cabinet has reviewed the Commerce Commission's recommendations against full unbundling and will release its own findings this month.

The report weighs up the pros and cons of leaving the development of competition to challengers building their own networks versus regulating to open Telecom's network to competitors - so-called "facilities-based" competition.

"Facilities-based competition may be the most efficient (or perhaps the only) way to achieve competition, given New Zealand's small, thinly dispersed population and rugged terrain," the report read.

That would appear to be a vote in favour of unbundling on behalf of the Government. But officials in Cunliffe's office said it was a draft report and had yet to go before the Cabinet.

It had not been used to advise the Government in making its decision on unbundling.

The report however notes that broadband uptake in New Zealand has been "uncharacteristically low" by OECD standards and that pricing is considered a factor in low take-up.

It also goes on to suggest that by 2010, 85 per cent of home users will have access to 50Mbps (megabit per second) internet connections - more than 10 times what is available to them now through Telecom.

Research centres would become involved in "synchronised astronomy" projects under a programme to link universities around the country and overseas via a huge data network.

Hospitals would be sending digital images of cat scans over similarly high-capacity links.

The seemingly ambitious targets are understood to have been backed up with technical information from Telecom.

But industry players such as Telecom and TelstraClear will have to significantly upgrade their networks to make them a reality - spending millions in the process.

Telecom's head of regulatory affairs, Bruce Parkes, said the targets in the report could only realistically be achieved if unbundling was not the primary method used to stimulate competition.

"You're going to need to get fibre a lot closer to the end user. There needs to be regulation that doesn't penalise investors."

The digital strategy

WHAT'S AHEAD

December 2004 - all schools to have access to broadband through Project Probe.

2005 - A high-speed network linking the country's educational institutes to be built.

Government-funded projects to raise awareness of broadband.

Fund groups such as E-regions to help achieve Probe objectives. 2006 - fund delivery of broadband to all public libraries and Citizens' Advice Bureaus as part of Project Probe.

2008 - 95 per cent of all health and disability facilities to have access to a minimum 10Mbps broadband link.