Telecom's late offer surprises rivals

By PETER GRIFFIN

A talkfest on the pros and cons of opening up Telecom's copper line network to competitors has thrown up no surprises, save the tabling of a last-minute deal by Telecom aimed at placating competitors and a change of stance from a player in the "don't unbundle" camp.

The debate has polarised the telecoms industry as submissions to the Commerce Commission point out equally well-put-together arguments for and against local loop unbundling.

But few expected Telecom's move on Thursday, when during a conference on unbundling in Wellington, it outlined a deal for competitors that would make unbundling unnecessary.

"Telecom is giving a commitment at this conference to reshape its current data services, taking them more towards an interconnection model," Telecom's head of regulatory affairs, Bruce Parkes, told the commission.

In layman's terms, Telecom is offering rivals such as TelstraClear links to customers on better terms and at a lower price, something TelstraClear has been pursuing for years.

"Telecom is committed to resolving the partial private circuit issue within a reasonable time frame and at a pricing level at which an efficient rival can compete," Parkes said.

The commission expressed interest in the proposal and is seeking more information from Telecom. But observers such as TelstraClear see it as a "last ditch effort" to fend off the inevitable.

The Telecommunications Users Association scoffed at the offer. Chief executive Ernie Newman said Telecom had come to it over a year ago with similar intentions.

"There's been absolutely nothing tangible since then to back up the hints," he said.

As the conference drew to a close, the chief executive of Counties Power, Neil Simmonds, altered his stance on unbundling.

A player in telecoms through its Wired Country subsidiary, and with bad memories of regulation in the electricity market, Simmonds now saw "practical" reasons for unbundling. Largely, they came down to price.

Simmonds said submissions from anti-unbundling players suggested they were unwilling to adjust their business models to allow for the lower pricing brought about by competition.

"The implication is that Telecom is getting a monopoly rent and that by Telecom charging more than is fair, [BCL and Woosh] can then charge higher themselves."

Faced with that situation he said the commission had little choice but to unbundle.

TelstraClear, for its part, claims that unbundling as it is currently envisaged by the commission will give little assistance in taking on Telecom in the residential market. It is lobbying for access to Telecom's "bitstream", effectively allowing it to buy a whole service for voice and data services from Telecom without having to install its own equipment in Telecom's exchanges.

With bitstream, TelstraClear could make a business case for reaching a larger number of customers economically, though it has not publicly released figures outlining its argument.

Telecom produced Bob Crandell, an economist and senior fellow at the Brookings Institute in Washington, who said: "It's too bad that over the last decade someone didn't deliver a fibre co-axial cable network. You don't have it so you look for the next best thing which is these wireless operators."