The final mile too far for National

By PETER GRIFFIN

The National Party has finally stated its official line on local loop unbundling, endorsing the Commerce Commission's decision to reject full unbundling in favour of a narrower provision to encourage broadband competition.

National's communications spokesman, John Key, said the party caucus had thought long and hard on unbundling, but decided it was not the best outcome.

"I came at it from a position of naturally wanting to unbundle the copper loop," said Key.

In the end, however, National favoured the light-handed form of regulation proposed rather than full unbundling which had not been overly successful in stimulating competition in other countries.

Key expected the Government to support the commission's findings.

Communications minister Paul Swain will this month decide whether to accept the commission's view - or send the issue back to the commission for a re-think.

"To over-rule the commission is a big call", said Key, who thought that rejecting the commission's report on unbundling would be the equivalent of asking telecommunications commissioner Douglas Webb for his resignation.

"He's independent and has spent a year working on it," said Key.

He was aware of the argument that failing to fully open up Telecom's network to competitors could hurt New Zealand's chances of securing a free trade agreement with the United States.

He said he had more faith in fledgling wireless technologies than unbundling advocates such as Telecom rival, TelstraClear which claimed the wireless business case would not stack up for mass market telecoms for some time.

As far as the residential market was concerned, Key said the offerings currently on the market were reasonably good.

The MP used Telecom's high-speed internet service Jetstream at work and its lower speed cousin Jetstart at home.

He said the internet speed limits in the bitstream unbundling provision the commission favours were adequate for the time being, but might have to be reviewed as technology changed.

If the full unbundling of Telecom's last mile network was given, Key said it was unlikely that competitors would ever take it up, given the high cost of putting equipment in Telecom's telephone exchanges.

Unbundling would be held over Telecom as an insurance mechanism for decent wholesaling terms, but not used.

Key said that without full unbundling, Telecom's wholesale business would grow significantly, as Telstra's had across the Tasman.

"Telecom is going to convert a significant part of its business into wholesale," said Key.

Australia has forced the unbundling of Telstra's local loop network, but Telstra had countered that by offering more attractive wholesale deals.