Unbundled future bleak: BCL

By PETER GRIFFIN telecoms writer

State-owned transmission company Broadcast Communications has signalled it may have to abandon its multimillion-dollar move into the telecoms industry and radically restructure if the Government opens Telecom's copper line network to competitors.

BCL delivered one of the gravest indictments yet of "local loop" unbundling in a submission to the Commerce Commission last week as lobbying around unbundling heated up before a final decision on whether it should proceed.

BCL, which has undergone huge change as it repositions itself as a wholesale supplier of wireless data and telephone services in the regions, forecasts a grim future for itself should Communications Minister Paul Swain approve the commission's draft unbundling recommendation.

The company said a wide definition of the "public data network" in the report meant its Extend wireless network used by Telecom might also have to be opened to competitors, tearing apart its business model.

"Telecom could have to sell BCL's services at a net loss. This would be a disincentive for Telecom to purchase further broadband wireless access services from BCL," its submission read.

BCL has spent about $25 million upgrading transmission sites to enable it to sell wholesale services to partners such as Telecom and to internet providers ihug and Iconz.

But the cost of BCL getting into the telecoms game is much higher. In late 2000 it paid $30.5 million to Clear Communications to end a restraint of trade agreement that prohibited it from becoming a telco.

BCL's fate is closely tied to that of Telecom's through the partnership the two have struck in the regions and as part of the Government's Probe rural broadband initiative.

BCL's managing director, Geoff Lawson, said the impact of unbundling on BCL would be a loss of revenue amounting to tens of millions of dollars over several years.

"Unbundling as envisioned in the draft report has the potential to undermine [our] investment."

The commission's network access group manager, Osmond Borthwick, said there was scope in the draft report to mandate unbundling across parts of Telecom's local access network that it may lease from others - such as BCL. The commission would consider opposition to this.

A slew of submissions on the unbundling issue has the telecoms industry and the business world in general divided on where unbundling should proceed.

The pro-unbundling camp is headed, not suprisingly, by TelstraClear with support from CallPlus and owner Malcolm Dick's Australian investment Swiftel, the Consumers Institute, film studio DayBreak Pacific, the North Shore City Council and Chime Communications, a subsidiary of Australian listed company iiNet, which bought ihug in September.

Those opposing unbundling include Broadcast Communications, Telecom, Woosh Wireless, the Business Roundtable, Federated Farmers, Business New Zealand, Teamtalk, NZX, NGC and Zespri.

Opponents of unbundling point to the hive of activity generated by wireless providers such as the partnerships between Woosh and Vodafone and BCL and Telecom.

But the Telecommunications Users Association in its submission pointed out that there was as yet no successful national competitor to Telecom to prove competition could thrive without unbundling.

BCL

Broadcast Communications Ltd.

TVNZ subsidiary, but becomes separate state-owned enterprise on December 31.

Broadcasts TV and radio to 99.8 per cent of New Zealanders through network of more than 400 transmission sites.

Owns a 28-site national broadband wireless access network, branded Extend, which goes live this month.

Employs 300 people.