Unbundling gives Danes edge

Jorgen Abild Andersen

We're a world apart geographically, but when it comes to telecommunications, the Danes have a thing or two to teach us.

As director-general of the Danish national regulatory authority since 1991, Jorgen Abild Andersen has overseen the liberalisation of Denmark's telecoms market.

By most measures, he's done a fantastic job. Denmark is among Western leaders in terms of high-speed internet usage. Not bad for such a small country.

Andersen puts the success down to early telecoms industry liberalisation. The network of Danish incumbent TDC was opened to competitors in 1998.

Last year, Denmark had more than a million broadband subscribers in a population of 5.4 million.

The country enjoys similar levels of urbanisation, gross domestic product and industrial mix to New Zealand, but has one major advantage when it comes to communications: Population density in Denmark is 125 people per square kilometre. In New Zealand the figure is 15. That creates major challenges for New Zealand operators rolling out networks.

Denmark has the third-highest rate of broadband take-up in the OECD - around 18 per cent. In comparison, broadband penetration here is just under 5 per cent, well below the OECD average.

So did we make a grave mistake in not forcing Telecom to open its copper-line network to competitors?

"No, I wouldn't say you made the wrong decision," says Andersen.

"Every regulator has to find their own route to the desired outcome. It's different for every regulator."

The proliferation of flat-rate broadband deals based on unbundled services, and tax-exemptions for employers providing workers with high-speed internet connections also helped Denmark, says Andersen, who spoke at last week's Telecommunications Users Association conference in Wellington.

"But what strikes me is that unbundling has played a significant role in terms of broadband penetration in other countries, the level of investment and competition at all levels."

Andersen suggests the case for unbundling may be revisited here.

"I'd assume they would. But an unbundled local loop is only one step on the ladder."

Andersen had been briefed on decisions telecommunications commissioner Douglas Webb had in the pipeline and said it was completely in parallel with the route I want to take".

The relatively high level of broadband penetration and a competitive market for internet services in Denmark had not served to kill off TDC, which still has 75 per cent market share for DSL and 50 per cent for mobile.

In fact, Andersen says, TDC's competitors may not have been as successful as they might in seizing the opportunities unbundling offers.

Andersen believes infrastructure competition, where several competing networks are built by different operators, is the best model for a healthy telecoms sector. But he saw merit in the services-based competition being fostered in New Zealand - as long as operators progressed from simply reselling the incumbent's services to getting a deeper level of "bitstream" network access to finally building their own networks.

The problem with wholesale services was that the incumbent's competitors would always be limited to the technical attributes of the incumbent's network.

This could slow the development of so-called triple-play services where voice, internet and TV services are delivered over the same line.

"Even a two-megabit [per second] connection is not sufficient [to deliver it]," Andersen says.

The Government's Digital Strategy, which Andersen praised, calls for 5Mbps connections to be available for most residential homes by 2007. About $400 million has been earmarked for the digital strategy's implementation.

Jorgen Abild Andersen

* Favourite gadget: Laptop computer. "I'm not a tech freak at all."
* Next big thing in tech: "Everyone's talking about the next-generation network. But no one really knows what it implies yet."
* Alternative career: Has a law degree from Copenhagen University, and would probably be a lawyer.
* Spare time: Escapes to his summer house off the coast of Denmark whenever possible.
* Favourite sci-fi movie: "I don't like sci-fi." Prefers European directors such as Jean Luc Godard and Francois Truffaut, but not fellow Dane Lars Von Trier.