Telecom's pricing moves branded "a joke"

AUCKLAND (02/10/2004) - Ihug Ltd'.s managing director Martin Wylie calls Telecom New Zealand Ltd.'s latest broadband pricing announcement a "cynical move" designed to squeeze the market dry.

Telecom has announced a new JetStream service that offers 256K bps (bits per second) download with 128K bps upload and a choice of either 1G byte a month, 3G bytes a month or 10G bytes a month traffic caps.

The new service closely resembles the wholesale service outlined by the Telecommunications Commissioner in his final report into unbundling of the local loop. The commissioner rejected full unbundling in favor of requiring Telecom to offer a wholesale residential service of not less than 256K bps download and 128K bps upload.

"It's an entirely cynical move that's designed to clean up as much of the market as possible while Telecom still retains its full monopoly position. By the time we get to negotiate a wholesale service Telecom will own that market and we'll be left with nothing. Telecom will drag its feet over the negotiations and will saturate the market with this service and whatever is left will be too little, too late."

Wylie says the time has come for government to realize Telecom is a monopoly and to force its break up.

"If government can't see what Telecom is up to at this point then it's simply not looking. How can they talk about New Zealand being a knowledge economy if this kind of thing is going on?"

Wylie says it's not enough to look at each market segment in isolation -- the entire telco market including broadband, voice, cellular and business needs to be considered as a whole.

"Why is Telecom moving so slowly to introduce broadband? It's protecting its voice market. Telecom wants no part in voice over IP (VoIP) because it sees that as a disruptive technology."

CallPlus founder Annette Presley calls the move "a joke" and points to Telecom's bundling of services as evidence of its monopoly power.

"Telecom is bundling JetStream with its tolls and saying 'you'll only get this new service at this price if you buy tolls from us'. That's not a wholesale agreement, that's Telecom tying in the customer from one end to the other. Nobody else can do this anywhere in the world."

Both Ihug and CallPlus are members of a lobby group calling on government to change its position on unbundling. The group, which comprises of TelstraClear, CallPlus, Slingshot, Ihug and Compass, has launched its "campaign for choice" and wants members of the public to express their opinion over the lack of telco competition in New Zealand.

Telecom spokesman John Goulter says the lobby campaign is more heat than light and is something of a red herring.

"The Commerce Commission recommendation is about unbundling of the local loop with regard to broadband and isn't really related at all to the price of home lines around the country."

Goulter says the new JetStream product group will be made available for wholesaling by the ISPs should the commission's recommendations be accepted by government.

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