Telecom well short of wholesale target: ComCom

The New Zealand Commerce Commission's latest residential broadband uptake figures show that Telecom New Zealand Ltd. is well behind its self-imposed wholesale customer target.

Last week Telecom declared that it had already reached the 250,000 residential broadband user mark and that it had met its wholesale target as well. However the commission says while Telecom is on the verge of reaching 250,000 broadband customers, it has only just over 47,000 wholesale customers -- a long way from its promised 83,333.

Telecom had agreed with the government to deliver 250,000 residential broadband customers with one third of those from its wholesale channel as part of the government's decision not to unbundle the local loop. Then-communications minister Paul Swain said at the time that the decision not to unbundle but to instead opt for a wholesale regime was a "line call" and that whether that decision was reviewed in the future would in large part depend on Telecom's willingness to embrace the wholesale targets.

In May 2004 Swain said: "The extent to which this is achieved will influence any future decision I may make on whether to refer these issues back to the commissioner. The message to Telecom is that there is a chance to show good faith and truly pave the way for more competition."

However, late last week Telecom stunned the industry and observers when its chief executive, Theresa Gattung, announced that the wholesale target it had agreed with the government was 30 percent of "new growth" rather than one third of the overall residential broadband figure. Gattung also stated that this target had been achieved because 45 percent of the growth for the last quarter had come from wholesale. This was up on the 34 percent in the quarter to June 2005, and 23 percent in the quarter to March 2005. Overall, Gattung says that since the inception of UBS in November 2004, wholesale providers had attracted some 30 percent of new growth in the broadband market and therefore, Telecom had met its obligation to government.

The commission's broadband monitoring began in July 2004, not November as claimed by Telecom. At the time, the commission's broadband monitoring said that for the period July to September 2004, Telecom had achieved 20 percent of its 2005 target with 74,449 residential connections. The wholesale component then was 0.05 percent.

Both the current minister of communications, David Cunliffe, and telecommunications commissioner Douglas Webb have said repeatedly they will be expecting more from Telecom in terms of both service levels and wholesale delivery and that a failure to deliver would result in greater levels of regulation.

The commission's only comment on the claims by Telecom is to say it is "satisfied that the treatment of the target is correct".

The commission takes its numbers directly from Telecom. However, commission spokeswoman Kate Camp says they do check with ISPs as well.

"The numbers rarely match exactly, but the numbers the ISPs report tend to be higher than Telecom's, so we don't think that using Telecom's numbers distorts the outcome in Telecom's favor."

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