The Commerce Commission has released its ruling on the terms Telecom must meet to make unbundled sub-loop services available to other telecommunications providers — and they are 26% higher than for the local loop.
Telecom is currently deploying 3,600 roadside cabinets on its network. This "cabinetisation" shortens the length of the copper lines used to connect customers to Telecom’s network by bringing fibre optic cable closer to residences and businesses. That in turn boosts ADSL broadband speeds.
However, it would also threatens to strand the unbundled lines of competitors in the exchanges unless the sub-loop can similarly be unbundled.
“Access to the sub-loop services will allow Telecom’s competitors to take advantage of the shorter copper telephone lines that result from the cabinetisation process," says Commissioner Anita Mazzoleni.
Under the Commission’s sub-loop unbundling determination, released today, competitors are provided with access to Telecom’s roadside cabinets.
The Commission’s decision covers the three unbundled sub-loop service. The sub-loop unbundled copper local loop service provides competitors with access to the copper line between Telecom’s roadside cabinets and customers’ premises and the sub-loop co-location service allows these competitors to locate equipment within Telecom’s cabinets. The sub-loop backhaul service provides fibre transmission capacity between these cabinets and Telecom’s local telephone exchange buildings.
The Commission has set a monthly rental charge ($11.99 per line in urban areas and $22.14 in rural areas) that Telecom’s competitors must pay for access to the sub-loop unbundled copper local loop service. The monthly rental for the sub-loop co-location and sub-loop backhaul services will be calculated on a cabinet-by-cabinet basis.
The charge is related to the cost of the cabinet, the Commerce Commission says. The Commission has decided that, for cabinet co-location, each party will pay a share of the cost of the roadside cabinet based on the proportion of occupied space that it is using.
The Commission says it has balanced the investment incentives of Telecom and its competitors.
"Although the combined cost per customer for the unbundled sub-loop services is approximately 26% higher than the corresponding costs for local loop unbundling, service providers will be able to provide customers with higher-value services over the sub-loop services," it says in a statement. The determinations received a harsh reception from Orcon CEO Scott Bartlett. “The commission has failed to protect the interests of consumers, instead opting for a pricing structure that inevitably will lead to market domination by one player," he said in a statement today. “The commission’s decision not only prices Telecom competitors out of the game it also lacks any alternatives for continued investment in local loop unbundling, taking us back to the ‘bad old days’." Bartlett says all of the improvements in broadband price, speed and service Kiwi consumers have benefited from during the past two years have been as a result of competition brought about by unbundling. But that may be coming to an end. “With this determination, any player would need between 25% and 30% market share to engage in sub-loop unbundling. That’s about as much as the entire non-Telecom industry players combined," he says. “The determination is flawed. He says the commission's asumption that higher costs will be paid for by high value services is flawed given the state of the economy and pressure on prices. He adds that Telecom's “Loyalty” offers to ISPs not unbundling demonstrate company's costs aren’t as high as they say they are. "Because Orcon led the unbundling of the local loop, the so-called loyalty offers have been structured in such a way as to prevent us from taking advantage of them. This is a blatant breach of the separation undertakings," he says.