TUANZ’s Newman reports good progress from UK, Europe

The reformed telecommunications environment appears to be helping to introduce new services and bring down prices

TUANZ chief executive Ernie Newman, returning from a European trip, reports encouraging signs that the reformed telecommunications environment, particularly as implemented by BT, appears to be helping to introduce new services and bring down prices.

Newman travelled for the primary purpose of attending a meeting of the International Telecommunications Users Group (INTUG) in the Netherlands, but was asked by TUANZ to check on the environment in which the reformed BT is working.

BT has undergone operational separation, the move recommended by some bodies making submissions on New Zealand’s telecommunications reforms, and established last year a separate “access division”, Openreach, to provide wholesale services to BT’s competitors.

Newman says Openreach was described to him as “the solution no-one wanted, but everyone could live with”. There continues to be some agitation for full structural separation, but British regulator Ofcom decided operational separation was enough.

British observers say, according to Newman, that BT is going through a “genuine cultural shift”, and new services and lower prices appear to be coming through.

“Some customer relationships with Openreach have gone like a train, but other customers are still cynical,” Newman says.

Ofcom has expressed disappointment with broadband penetration in the UK after local loop unbundling — broadband still accounts for only 6% of lines, but the price drops certainly seem to be happening, he says; where a 2Mbit/s connection was available for £20 a month in 2004, 8Mbit/s is now typically priced at £13 a month.

“Voice over IP is marching ahead,” Newman says. WorldXchange has now introduced “voice over broadband”, that is, over the company’s own lines, rather than the internet.

The WorldXchange DSL line is attached to a simple distributor box and telephone instruments from any source simply plugged into the other side. ISPs are on their way to becoming simply “service providers”, with voice as a standard part of their offerings, Newman says.

And in response to the sceptics who say LLU wholesaling militates against the establishment of new broadband infrastructure, Newman cites a French-based company simply called Free (www.free.fr) which has laid fibre to the home across Paris and has promised that in any other region where it reaches 15% market share on the back of wholesale connections, it will lay its own fibre. “The ladder of investment works,” says Newman, referring to the theory that use of an unbundled loop from the incumbent will only be a first rung on the ladder and will lead to establishment of independent infrastructure.

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