Telecom: Xtra is not an ISP - it’s a brand-name

Xtra won't 'buy' services from Telecom's wholesale division, says Telecom

Xtra is not an ISP, it's a brand name and, as such, won't be buying services from the company’s wholesale division, says Telecom.

Despite this statement, Telecom is still keen to demonstrate publicly that the country's leading ISP is being held at arm's length from the wholesale side of the business — as per its accounting separation, says Telecom’s chief technical officer, Mark Ratcliffe.

"Xtra is a brand name we use for internet services. It's not a separate business unit," says Ratcliffe. He says Xtra is provisioned in exactly the same way as other ISPs but that it doesn't "buy" services from Telecom’s wholesale division as such.

"It's quite hard to talk about a buying relationship with an internal unit, without duplicating a lot of infrastructure."

Ratcliffe says customers on Xtra receive the same network performance they would receive from any other wholesale ISP under the same circumstances.

"The network performs in the same way for internal internet users as for the external ones,” says Ratcliffe.

However, despite these assurances, Computerworld understands that Xtra receives Telecom DSL as a Layer 3 service, whereas wholesale providers get it as a Layer 2 Tunnelled Protocol.

ISPs tell Computerworld that this means they have to install more expensive equipment for broadband than Xtra does.

Ratcliffe says Telecom is trying to work through exactly what accounting separation, as outlined by the company in June, means.

Telecom announced it would voluntarily split its business into two halves — wholesale and retail — ahead of government regulation.

The split means Telecom's wholesale division will be set up to run as an independent unit.

One of the goals of the wholesale unit is to offer "equivalent service-delivery processes and services levels" to wholesale customers. It will also offer transparent external reporting "so all our customers can see the facts" and oversight by an independent monitoring group.

"We'll be using accounting separation to report the performance of our wholesale unit versus our retail unit, particularly in terms of how we provide services internally," says Ratcliffe.

He says Telecom is trying to understand what the industry wants the outcome of structural separation to be — something he calls "equivalence".

"[That's] absolutely the same service delivery, with no advantage for retail or wholesale delivery units."

However, before deciding on the internal structure of Telecom, and how it will buy or sell services internally and so on, the company needs to "get an agreement on what outcomes people want," says Ratcliffe. That doesn't stop Xtra and the wholesale unit being split in two already.

"It is absolutely separate from the wholesale unit. The wholesale unit does not consult with Xtra, in terms of what its customers want, nor does it pass on information.

“It doesn't know what Xtra is doing. What Xtra chooses to do from a pricing point of view or marketing … is restricted to the retail unit."

Ratcliffe says Telecom is addressing the issue of end-user customers being forced to wait several working days or longer for an internet connection to a new phone number. But Telecom can't do everything at once, he says.

"What you will be seeing is that we've committed to making the performance between retail customers versus wholesale customers visible."

Ratcliffe says that's a top priority for the wholesale unit.

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