Unbundling local loop ‘not enough’

NZNOG believes more action is needed to increase competition in the telco market

Local loop unbundling is not enough – so says InternetNZ, as well as number of panellists taking part in the New Zealand Network Operators Group (NZNOG) conference, held in Wellington last week.

In a recent submission to the government on broadband, InternetNZ suggested a number of other ways of increasing competition in the local telco market, as well as unbundling the local loop. These included use of government assets – such as BCL’s fibre network – by others, and reorganising Telecom itself, so as to reduce the vertical integration hold it has on the market.

This integration is “the biggest problem with Telecom”, says InternetNZ president Colin Jackson. Aspiring competitors in one part of the telco market have to turn around and buy services from another part of Telecom. Naturally, Telecom acts against this competition. It does so by manipulating available speeds and data caps, which is exactly how a dominant incumbent would be expected to behave, says Jackson.

CityLink representative Jonny Martin told the NZNOG panellists that local loop unbundling was not worthwhile now. Three years ago it might have been worth doing, he said. If it happened tomorrow it would take between six months and a year to develop useful local loop-based products, during which time Telecom would likely employ various counter-measures and delaying tactics.

“[Telecom] will do the absolute minimum it must to meet legislative demands,” says Martin. With such constraints “it will take at least two years to get to the stage where [the unbundled local loop] behaves as it should.”

Even at that point rival telcos could still find they had bought a lemon as a lot of the old copper wire is not in a very good condition, says Martin. It could very well prove incapable of carrying higher bandwidth technologies such as ADSL2+ over realistic distances. Noise and crosstalk would also limit the number of services that one cable could carry, he claims.

Meanwhile, Telecom would be building-out fibre as close to the customer as possible because of the access it has to the roadside cabinets it owns. Competitors can only put equipment in at exchanges, he says.

And, if such major concessions were made by Telecom, following years of political manoeuvring, it would then be several years before more reforms would be possible and this solution would still be a sub-optimal one. The answer, Martin believes, is for competitors to build-out their own networks and make arrangements with the various organisations involved to gain access to trenches and rights of way.

Tom Vest, of the Californian-based Cooperative Association for Internet Data Analysis (CAIDA), has doubts about this strategy, however. Massive fibre deployment might work in a developing country, he said. But in New Zealand there would be complications such as competing rights of way, which would make the exercise a costly one.

Vest also raised the “ethical question” as to whether the copper network was, in fact, Telecom’s property which the government would effectively be confiscating.

Ihug representative David Diprose, who considers unbundling the local loop to be almost a done deal, countered that no-one was trying to “take away an asset”. What was being suggested was that others pay a fair price for commercial access to the local loop.

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