ISPs are demanding increased regulation after Telecom missed its self-imposed wholesale broadband target.
Telecom had set itself the goal of delivering broadband to 250,000 residential customers with one third of those connections being offered via wholesale partners.
However, while exceeding the 250,000 target, Telecom fell well short of the wholesale component of the pledge.
Ihug chief executive Mark Rushworth says that a review of the telecommunications regulatory regime is even more criticial now that Telecom failed to meet its wholesale pledge. Local loop unbundling is the way forward according to Rushworth, and says Ihug's Australian mother company is selling 24Mbit/s ADSL2+ connections across the Tasman for A$29.95 whereas New Zealanders pay twice that for 256kbit/s connections with non-broadband 128kbit/s upload speed.
Annette Presley, CEO of ISP and telco Callplus, says the broadband figures are "no cause for celebration" and points to the latest OECD report which says that New Zealand is at the bottom of the league of developed countries when it comes to fast network connections. Leading European countries have over 20% of inhabitants on broadband, according to Presley, whereas New Zealand is well below the OECD average of 10.8% connections with a meager 6.9% penetration.
The ISP Association of New Zealand, ISPANZ, echoes Ihug's calls for a regulatory review of the telecommunications market. David Diprose, president of ISPANZ and Ihug's industry and regulatory affairs manager, says the wholesale market in European countries is on average half of the entire broadband business.
Medium-sized ISP Orcon issued a more optimistic statement on the broadband numbers through its general manager of operations and regulatory, Scott Bartlett. "Orcon was interested to read that Telecoms [sic] broadband announcement this morning has fallen short of meeting the targets set last year for wholesale broadband uptake, and wonder what is in store from the Government as a result," Bartlett says in a written statement.
Bartlett says Orcon is encouraged by the wholesale growth rates. While it is disappointing that New Zealand is still at the bottom of the OECD when it comes to broadband uptake, Bartlett is hopeful that Telecom will consider extending further assistance and promotional offers to ISPs such as Orcon to encourage market growth. "We are the best placed to assist them in meeting any further targets," Bartlett says.
Colin Jackson, president of InternetNZ, says Telecom exceeding the number of retail connections it pledged to deliver while missing the wholesale target by 20,000 shows it totally dominates the market. A radically different regulatory framework is needed, Jackson says, and says that the current one has not delivered on competition for New Zealanders and cannot do so in its present state.
Minister of communications David Cunliffe has ordered an industry stocktake and a review of the Telecommunications Act 2001 as criticism of the slow and light-handed regulation of Telecom mounts. Cunliffe promised to act against Telecom last year if it failed to meet the wholesale target, which he described as being light.
However, to date Cunliffe will only say that he does not wish to pre-empt the process of industry consultation he claims to have put in place and expects to make a decision on what to do in the middle of this year at the earliest.
When it became apparent that the wholesale target would be missed last year, Telecom chief executive Theresa Gattung stated that the goal was never one-third of all customers, or 83,333. Instead Gattung says that it was a third of all new broadband customers, a quota that Telecom says it met last year. Both the Commerce Commission and Cunliffe disagree with Telecom, however, and insist that the pledge was for one-third of all residential broadband connections by the end of 2005 to be wholesaled or resold.