Telecom is claiming to have met and even exceeded its self-imposed target of delivering 250,000 residential broadband customers, one third from wholesale partners, but the rest of the industry remains sceptical.
In answer to a question at its quarterly financial briefing, held on Friday in Wellington, chief executive Theresa Gattung claimed the wholesale target is 30% of "new growth, and not one-third of the 250,000 residential broadband customers". Gattung said that since the company was delivering "about 45% of total residential broadband growth" through wholesale she believed Telecom had met and exceeded the target set.
Dispute over the goal goes back to the original decision by the Commerce Commission not to recommend unbundling the local loop. The commission recommended a wholesale model and the government agreed it would adopt the same on the proviso that Telecom met certain targets — targets there were set by Telecom itself. Those targets consisted of delivering 250,000 residential broadband customers by the end of 2005 and providing one third (33.33%) of those customers via wholesale means.
In May, 2004, when announcing his decision to accept the commission's recommendation, the minister of communications Paul Swain said: "I understand that Telecom intends to exceed the recommendations for bitstream unbundling set by the commissioner. The extent to which this is achieved will influence any future decision I may make on whether to refer these issues back to the commissioner. The message to Telecom is that there is a chance to show good faith and truly pave the way for more competition."
At last year's Telecommunications and ICT Summit in Auckland, Gattung appeared to agree to those goals.
She said, "We see about a third of those connections on our network being delivered by other players under the wholesaling and unbundling regulations that are in place."
The commission itself monitors Telecom's broadband uptake and produces a quarterly report into the progress Telecom is making towards its target. In November, 2004 it released the first of these reports and it said: "The commission commenced its broadband monitoring following Telecom’s announcement earlier this year that it will have no fewer than 250,000 residential broadband connections by the end of 2005, of which more than a third (approximately 83,000) will be resold Jetstream products or wholesaled Bitstream services".
The commission has released a statement in response to Gattung's comments on the broadband target.
In it the commission says it has "clearly informed" Telecom that the target of 250,000 residential customers require that more than a third will be resold Jetstream products or wholesaled bitstream services.
The new minister of communications, David Cunliffe, has also voiced his concerns about the wholesale target as recently as July 28, when he said, "More work will be required for Telecom to achieve its commitment of one third or 83,000 of those connections to be wholesaled".
Prior to the election Cunliffe told Computerworld that he was very concerned about Telecom's approach to broadband, both with regard to the upload speed of its service offerings and to its wholesale service. Cunliffe told Computerworld that the target of one third was "extremely low" given that other telcos around the world in countries like Australia and the UK were delivering more than two thirds of broadband residential connections via a wholesale service.
At this year's Telecommunications and ICT Summit, Cunliffe reiterated his determination to hold Telecom to account over the target.
"However more work will be required for Telecom to achieve its commitment of one third or 83,000 of those connections to be wholesaled. I have already signalled publicly that the government regards a healthy and competitive broadband wholesaling market as essential. Telecom New Zealand's wholesaling commitment is important, and a response will follow if it is not met."
As of September 30, Telecom says that it had a total of 244,086 residential customers. Of these, 47,059 were wholesale ones, or 19.3% of the total. It is unclear how many broadband customers Telecom has currently, but analysts Computerworldspoke to say that with only two months left of the year and the holiday period coming up, the telco is unlikely to meet the one-third of 250,000 target.
The commission is expected to release its latest quarterly report on Telecom's broaband figures early next week.