TelstraClear and the Telecommunications Users Association (TUANZ) have warmly welcomed the Commerce Commission's recommendations over the wholesale broadband market.
Ernie Newman, chief executive of TUANZ, says the Commission has exposed Telecom's "scaremongering", referring to the telco's insistence that providing full-rate DSL would put the service at risk for some customers.
According to Telecom, providing DSL at the full-rate the DSLAM (Digital Subscriber Line Access Multiplexer), which is the equipment in telephone exchanges or roadside cabinets that customers connect to, would increase noise to the point that some customers in rural and outlying urban areas would have to forego broadband.
The Commission has rejected Telecom's argument, noting that the telco has provided full-rate DSL since the inception of the Jetstream service in 1999, and is still doing so to a number of customers.
Due to this, the Commission has set the Peak Information Rate (PIR), or the maximum downstream data rate of the regulated service to the maximum that the DSLAMs are capable of. With Telecom's current equipment, this is 7.6Mbit/s after overheads are removed.
Telecom's manager for government relations and industry affairs, Bruce Parkes, maintains that "unconstrained broadband" will signficantly impact on Telecom's ability to provide broadband to some customers. He claims that up to 72,000 customers in rural and urban areas could be affected by the unrestrained broadband. According to Parkes, the Commission has decided the risks to those customers are outweighed by the need to increase competition. It is not known where these 72,000 customers are or whether or not they currently have broadband.
The commission also says there is no justification for Telecom to charge different wholesale rates for business and residential UBS, as there is no material difference for Telecom to provide the two which run over the same network and have the same service parameters. Therefore, a single, uniform wholesale rate will be provided by Telecom for both business and residential UBS to TelstraClear.
The commission has set the price TelstraClear will pay for "bitstream access" at $26.57 per connection.
Telecom's controversial "churn" fee, the money it charges other providers when customers switch to other to another ISP, is also deemed to be too high by the commission. Although Telecom has dropped the fee from $110 to $36.42, the Commission says a figure of between that number and $8 is more reasonable.
In its submission, Telecom said it would need 20 weeks from from the date of the final UBS determination to implement a regulated solution, however the commission says it will have no more than four weeks because it already has in place the systems and processes it needs.
Upstream or upload speed is not mentioned in the Commission's document. Currently, Telecom limits this to 128kbit/s for its commercial proxy UBS and retail Jetstream service, even though an unrestrained ADSL service can provide up to 800kbit/s. This is due to an earlier determination by the Commission which saw a regulated bitstream service with a maximum upload speed of 128kbit/s being enacted as an amendment to the Telecommunications Act 2001.
TelstraClear's head of government and industry affairs, Grant Forsyth, says his company is by and large pleased with the way the Commerce Commission's determination is going.
As for the pricing, Forsyth says TelstraClear is still looking into how the commission has calculated it to make sure that there is a sufficient margin built in to make delivering the regulated service viable. He notes that providers of Telecom's current commercial proxy UBS have to cross-subsidise that service, however, indicating the price could be too high.
Forsyth also puts a damp squib in expectations of the regulated service being available before Christmas. He says that while Telecom is currently supplying UBS to wholesale customers, TelstraClear needs to put in place data backhaul and ensure that its provisioning systems interface correctly with Telecom. Although work on this has already started, Forsyth says that TelstraClear needs to know the specifications for Telecom's systems to finalise the set-up.
Interested parties have until October 27 to make submissions on the statement, after which date the final determination on TelstraClear's application will come into effect.