Not a few surprised gasps were heard in New Zealand’s ISP-land when the Commerce Commission released its draft determination on TelstraClear’s application for a regulated Unbundled Bitstream Service. Most observers expected the determination to go in Telecom’s favour, but the Commission says TelstraClear should have access to DSL — on its terms, rather than the incumbent’s.
Telecom’s corporate strategists must be asking themselves what went wrong because, so far, Telecom has outwitted everyone at the regulatory game. Without knowing what exactly is going on behind the scenes it’s hard to say for certain, but I’m guessing that the Commission’s patience with Telecom has worn thin. The rollout of the commercial proxy UBS is still not ready, it’s been fraught with technical difficulties and, what’s more, the ISPs reselling it say they’re not making any money on it.
It’s possible Telecom knew there had been enough squeaky wheels complaining to the Commission about UBS and was fighting a losing battle, but hoped that the process would take the usual two to three years. That amount of time would buy Telecom enough breathing space to launch the superior ADSL2+ as a premium service and it could exit out of retail space for first generation DSL, leaving it to other ISPs. ADSL2+ is apparently considered part of Telecom’s loosely-defined Next Generation Network and won’t be made available wholesale.
Thanks to the Commission speeding up the decision process considerably, however, it looks like there could be some major changes coming up in the retail broadband area soon.
That said, it’s much too early for TelstraClear to break out the bubbly and start planning the migration of its dialup customers to DSL. The determination is only a draft, and much can happen between now and the final decision (don’t forget what happened to Local Loop Unbundling).
Therefore, it is important for the “interested parties”, or ISPs, wanting better access to Telecom’s DSL to make their voices heard with the Commission. Once the determination is done, there will be no second chance. ISPs need to go through the determination and provide feedback on technical issues, such as explaining why Telecom shouldn’t be allowed to limit applications at network Layer 2.
One of the issues with the Telecommunications Act 2001 is that the Commission is expected to act on complaints from access seekers and not on its own initiative. There is one exception, outlined in Schedule 3 of the Act. This allows the Commission to investigate whether or not a currently regulated service should be altered. It is basically the vehicle to get rid of the 128kbit/s upstream speed limit. With such a low upstream speed, it’s not possible to get the full benefits of full-rate downstream or even share the connection without major technical headaches, so it’s crucial to open it up as well. If ISPs want a change they should write to the Minister of Communications and the Commerce Commission and say so.
There is another side to every coin, and no, despite breaking a lance for DSL access, TelstraClear doesn’t get the White Knight Award. It withdrew backhaul from the determination presumably because TelstraClear, unlike smaller ISPs, has points-of-presence all over the country. This means TCL will be able to sort out its own backhaul cheaper than competing ISPs, which will have to purchase expensive ATM connection gear to feed DSL customers. And then there’s TCL’s de-peering nonsense as well. The Commission has to be careful that the determination doesn’t lead to a broadband duopoly in New Zealand.
Improved wholesale DSL could also trip up those ISPs that understand that leeching a margin off Telecom’s network is never going to be good business. It could set back their efforts to roll out wired and wireless networks by these ISPs by years, in fact.
Everyone knows that online advertising doesn’t work (right?). Unfortunately, there must be some rather misguided advertisers out there who are responsible for almost doubling the spend on online ads in New Zealand last year. That’s still only $15 million annually, but a worrying trend because it means there’s now more money going into online ads than for cinema advertising.
Even more disturbing, Yahoo doubled its profit over the last year thanks to advertising revenue. It’s all a fluke of course, and next year will see sites depending on online ad money crash and burn. Don’t say we didn’t you warn you.
Those who have forecasted the imminent demise of print publishing will be similarly frustrated. The only sector to actually increase its share of the ad spend, aside from online, was newspapers and magazines.