Telecom deal with Ihug staves off UBS investigation

Sweeter wholesale terms from Telecom mean Ihug will offer 1 and 2Mbit/s DSL in January

Facing regulatory pressure, Telecom has agreed to improve the terms for its residential Jetstream DSL resale in order to accommodate national ISP Ihug’s request for access to faster broadband speeds.

The agreement was reached despite Telecom earlier claiming that there was nothing it could do to ensure immediate access for ISPs to DSL plans that were as fast the ones currently offered for its retail customers.

Over the past month, Telecom has vigorously defended its decision not to make available faster than 256kbit/s wholesale unbundled bitstream service (UBS), citing “real technical reasons” such as the move to a different type of speed limiting for the 1Mbit/s and 2Mbit/s services.

Following the agreement, Ihug withdrew its application with the Commerce Commission for access to 1Mbit/s and 2Mbit/s UBS. The Commission says Ihug’s $22,500 application fee will be used to pay for the cost of investigating the application so far. Any remainder will be refunded to Ihug.

Ihug now intends to sell 1 and 2Mbit/s DSL from January onwards, says general manager David Diprose. However, the service, named “bliink” by Ihug, will not be the UBS variant but rather standard Telecom Jetstream with a 192kbit/s upstream. It will be delivered as a network layer 3 service and not a layer 2 tunnelled protocol one like the 256kbit/s UBS.

Diprose adds that L3 service, which it buys from Telecom at a 16% discount, will be replaced in March with UBS that has equivalent downstream speeds but slower upstream speeds. The government has legislated that UBS must not be faster than 128kbit/s in the upstream direction and that it is not required to support any real-time delay-sensitive applications, which could include voice, virtual private networking or certain games.

Telecom's general manager of government and industry relations, Bruce Parkes, says Ihug and other ISPs are now able to supply their own international bandwidth for Jetstream. Before, under Telecom’s wholesale services agreement (WSA), ISPs had to buy international bandwidth from Telecom and also take over customers’ line rental at 2% discount and toll calls.

The two latter conditions are now no longer mandatory, meaning customers can buy broadband connections from any ISP but leave their phone lines with Telecom.

TelstraClear, which filed an application for access to faster UBS as well as Telecom’s business DSL, Private Office Networking, intends to go through with the process, says spokesman Mathew Bolland.

“Our application for UBS remains with the Commission,” Bolland says.

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