Commerce Commission to investigate TelstraClear and Ihug UBS applications

Commissioner Webb promises a speedy investigation

Much to Telecom’s chagrin, the Commerce Commission has decided to go ahead and investigate TelstraClear and Ihug’s applications for a regulated wholesale unbundled bitstream service (UBS). Telecommunications Commissioner Douglas Webb has promised the investigation will be a speedy one.

Currently, there is no regulated UBS as per the amendments to the Telecommunications Act 2001, only Telecom’s “commercial proxy” of the service. Telecom’s UBS offers the minimum speeds set out in the Act, or 256kbit/s downstream and 128kbit/s upstream. The commercial proxy UBS is a Layer 2 Tunnel Protocol service that is labelled “internet grade” by Telecom, with low levels of committed throughput, high latency and unspecified amounts of packet loss.

Before its commercial proxy UBS was ready to be commissioned by ISPs, Telecom launched faster Jetstream DSL plans, running at 1 and 2Mbit/s down and 192kbit/s upstream. These are priced at similar levels to the slower UBS, and have stuck in the craw of ISPs who feel they are left selling an inferior service.

TelstraClear has requested a regulated UBS that provides faster download speeds, defined as any that the service is technically capable of supporting. Ihug on the other hand would like to have access to the 1 and 2Mbit/s speeds on a wholesale basis.

Telecom is refusing to provide faster than 256Kbit/s download speeds for its commercial UBS currently, citing unspecified technical reasons. It will offer a 1Mbit/s service in March next year, followed by a 2Mbit/s option some months after. Based on the future availability of faster wholesale DSL, Telecom says the Commerce Commission should not go ahead an investigate TelstraClear and Ihug’s applications, according to submissions made by its legal counsel.

Webb says he intends to process the applications “as rapidly as possible” in order to provide certainty in a quick-changing broadband market. The Commission has recently faced criticism over the long and expensive process for access determinations, which can take up to a year to decide and come with steep application fees and legal costs.

While the Commission is investigating the application, TelstraClear’s spokesman Mathew Bolland says the provider has no UBS to resell. Bolland suggests that the Commission’s decision to investigate the applications shows that it accepts that commercial negotiations between TelstraClear and Telecom have failed.

Ihug’s general manager, Guy Nelson, says the speed of the Commissioner’s response to its request for a regulated service suggests a keenness to investigate why Telecom cannot provide wholesale customers with a 2Mbit/s UBS. As part of the investigation, the Commission will request Telecom to provide a complete description of the constraints that prevent it from delivering faster UBS on a wholesale basis, as well as options to overcome the issues.

Commenting on the applications, spokesman Bruce Parkes says it is clearly not in Telecom's interest to take criticism for not being able to offer retail DSL plans in the wholesale markets at the same time. Telecom would like to offer retail and wholesale plans in tandem, but is being pressured by the government to meet its target of 250,000 residential broadband customers by the end of 2005.

"It's a conundrum," Parkes says, adding that Telecom would have faced criticism if it had held off with the faster retail plans as it wouldn't have been able to meet the customer target.

Parkes says there are real technical issues for not offering faster UBS and is confident that they will stand up to scrutiny. Telecom has already briefed the Commission on the technical reasons why it cannot deliver speeds faster than 256kbit/s and Parkes says the telco is "comfortable" with the regulatory process.

Asked if there is nothing Telecom can do to offer providers an interim wholesale offering that would allow all ISPs to resell 1Mbit/s and 2Mbit/s plans now, Parkes says the telco has tried everything it could think of but couldn't come up with a solution.

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