Telecom service stats gloomy

Metro and regional services the only hope for broadband, says Tuanz chairman

Service to the people is supposed to be the final objective of telecoms competition and regulation and Tuanz chairman Graeme Osborne, as befits his “day job” as Statistics NZ CIO, gave the Tuanz Telecommunications Day the mostly bad news about the customer base in New Zealand over the next five and ten years.

Firstly, it’s not going to get much bigger. “There is no natural growth in the population and the immigration tide is turning,” Osborne told the conference recently held in Wellington. “We’ll be struggling to reach five million.”

With such a static marketplace and New Zealand's proverbial preponderance of small businesses — 84% employ five or fewer people — expansion of telecommunications businesses will only be achieved through innovation, producing new products and services to keep the churn of equipment going and the spend increasing.

Yet that same small and stable base, particularly contrasting with the booming economies and growing populations of Asia, stands to lose this country the attraction it once had as a testbed for new equipment, Osborne suggests. International rollouts of innovative lines from large corporations like Vodafone offer the best hope in that direction.

“Voice will not grow further, nor will mobile” over the next five or even 10 years, Osborne says.. In “broadband” (not what Asian countries mean by broadband, but anything from 256kbit/s up), and in data network connections of 1Mbit/s and above, there will be expansion, particularly in metropolitan and regional providers.

There could be as many as 10 such providers serving particular regions, or sets of regions, within the next five years and possibly two genuinely nationwide operators.

The negative decision on local-loop unbundling limits reuse of Telecom’s existing copper network to bitstream mode which “forces us to depend on Telecom’s current DSL capacity” and constrains businesses, particularly small and medium enterprises outside the range of alternative services like wireless.

In a small market, overall success must depend on some degree of cooperation among rivals. The regulatory regime is still too slow with interconnection and wholesaling still going through the “Round Two” appeal stage and the real possibility of the long-running negotiation on number portability being the first cooperation scheme to reach a conclusion.

The whole concept of ‘Round Two’ is a brake on the process, Osborne says.

New Zealand is late to regulation so ought to be able to take advantage of the “piles” of precedence existing in other countries’ successfully concluded negotiations; but sorting through this material and arguing its relevance seems to slow the process even further.

The Government’s Probe initiative was a positive shot at assisting the evolution of a multivendor broadband infrastructure, but in its final shape, with backouts from Woosh, “has actually reinforced dependence on Telecom,” he says.

Metro and regional players provide the only hope for broadband diversity, according to Osborne.

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