Responses to the government's decision not to unbundle the local loop have been swift and condemning.
TelstraClear, the company that arguably stood to make the most from a decision to unbundle, says the decision is bad for consumers, businesses and the economy.
"It's a real slap in the face for more than 60,000 New Zealanders who demanded a choice through Call for Change and more than 90% of Auckland businesses that said they don't believe Telecom can provide everything they need," says chief executive Rosemary Howard.
The Minister for Communications Paul Swain yesterday announced the government would accept the recommendations made by Telecommunications Commissioner Douglas Webb in January. Howard says the company will not pull out of New Zealand and will redouble its commitments to the market.
"Our shareholder and each and every one of our 1200 staff remain committed to providing choice and competition in New Zealand. Without unbundling it will take longer than it should, but we will continue to make a difference," she says.
Telecom welcomed the decision and declared itself "ready to offer unbundled services".“We have been prudently working on getting ready to deliver these services to our competitors, and will have them available in June and September respectively,” says general manager government and industry relations Bruce Parkes (pictured).
The two services mandated by the decision are aimed at either extreme of the industry - a 256/128kbit/s DSL service for home users, referred to by Telecom as "unbundled bitstream service" and the "unbundled partial circuit" offering aimed at allowing other telcos to offer high-end business services in areas where their networks are not yet established.
Telecom has set itself a target of 250,000 residential broadband subscribers by the end of next year and Parkes says this decision will help deliver on that promise.
"“We see about a third of the 2005 target being delivered by competitors through a combination of unbundled and wholesale services."
The Telecommunications Users Association (TUANZ) says the decision will cement New Zealand's poor performance in terms of broadband uptake.
"New Zealand now stands alone as not only the only developed country where local loop unbundling has been rejected, but also one of the slowest adopters of broadband services and declining," says chief executive Ernie Newman.
CallPlus managing director Malcolm Dick says it's ironic that the decision has been made against unbundling in part because of Telecom's threats over infrastructure spending being reduced.
"We'll probably make some money at it here with the bitstream unbundling products, but we'll invest it in Australia."
Dick says he can see at least a year's worth of arguing over the commercial terms for the bitstream service and the question of pricing going back before the commissioner to force a settlement before consumers see any result.
Swain says that accepting the recommendations avoided prolonging the debate any further.
"I could see that any suggestion of a change would result in debate dragging on for at least the next six months. The lawyers would have started in today and every single step of the way would be getting us nowhere."
Swain says he is very concerned about the low levels of broadband uptake in New Zealand and puts that down to one single issue: price.
"I will be keeping a very close eye on what happens next and can ask the commissioner to review the issue again at any stage. The ultimate test will be whether the price comes down and consumers take up the service."
Swain says he sees bitstream access as the best way to get increased levels of competition as quickly as possible.