US second thoughts on LLU not relevant to NZ: Howard

Reports of the death of local loop unbundling in the US are greatly exaggerated, says TelstraClear chief Rosemary Howard.

Reports of the death of local loop unbundling in the US are greatly exaggerated, says TelstraClear chief Rosemary Howard.

Industry commentators sceptical of the benefits of LLU have taken pleasure in pointing out that opinion in parts of the US telecomms industry, notably the regional Bell operating companies (RBOCs), has begun to suggest unbundling may have been the wrong strategy. It may have been wrong only as the Americans did it, says Howard.

“The US is a role-model of what not to do. When they split out the RBOCs and made different entities run local and long distance telecommunications, they used LLU as a substitute for wholesale services.”

Packaged services were offered by the incumbents to other companies rather than raw bandwidth.

“They ended up with a lot of ‘me-too’ services,” she says, so it’s not surprising some are having second thoughts.

She says Europe offers a more positive model. There a nation can only become a member of the European Union if it allows full LLU.

Howard was speaking to a Computer Society audience in Wellington yesterday on the absolute rightness of unbundling the copper local loop and her contention that wireless is not ready to take up the challenge of being a mainstream nationwide telco infrastructure.

“TesltraClear looked at wireless [in this role], and even with the government’s Probe subsidy we couldn’t make fixed wireless work as a business case. As soon as you use that spectrum for broadband, your range shrinks, cell sizes shrink and you have to put in a lot more equipment,” she says. “Wireless is a coming thing, one day, I think.”

She professes herself completely puzzled by the U-turn between telecommunications commissioner Douglas Webb’s draft and final reports last year. While the draft recommended LLU but was against wholesaling of DSL services, Webb reversed that position in the final report.

Howard painted a dire picture of a competitive telecommunications industry only able to proceed by gradual increments in the absence of LLU. If we unbundle the local loop, however, ICT will advance in New Zealand as it has in Australia and along with it will go gross domestic product per capita. Australia is outstripping us on this front, she says, and growth in that country’s ICT has to be a factor.

For the rest, LLU will give us real broadband -– up to 10 Mbit/s –- and business will be able to do cleverer real-time applications. “Greater family harmony” is also a promise, as children will no longer suffer the agony of trying to seek information for homework assignments on a dial-up connection.

“All we’re asking for is what Telecom has when competing with Telstra in Australia.”

On the world stage, however, she says, Australia-NZ competition and the rivalry of Telecom-AAPT and Telstra-TelstraClear within it is insignificant.

“Both [countries are] minnows on the world scale” and can achieve much more by harmonising our telecoms regimes as we have harmonised so many other business factors.

“The real competition is coming from outside, and we want the best possible Australia/NZ economy.”

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