Court case provides powder to unbundling

The decision by the Commerce Commission to take Telecom to court over anti-competitive behaviour in the business broadband market gives minister Paul Swain all the ammunition he needs to recommend unbundling of the local loop.

The decision by the Commerce Commission to take Telecom to court over anti-competitive behaviour in the business broadband market gives minister Paul Swain all the ammunition he needs to recommend unbundling of the local loop.

The commission alleges that Telecom has "misused its market power" to "prevent or deter competition in markets involving high speed data transmission". Specifically the claim, stemming from a complaint laid by Clear and Telstra four years ago, refers to Telecom's wholesale pricing for data tails -- links between businesses and the telecommunications backb

one -- in the business sector.

As you know, Swain was presented with the final report from the Telecommunications Commissioner in December last year. That report recommends against unbundling Telecom's local loop and instead suggests a resale model. Swain has to report back to cabinet by May with his take on the matter and from there the government will make its decision.

The commissioner's report divided Telecom's network up into two sides -- the "internet grade" service that most home users will be receiving, with low levels of quality assurance and no requirement to offer real time service, and a business-class service. The first half has received most attention in the months since the decision because the business class decision was put off by the commission after Telecom announced a late-breaking offer over what are known as partial circuits. Because of the timing of the offer and because of "some, though limited, limited [sic] support for Telecom’s approach", the commission decided not to recommend unbundling of the business side of Telecom's network for the time being. However, it reserved the right to look again at the decision should Telecom not be able to reach a commercial agreement over the issue.

"Should such an outcome fail to eventuate within the next six months, the commission considers that it would be appropriate to re-evaluate the merits of regulated unbundling of a data tails or partial private circuits service at a long-run incremental cost price".

If the commission proves its case in court, it strongly suggests that the business sector has been ill-served by Telecom in the past. That alone should make the commission revisit the question of unbundling even before the minister makes his recommendations to cabinet. Only the courts can decide whether Telecom has been anti-competitive, and the commission can't even use its anti-competitive investigation to influence its unbundling investigation. However, once a ruling is handed down in court, all bets are off. The minister must wait to hear what the court says before proceeding with his recommendation. As he himself said, this is the most important question in telecommunications this decade.

Brislen is Computerworld Online'sreporter. Send letters for publication in Computerworld to Computerworld Letters.

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