Telecom risks split, says Budde

Telecommunications commentator Paul Budde has added his voice to the champions of local-loop unbundling.

Telecommunications commentator Paul Budde has added his voice to the champions of local-loop unbundling.

“[Telecom’s] 99% monopoly on the local loop market is not only hampering broadband developments in the country – it also is stopping TCNZ [itself] from venturing into the exciting new world of telecommunications,” Sydney-based Budde says in his latest annual report on the New Zealand telecommunications industry.

“In the last 10 years, Telecom has been able to stop growth [by hanging on to the local loop]; we should have been concentrating on growing the size of the telecommunications pie, but we’ve been squabbling over the slices,” Budde told Computerworld.

Telecom’s interconnection and co-operation agreements with Telstra Saturn and Clear show it realises that the old times are drawing to a close. “They have held on as long as possible to the lucrative position the government had provided them with but they also know when to call it quits.”

But even the telecommunications inquiry stopped short at suggesting full local-loop unbundling. Budde sees a need to wrest control of the local loop from Telecom, so other telcos will be able to offer enhanced and imaginative services. Competition throughout the network will attract growth, he says; an area in which the local telecomms business has been sadly deficient.

"It has been growing at about a third of the average world rate; slower than countries like Luxembourg and Finland, so we can hardly blame New Zealand's size.

"Competition generates growth. If you open the local loop, you open the market for the rebels and free spirits who think outside the square."

The best result of the telecommunications inquiry has already happened, he says, with Telecom’s agreements with Clear and Telstra Saturn on interconnection and other co-operations – because there was a threat of regulation.

“But the days of the regulator are past,” he says. A regulator is not powerful enough to take the country’s telecommunications policy in hand – which is really a policy about the country’s business and lifestyle future, he says. The government should be issuing some stern directives about what needs to happen – particularly in building a better telecomms infrastructure – and if Telecom won’t come to the party, government should tender to international companies more prepared to set up these essential facilities and services.

Would this not be a 180-degree turn from government policy that still espouses very much a "hands off" view?

“The hands-off approach has not paid off,” Budde says. “Government stood aside, and it was left to business to do their bit. They didn’t; they stood on the sidelines too. Government now has to think seriously about implementing the vision it has for the country."

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