Telecom, Clear stitch up DSL market

Telecom has cut a deal providing Clear with wholesale access to JetStream - and ruling out such access for the two companies' competitors until at least next year.

Telecom has cut a deal providing Clear with wholesale access to JetStream - and ruling out such access for the two companies' competitors until at least next year.

The agreement - finalised at 2am this morning - will undoubtedly be seen as an attempt to upstage the recommendations of the Ministerial Inquiry onto Telecommunications, which are to be released tomorrow morning. The Inquiry is expected to recommend mandated wholesale access to services such as JetStream.

Ihug director Nick Wood was shocked by the news this morning. Wood says Ihug has been demanding wholesale access to JetStream for the past seven months - and has been told by Telecom that Telecom had yet to make a decision on whether such access would be made available.

The wholesale deal will allow Clear to provide its own international access behind JetStream, and to sell its own customer premises agreement, but will not allow Clear access to Telecom exchanges to install its own switches or routers.

It solves the problem of a broadband strategy for Clear, which has not participated in the current radio spectrum auction and has up till now been relying on a high-speed service delivered via the public 2.4GHz spread spectrum band, which has already reached its capacity in parts of Auckland such as Penrose.

At a press conference this morning, a Telecom spokesman described the arrangement with Clear as a "beta test" and said that similar access would not be available to other players until the "test" had been completed next year.

Wood says Ihug - which sources its own inbound bandwidth via PanAmSat satellites - has been demanding a similar arrangement for most of this year "and getting nowhere with Telecom. We've all been waiting for the inquiry's outcome to provide some direction, so I'm upset with Telecom on this one.

"I've been saying, let's do a wholesale DSL product, we're ready to go, and Telecom have been saying they can't make their minds up about what they're going to do."

Wood says the deal appears to be a case of Telecom arranging the market to its own advantage.

"It gives Clear their solution for broadband, it promotes a product of Telecom's that they're going to get some money for and it also puts pressure on us and everybody, especially Telstra-Saturn, because these guys between the two of them are going to push out high-speed Internet.

"That means you've got two big companies against Ihug, because telecom doesn't like us and our Ultra product. Telstra-Saturn are sitting there with nothing rolled out and they can't get access to the same product.

"What Telecom have done is got Telstra to sign a certain kind of interconnect agreement which suits them and puts pressure on Clear - and then signed a different one with Clear which gives them an advantage and then puts Telecom in the middle playing it safe. They're positioning everybody around them to do the least damage to Telecom and the most damage to everybody else.

"They're using Clear to screw up Telstra and Ihug and Telstra, and Ihug to screw up Clear's plans."

Today's announcement leaves Wood awaiting the inquiry's recommendations even more keenly than before, "because it's going to direct them to do the same thing with everyone else and this is Telecom's way of slowing that down."

When Clear and Telecom first reached their interim interconnect agreement this year, Wood described it as a collusion between the two big players in the local market to squeeze out smaller players. He says Telecom's strategy in particular is obvious.

"You look at the price of Internet they've got out in the market and take the exchange rate into account, it's cheaper than anywhere else in the world. And they're doing that for one reason - which is to try and kill off all the little ISPs and anyone else that can't handle the pace. It's anti-competitive."

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