Tuanz: Lack of LLU will hold back broadband

A decision not to proceed with local-loop unbundling (LLU) will hold back the much-needed expansion of New Zealand's broadband infrastructure, says TUANZ head Ernie Newman.

A decision not to proceed with local-loop unbundling (LLU) will hold back the much-needed expansion of New Zealand’s broadband infrastructure, says TUANZ head Ernie Newman.

Despite the focus on fibre and wireless for the country’s broadband future, the majority of current “broadband” users work over DSL, using Telecom-owned copper, Newman says. The Jetstream Starter and Jetstream ADSL service is supplied by Telecom through Xtra and a small number of other ISPs.

Opening the local-loop resource to competition will make the offering more competitive and hence exert pressure for lower cost and higher capacity, he says.

The term “broadband” is flexibly defined, says Newman, and usually implies speeds greater than 128Kbit/s, “but that is only the minimum speed for JetStream".

Telecom’s specification on its website specifies only a maximum 128Kbit/s for JetStream Starter, and for its other JetStream home and business options promises only a vague “up to 50 times faster than standard dial-up access”.

The technology is capable of megabit speeds over copper, Newman says, and he believes performance will further improve with more research and development, particularly under the spur of competition.

The question of who will be responsible for ongoing maintenance of a shared local loop “needs to be resolved”, Newman says. But the preferred model internationally is simply to have those costs paid by the incumbent and recouped as part of the fee to other carriers for use of the loop.

LLU champions are not talking about robbing Telecom of the infrastructure it invested in, he says, simply asking that it be sold at a fair level including a reasonable profit margin for the incumbent.

Business New Zealand and the Business Roundtable come out against LLU in their submissions to the Commerce Commission. Business NZ questions whether what it sees as a short-term bottleneck justifies a regulatory remedy. Other media are fast being deployed, it says, including satellite communications, particularly suitable for reaching remote locations.

LLU would involve Telecom relinquishing at least an element of its property rights and thereby diminishing its value to shareholders, Business NZ argues.

It points to the “capacity of New Zealand for absorbing technological change” to suggest that the need for LLU is not proven in the long term.

The Business Roundtable questions the meaning of such concepts as the “essential” nature of telecommunications and “the long term”.

It contends that in papers on the subject to date, there has been “a disquieting lack of analysis of the specific nature of any underlying problems” with the status quo.

Newman says Business NZ and the Roundtable are “taking a theoretical approach, in contrast to our pragmatic approach.

“If [LLU] is so reprehensible and evil, why has almost every other OECD country adopted it?” he asks.

New Zealand’s only companions in not having unbundled, Newman says, are Mexico, the Czech and Slovak republics, Turkey and Switzerland. Turkey has said it will unbundle next year; LLU will be a requirement on the Czech republic and Slovakia for membership of the European Union, and in Switzerland the move is being held up only by a legal challenge from the incumbent, Newman says.

“That will leave us in the company of only Mexico.”

The Business Roundtable suggests that the LLU-adopting countries are not comparable with New Zealand, having different distributions of population density and existing broadband penetration.

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