Unbundling inevitable says TUANZ chief

Unbundling of the local loop is not just an option for the future, says Telecommunications Users Association (TUANZ) chief executive Ernie Newman, it's inevitable.

Unbundling of the local loop is not just an option for the future, says Telecommunications Users Association (TUANZ) chief executive Ernie Newman, it's inevitable.

The Telecommunications Commissioner has released a discussion paper on unbundling as part of his review of the New Zealand market. The commissioner has until the end of the year to report back to the minister, Paul Swain, on unbundling and in that time will discuss the issue several times with interested parties. This discussion paper sets the groundwork for the review.

Newman says that the only reason unbundling hasn't worked as well as had been hoped in some countries is because of the local incumbent's attitude.

"They say it won't work, they resist its implementation and then they fight a rear-guard action once it is introduced. Then they point to the low take-up and say it's not working."

Newman hopes that Telecom won't adopt this tactic, but says he is prepared to be disappointed.

"I don't think Telecom has realised that it's better to have a smaller slice of a larger pie, no."

Ihug managing director Martin Wylie, himself a former Telecom executive, believes the commissioner will introduce some form of unbundling, probably a hybrid solution paired with wholesale.

"Wholesaling needs to be given a shot, we need to get that sorted out in the short term and then unbundling can be introduced for the medium term."

Wylie says a blended approach would give companies like Ihug the ability to resell Telecom services where it is uneconomic to develop its own service.

"We'd be able to offer DSL where it doesn't make sense to offer wireless service."

Wylie believes unbundling the New Zealand local loop now isn't going to be as traumatic as it once would have been.

"Ten years ago it would have been a major issue - now it's not because there is already development of alternative technologies that bypass the local loop altogether."

Wylie says it's ironic that unbundling is only being considered now - at at time when competition beyond the local loop is intensifying.

Telecom did not return calls by deadline.

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