2002 Review: Telecomms - All change in comms conundrum

During the holiday season IDGNet is taking a look at what made headlines in 2002. Today's review focus is on telecomunications. Computerworld reporter David Watson found that this year will go down as one of the most eventful in New Zealand's telecommunications history.

2002 will go down as one of the most eventful years in New Zealand’s telecommunications history. Just my (good) luck.

From the handing down of commissioner Douglas Webb’s first determination to the government’s commitment of tens of millions of dollars for regional broadband, this year has been one in which those in the industry could be forgiven for thinking they’d been struck by the old Chinese curse “May you live in interesting times”.

The long-running dispute between Telecom and TelstraClear went before commissioner Webb in the form of requests by the latter for determinations on interconnection, wholesaling and the cost of TSO (telecommunications service obligation), which can now be levied on all carriers, not just Telecom.

At the time of writing, only interconnection had been ruled on, but what a ruling it was: Telecom was ordered to more than halve the interconnection rate it had been charging TelstraClear and other carriers for access to its network.

At the beginning of November Webb set the rate at 1.13c per minute, compared with the 2.6c Telecom had been charging, and ordered Telecom to pay TelstraClear $14 million to cover the difference between the two rates over the five months since TelstraClear first lodged its application for a determination.

The ruling certainly gave TelstraClear a boost, though whether it will be passed on to its customers in the form of lower bills is Telstra’s call.

Telstra chairman Bob Mansfield was pretty frank when he visited shortly afterwards. He told an Auckland business lunch that if the office of the commissioner hadn’t been created, Telstra wouldn’t have bought Clear.

TelstraClear, you might remember, was created a year ago and made significant losses in 2002. (It has been told by its parent that it has to be profitable by 2004.)

At the end of November Webb released his draft determination on wholesaling, provisionally setting the discounted rate at 14.8% to 18.05% lower than Telecom’s retail prices, based on a comparison with US rates.

Probing the regions

Both Telecom and TelstraClear are involved as partners in bids for project Probe, the government-funded regional broadband strategy announced in the May budget.

The government allocated an undisclosed sum to the project, justifying the non-disclosure on the grounds that if they named the figure no one would put in bids for less.

The country was divided into 14 regions, three of which — Southland, Northland and Wairarapa —opted to select providers themselves rather than through the government process.

In Southland, Walker Wireless and Vodafone were selected, beating a Telecom-BCL partnership and Northland and Wairarapa are still deciding on providers. For the other 11 regions, it’ll be next year before their network builders and carriers are known, but Telecom and BCL would have to be strong contenders.

Wireless will feature heavily in Probe, since despite the enabling of more and more Telecom exchanges for ADSL, the only way many New Zealanders will get broadband is wirelessly. A separate, 15th, Probe tender for satellite-based coverage of the entire country was issued at the beginning of December. Earlier in the year, Telecom and BCL showed their wireless wares in Taranaki, where BCL’s Airspan wireless gear has been trialled.

This year, there were several non-Probe initiatives for wireless broadband announced, including an initiative by Counties Power to supply broadband over its power line network.

UnitedNetworks Communications, the metropolitan ethernet wholesale division of the former lines company, was trialling PLC (power-line communications) before being swallowed by rival Vector; Vector management are being tight-lipped about plans for the new metropolitan ethernet service, which will merge into Vector’s own fibre provider, Tangent.

PLC was also mooted earlier in the year by Buller Electricity, which went on to form a joint venutre, ThePacific.net, with Nelson-based Tasman Solutions.

The PLC concept hasn’t got too far, however, with ThePacific.Net’s website noting “the connection of choice for ThePacific.net at present is wireless” and that PLC is still being tested.

In the South Waikato, Rural Networks announced a planned broadband rollout.

Some planned and proclaimed networks haven’t gone ahead in 2002. At the beginning of the year, Fencepost announced plans for a rural network to serve Fonterra’s farmer shareholders, but in October Kris Nygren, chief executive of Fonterra web subsidiary Fencepost, told IDGNet that the plans had been scaled back and Fencepost was now keeping a “watching brief” on the rural broadband scene.

Nygren said he hopes Probe will deliver the service Fonterra had been seeking.

Beyond the wires

The Fonterra network isn’t the only one not to have gone ahead as planned: last year, radio spectrum was set aside for Econet, a GSM wireless venture planned for this year that would rival Vodafone, but now it looks like Econet will roll out the network next year at the earliest.

Developments in the wireless space that have gone ahead include Telecom’s MobileJetStream, its CDMA1x network, which the carrier claims is third generation, though some would disagree.

Vodafone is trialling W-CDMA with Walker Wireless and in Wellington, metro ethernet provider CityLink is getting into the wireless space with CafeNet, a network of 802.11b or Wi-Fi based inner-city hotpsots that was officially launched last month.

CityLink product development head Hamish MacEwan says there are only a handful of regular users at present, “but we’re reasonably confident that will increase rapidly”.

CafeNet is targeted at corporate users who want to use it to send traffic to a specific destination, MacEwan says.

Wireless LANs are hailed by many as a hugely important development and are being increasingly used by New Zealand businesses and institutions, including Toshiba, St Kentigerns College in Auckland and Dunedin Hospital, where the technology is being used for wireless transmission of patient notes.

However, security remains an issue, with the basic WEP (wired equivalent privacy) not enough to stop would-be intruders.

CafeNet has no security whatsoever and getting it is the responsibility of users.

Voice over IP, or IP telephony, continued to make strides into the mainstream, with Lion Nathan adopting the technology and ASB bank continuing a roll-out begun last year.

A survey by Auckland firm teleconsultants showed half of 40 respondents were planning an IP telephony deployment in the next 12 months.

In what must have been the biggest telecommunications deal of the year, Telecom and Alcatel signed a contract in which Alcatel will become Telecom’s “primary supplier” for its all-IP network, to be built over the next decade.

The deal is potentially worth $1 billion-plus over that time and part of Alcatel’s brief is to introduce “significant operational savings by tens of millions of dollars”, according to Telecom network investment manager Rhoda Holmes.

At the same time, TelstraClear key clients business manager Rob Julian told Computerworld “we have implemented a fully operational IP network which we consider provides carrier-class service to us and our customers”.

Telecom, EDS and Microsoft dissolved esolutions, their ill-fated alliance set up in 2000 to provide online services via the ASP model, and merged it into Telecom’s advanced solutions group, with the loss of 35 jobs, mainly in administration. Advanced Solutions has since begun recruiting up to 40 new IT staff.

And of course one of the biggest body blows to the telecomms jobs market was when 650 jobs were lost with the merger of TelstraSaturn and Clear into TelstraClear.

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