Telecom's largest shareholder, Bell Atlantic, has done what Telecom says it cannot - thrown open its local loop.
Bell Atlantic owns 24.9% of Telecom. Although it has no board representation or managerial input to the New Zealand carrier, its move dents Telecom's contention that the parent companies of its local competitors Clear (British Telecom) and Telstra would never wear in their home markets the kind of telecommunications regime they are demanding for New Zealand.
Telecom has also claimed that BT's adoption in the UK of a dedicated number range for unmetered Internet dial-up - similar in some ways to Telecom's 0867 initiative - showed that BT was saying one thing in New Zealand and doing another at home.
Now, in an agreement with the Federal Communications Commission (FCC), Bell Atlantic will permit new entrants to resell local call services provided over its New York network.
Telecom has resisted pressure to supply local call services to new entrants on a wholesale basis, and last year angered Telstra by withdrawing an agreement allowing Telstra to rebill for Telecom services - meaning Telstra could no longer present a single bill for all services to its corporate customers.
Bell Atlantic has also agreed to permit new entrants direct access to the "last mile" between the local exchange and the customer, and to provide access to unbundled network elements, including loops and switches - and the operation support systems and databases used with those elements.
The US carrier has also undertaken to provide transparent, intelligent network-based number portability - which still seems a distant prospect in the New Zealand market.
Bell Atlantic made the undertakings to qualify under the FCC rules for "Baby Bells" operating as local carriers wishing to enter the US long-distance market.
In a press release, the FCC says 1996 legislation passed by the US Congress "envisioned fundamental pro-competitive changes in the telecommunications environment by making a Bell Operating Company's entry into long distance contingent on the BOC first opening its local service monopoly to competition". It said Bell Atlantic had met all conditions of a 14-point checklist aimed at ensuring its competitors had "a meaningful chance to compete."
Telecom declined to comment.