Telecom cabinet ruling uproar

Australia’s regulatory authorities appear intent on levelling the playing field and increasing telecommunications market competition. New Zealand’s regulators seem determined to strengthen Telecom’s dominant position.

Yesterday the Commerce Commission announced the prices rivals will have to pay to install equipment in Telecom’s roadside cabinets. The deal was so favourable to the company, its shares jumped 4 percent.

The National Business Review’s Chris Keall reports “Vodafone and Orcon are up in arms, saying the commission has set them up to lose money hand over fist”. His Vodafone, Orcon slam ComCom ruling on Telecom cabinets reports the price for back-haul – that is, connecting to the network – is ten times the price indicated in the draft determination.

Computerworld New Zealand published Comcom issues sub loop unbundling terms quotes Orcon CEO Scott Bartlett saying a company would need a 25 to 30 percent market share to make using the cabinets possible, let alone worthwhile. He pointed out that number is roughly the size of all Telecom’s competitors added together.

Tom Pullar-Strecker at The Dominion Post raised a different point at the end of his Roadside ruling upsets telcos. He quotes TelstraClear spokesman Chris Mirams saying few roadside cabinets have been unbundled anywhere in the world. He says this was likely to be the case in New Zealand because of the economics and the government’s promised fibre to the premises network which will lead cabinet hardware ‘stranded’. For Cabinet access too costly, say rival telcos

The New Zealand Herald’s Helen Twose spoke to Telecommunications Users Association chief executive Ernie Newman who said; “The unfortunate reality of it is that competition can't thrive as well out of cabinets as it can out of exchanges."

Telecommunications Review, which has recently returned to print, published Paul Clearwater’s measured Sub-loop cost may deter some (story no longer online) which included the same quotes from Bartlett. Clearwater says the price means some companies may lose interest in the sub-loop.

In The Line, Clearwater captured more of the industry anger writing Orcon boss "livid" with sub-loop STD (only available to subscribers). He also reports that Vodafone crunched the numbers and found participation wasn’t viable in Vodafone not out, but hardly impressed (only available to subscribers).

Australians take interest in NZ ruling

Australian titles saw the story as important too. The Australian Financial Review’s Dominic White writes; “Telecom New Zealand has received a rare piece of good news from the country's competition regulator – which has in turn infuriated the incumbent's rivals, including Vodafone.”

White’s Telecom NZ price ruling inflames rivals (subscription required) comes with a graph showing the company’s share price ticking up after the announcement. He reports the decision makes it prohibitively expensive for rivals to invest, while handing a competitive advantage to the former monopoly.

At the subscription only newsletter CommsDay, Kei Contreras wrote ‘ComCom releases ruling on price & non-price terms on sub-loop services’. The story is a straight up and down account of the ruling without any reaction but it comes with a succinct explanation of the jargon term ‘cabinetisation’.

Contreras writes; “Cabinetisation, the process being employed by Telecom, involves reducing the length of the copper lines used to connect customers to its network by bringing fibre optic cable closer to residences and businesses.” What isn’t explained is the name derives from the roadside cabinets used to house network equipment.

Update: This morning another Australian journalist covered the story. Liam Tung at ZDNet focused on Vodafone New Zealand's objection to the pricing in Voda protests Telecom NZ pricing.