Roadside ruling upsets telcos

Vodafone and Orcon have decried a long-awaited ruling on the terms on which they can install equipment in Telecom's roadside cabinets, saying the determination by the Commerce Commission will shut them out of much of the broadband market.

Telecom is installing 3600 cabinets, bringing fibre optic cable closer to consumers and speeding up broadband in all towns with more than 500 phone lines. Some customers will continue to be served using equipment installed in traditional telephone exchanges.

The commission yesterday ruled telcos would have to pay about 26 per cent more to install equipment in cabinets than in exchanges, recognising they would be able to provide customers with "higher-value services".

Vodafone and Orcon are the only telcos that have unbundled a significant number of Telecom exchanges to date.

Vodafone said the pricing announced by the commission would make it impossible for Telecom's competitors to unbundle "all but a few cabinets". The cost of accessing Telecom's "backhaul" connections, needed to transfer data between the cabinets and telcos' trunk networks, was 10 times higher than suggested in a draft ruling, while the fee for installing equipment in cabinets had risen 50 per cent from what the commission had originally proposed.

Scott Bartlett, chief executive of state-owned internet provider Orcon, said broadband consumers had been "let down by the commission", which had opted for a pricing structure "that inevitably will lead to market domination by one player". Telecom's competitors would need 25 to 30 per cent of the market to make installing equipment in cabinets a worthwhile proposition, he said.

Telecom spokesman Mark Watts said the firm was studying the ruling and was unlikely to comment for a few days.

TelstraClear spokesman Chris Mirams said few roadside cabinets had been unbundled anywhere in the world. That was likely to be the case in New Zealand, both because of the economics of "sub-loop unbundling" and because of the Government's promised $1.5 billion investment to roll out fibre to homes and businesses, which could mean equipment in cabinets would become "stranded".

- © Fairfax NZ News