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Vista 05-04-2006 01:39 AM

Unbundling Telecom - what will it mean...
 
Although on the surface unbundling looks to be a benefit to consumers
getting a better broadband deal, what costs will this be at. I am all for
faster cheaper internet and think telecom haven't been offering NZers with
the service they need (mainly the slow upload speeds low datacaps), however
the governments decision to impose this on a private company does setup a
dangerous precedent.

The few ISPs that will be able to afford to set up their own equipments in
telecoms exchanges, and to regually service it, will only set it up in the
main population concentrations, such as Auckland, Wellington, and
Christchurch. Areas that aren't profitable for them, they will not bother
with. Therefore low population areas, such as rural areas may not have any
competition whatsoever, and in fact may end up paying a lot more for their
internet. Therefore we are likely to end up with price variations throughout
the country. Therefore the government would need to impose terms on these
ISPs so that they setup their equipment in ALL exchanges, and not just the
profitable ones.

Will it be the end to Telecoms kiwi share agreement with the governemnt,
which will mean that an end to free local calling. I am sure the majority of
mainstream NZers would still prefer free local calling to 'faster' internet.
Sure they could set up VOIP, but that is no where as easy to setup as your
basic telephone, and that still costs per minute if you want to phone a
fixed line number. Also the reliability of this is questionable, and what if
someone needs to make an emergency phone call and the ISP is having 'network
problems'.

Will this mean that Telecom will now not be investing in their next
generation of Digital telephone services that they were going to invest in.
Will this mean that Telecom will not be investing further in the existing
telephone infrastructure, such as fibre optic, instead of older technology
copper wire. Will this mean a less reliable and aging infrastructure, which
telecom won't be able to afford to invest in and maintain, whilst still
providing their investors with a reasonable return on their investment. This
infact could mean that that NZers on average end up in a worse situaition
than they currently are, even though they may not be paying as much. A large
percentage of these investors in Telecom are your average mainstream New
Zealander anyway, and telecom do make up a whopping 25% of the New Zealand
sharemarket.The fact is that Telecom will need to generate additional income
from other areas if their bottom line is affected by unbundling.

I know a lot of people(probably your average person) who use the internet
regually, who really don't understand why it needed to be unbundled, and
they have no compliants about the current situation.



Jo 05-04-2006 02:14 AM

Re: Unbundling Telecom - what will it mean...
 

What scares me is who will actually bear the total cost of maintaining and
upgrading the exchanges. From what I understad any customer who does not use
tolls or internet is a loss leader.



Nova 05-04-2006 02:25 AM

Re: Unbundling Telecom - what will it mean...
 
Vista wrote:
> Although on the surface unbundling looks to be a benefit to consumers
> getting a better broadband deal, what costs will this be at. I am all for
> faster cheaper internet and think telecom haven't been offering NZers with
> the service they need (mainly the slow upload speeds low datacaps), however
> the governments decision to impose this on a private company does setup a
> dangerous precedent.
>
> The few ISPs that will be able to afford to set up their own equipments in
> telecoms exchanges, and to regually service it, will only set it up in the
> main population concentrations, such as Auckland, Wellington, and
> Christchurch. Areas that aren't profitable for them, they will not bother
> with. Therefore low population areas, such as rural areas may not have any
> competition whatsoever, and in fact may end up paying a lot more for their
> internet. Therefore we are likely to end up with price variations throughout
> the country. Therefore the government would need to impose terms on these
> ISPs so that they setup their equipment in ALL exchanges, and not just the
> profitable ones.


People that _choose_ to live in rural areas must accept that they are
always going to have less choice in many areas not just internet. They
don't have big supermarkets etc should the government force chains of
shops to open in rural areas? I really think it's a bit cheeky for these
people that choose to live in the middle of nowhere to expect others to
fork out loads of $$ to pay for them to get fast internet access.

>
> Will it be the end to Telecoms kiwi share agreement with the governemnt,
> which will mean that an end to free local calling.


Who knows, but the government has said nothing about ending the kiwi
share yet in among their plans, so it would look like at the moment it
won't end.

I am sure the majority of
> mainstream NZers would still prefer free local calling to 'faster' internet.
> Sure they could set up VOIP, but that is no where as easy to setup as your
> basic telephone, and that still costs per minute if you want to phone a
> fixed line number. Also the reliability of this is questionable, and what if
> someone needs to make an emergency phone call and the ISP is having 'network
> problems'.


what if, what if.. Well considering almost every NZ'er has a cellphone
now anyway and cellphones allow free emergency calls and aren't just
tied to one location.

>
> Will this mean that Telecom will now not be investing in their next
> generation of Digital telephone services that they were going to invest in.
> Will this mean that Telecom will not be investing further in the existing
> telephone infrastructure, such as fibre optic, instead of older technology
> copper wire. Will this mean a less reliable and aging infrastructure, which
> telecom won't be able to afford to invest in and maintain, whilst still
> providing their investors with a reasonable return on their investment. This
> infact could mean that that NZers on average end up in a worse situaition
> than they currently are, even though they may not be paying as much. A large
> percentage of these investors in Telecom are your average mainstream New
> Zealander anyway, and telecom do make up a whopping 25% of the New Zealand
> sharemarket.The fact is that Telecom will need to generate additional income
> from other areas if their bottom line is affected by unbundling.


We will see, I am sure Telecom have something up their sleeves, they
would have known this is a possibility. Anyway telecom basically chose
this for themselves they were warned so many times and chose to shaft
everyone instead and forced the government into taking action, if I was
a shareholder of telecom I would be pretty damn angry at the way Telecom
have gone about things.

Anyway is this really a precedent? maybe here in NZ but certainly not in
the world. Many Telco's have been regulated or broken up around the
world.


>
> I know a lot of people(probably your average person) who use the internet
> regually, who really don't understand why it needed to be unbundled, and
> they have no compliants about the current situation.


The average NZ'er will always be happy to get more for less I am sure,
if you put it to them like that I don't think they will mind :). If
indeed it will mean that..

Matthew Poole 05-04-2006 03:24 AM

Re: Unbundling Telecom - what will it mean...
 
On Thu, 04 May 2006 14:14:33 +1200, someone purporting to be Jo didst
scrawl:

>
> What scares me is who will actually bear the total cost of maintaining and
> upgrading the exchanges. From what I understad any customer who does not use
> tolls or internet is a loss leader.


Utter tripe. It's what poor, misunderstood Telecon would like you to
believe, to be sure, but it's nowhere near accurate.
Once upon a time, when Clear was just Clear, they offered to buy all
Telecom's "unprofitable" rural customers. For a very fair market rate.
Telecom declined. That is not the action of a company that is actually
losing money.

The lowest line rental that Telecon gets from any single customer is
almost $30, for a second line. The lowest stand-alone line rental is
$34-ish, in WLG and CHC. The rest of us pay $42-something. It doesn't cost
anything like that much to provide voice service, even with unmetered
local calls.
In NYC, for USD14/month, you get dialtone, unmetered local calls (yes,
we're not the only place in the world where they exist), and a bunch of
services that we have to pay for on top of the line rental. They also have
a multitude of phone companies, not just one, so nobody can afford to
treat dialtone as a loss-leader since they might not be providing any
other service.

--
Matthew Poole
"Don't use force. Get a bigger hammer."


Vista 05-04-2006 03:46 AM

Re: Unbundling Telecom - what will it mean...
 

> In NYC, for USD14/month, you get dialtone, unmetered local calls (yes,
> we're not the only place in the world where they exist), and a bunch of
> services that we have to pay for on top of the line rental. They also have
> a multitude of phone companies, not just one, so nobody can afford to
> treat dialtone as a loss-leader since they might not be providing any
> other service.
>


But look at the population, and it is all compressed into a very small area,
so it wouldn't be fair to compare NYC market with the NZ market.

It is going to be very interesting to see which ISPs do take up the
unbundled network and run with it. I suspect that there will only a be a few
of them, Telstra/Clear/Paradise or what ever they call themselves these
days, IHug and CallPLus AKA Slingshot will probably only be looking at the
main centres . However it may mean that some new overseas ones come in,
possibily AOL

I am wondering how far $20 million would go in setting up ADSL2 in exchanges
as that is what iHug plan to spend. Would then cover the whole of NZ? It
doesn't really sound like a lot for a nationwide service.



Matthew Poole 05-04-2006 04:15 AM

Re: Unbundling Telecom - what will it mean...
 
On Thu, 04 May 2006 15:46:51 +1200, someone purporting to be Vista didst
scrawl:

>
>> In NYC, for USD14/month, you get dialtone, unmetered local calls (yes,
>> we're not the only place in the world where they exist), and a bunch of
>> services that we have to pay for on top of the line rental. They also have
>> a multitude of phone companies, not just one, so nobody can afford to
>> treat dialtone as a loss-leader since they might not be providing any
>> other service.
>>

>
> But look at the population, and it is all compressed into a very small area,
> so it wouldn't be fair to compare NYC market with the NZ market.
>

The great thing about telecommunications is that what applies in one place
applies in another. If you can supply a comprehensive voice service in NYC
for USD14/month, you can do it in NZ, or at least in Auckland, Wellington,
Christchurch, Hamilton and Dunedin. But even in WLG and CHC, where there
is a competing network, you cannot get comprehensive voice services for
that price.

*SNIP*
> I am wondering how far $20 million would go in setting up ADSL2 in exchanges
> as that is what iHug plan to spend. Would then cover the whole of NZ? It
> doesn't really sound like a lot for a nationwide service.


It's what they've got ready to spend. Contrary to what Telecon would have
you believe, it's not all that Ihug are prepared to spend.
You're right that it's SFA toward a national service, and it's not even
very much toward connecting Auckland, but you have to start somewhere.
Ihug doesn't have nine figures of annual profit from which to draw
investment funding, so it can only start small. Annette Presley was saying
last night that CallPlus Group are going to spend $300m in network
investment, though she didn't specify the timeframe for that expenditure.

If you buy into Telecon's rhetoric, you'll end up taking their word for it
that this is a bad move for the country.

--
Matthew Poole
"Don't use force. Get a bigger hammer."


Jo 05-04-2006 04:16 AM

Re: Unbundling Telecom - what will it mean...
 

"Matthew Poole" <spam@stops.here> wrote in message
news:pan.2006.05.04.03.24.02.988037@stops.here...
> On Thu, 04 May 2006 14:14:33 +1200, someone purporting to be Jo didst
> scrawl:
> Utter tripe. It's what poor, misunderstood Telecon would like you to
> believe, to be sure, but it's nowhere near accurate.
> Once upon a time, when Clear was just Clear, they offered to buy all
> Telecom's "unprofitable" rural customers. For a very fair market rate.
> Telecom declined. That is not the action of a company that is actually
> losing money.
>
> The lowest line rental that Telecon gets from any single customer is
> almost $30, for a second line. The lowest stand-alone line rental is
> $34-ish, in WLG and CHC. The rest of us pay $42-something. It doesn't cost
> anything like that much to provide voice service, even with unmetered
> local calls.
> In NYC, for USD14/month, you get dialtone, unmetered local calls (yes,
> we're not the only place in the world where they exist), and a bunch of
> services that we have to pay for on top of the line rental. They also have
> a multitude of phone companies, not just one, so nobody can afford to
> treat dialtone as a loss-leader since they might not be providing any
> other service.
>

If you know anything about how a rural community works then you would know
that the telecom boundaries generally dont match the service area and that
for many a call to the neighbour is a toll call. Rural customers arent
unprofitable, they are very profitable. They make toll calls, they have add
on services and they purchase internet services as a package. Its urban
customers who never make toll calls and never have any other service other
than a phone line, add to that a high demand load on exchanges which not
only have to be up to date, but able to accommodate constantly more
subscribers. I am not saying unbundling is a bad thing, but who will be
paying for the exchanges?

Another thing Matthew, dont you work for a competing ISP? Thats not a dig,
but a question.



Matthew Poole 05-04-2006 04:35 AM

Re: Unbundling Telecom - what will it mean...
 
On Thu, 04 May 2006 16:16:34 +1200, someone purporting to be Jo didst
scrawl:

>
> "Matthew Poole" <spam@stops.here> wrote in message
> news:pan.2006.05.04.03.24.02.988037@stops.here...

*SNIP*
> If you know anything about how a rural community works then you would know
> that the telecom boundaries generally dont match the service area and that
> for many a call to the neighbour is a toll call. Rural customers arent
> unprofitable, they are very profitable. They make toll calls, they have add


Profitable for services, to be sure. Definitely not profitable for the
network. Services is where the money is, but networks are a money sink so
it balances out. I have no doubt that they're not unprofitable, but I
doubt they're quite as profitable as you think.

> on services and they purchase internet services as a package. Its urban
> customers who never make toll calls and never have any other service
> other than a phone line, add to that a high demand load on exchanges
> which not only have to be up to date, but able to accommodate constantly
> more subscribers. I am not saying unbundling is a bad thing, but who
> will be paying for the exchanges?
>

The companies who put in the equipment. LLU doesn't divest Telecom of its
exchanges, it just gives competitors access, at a set rate, to install
their own equipment.
The big city exchanges, such as Auckland's Mayoral Drive, service
literally thousands of customers. It's a very efficient exchange from a
cost perspective, because the density of circuits is so high. Rural
exchanges can't possibly compete with that.

> Another thing Matthew, dont you work for a competing ISP? Thats not a
> dig, but a question.

I haven't worked in the ISP industry for over three years. I left CallPlus
at the end of 2002, worked for Axon, then iServe, and am now a student.

--
Matthew Poole
"Don't use force. Get a bigger hammer."


k 05-04-2006 04:47 AM

Re: Unbundling Telecom - what will it mean...
 
Vista wrote:
> Although on the surface unbundling looks to be a benefit to consumers
> getting a better broadband deal, what costs will this be at. I am all for
> faster cheaper internet and think telecom haven't been offering NZers with
> the service they need (mainly the slow upload speeds low datacaps), however
> the governments decision to impose this on a private company does setup a
> dangerous precedent.
>
> The few ISPs that will be able to afford to set up their own equipments in
> telecoms exchanges, and to regually service it, will only set it up in the
> main population concentrations, such as Auckland, Wellington, and
> Christchurch. Areas that aren't profitable for them, they will not bother
> with.


I stopped at that last sentence and had to comment because I believe you
are wrong.

You might remember (if you were an avid Internet user back in the mid to
late 90's) that IHUG installed POP's ("Points of Presence") in the
smaller town centers so the users could dial those instead hauling the
call through the country to Auckland.

I see the same thing happening with this, it will take a while but _at
least_ a few of the larger ISPs will eventually cover the entire country.

kriskirk@hotmail.com 05-04-2006 04:54 AM

Re: Unbundling Telecom - what will it mean...
 
Vista wrote:
> the governments decision to impose this on a private company does setup a
> dangerous precedent.


Yes, it means that any other company that is deemed to be a monopoly
and holding the country back from the rest of the world in such a key
area such as internet services should watch out!

> which will mean that an end to free local calling. I am sure the majority of
> mainstream NZers would still prefer free local calling to 'faster' internet.


Hmmm, I dunno. I've spoken to quite a few people who would like to
actually to ditch their landline altogether because they would prefer
to use their mobile only. The only reason they're keeping it is for
internet access!

I for one would rather pay for local calls and have decent internet
speeds than the current situation.

> I know a lot of people(probably your average person) who use the internet
> regually, who really don't understand why it needed to be unbundled, and
> they have no compliants about the current situation.


The main reason for unbundling is for businesses rather than home
users. Yes it does please a lot of us who want faster internet from
home, but there's hardly any econmic reason for the government to want
this.

Kris



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