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Unbundling Telecom - what will it mean...

 
 
EMB
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      05-04-2006
Craig Shore wrote:

> Possibly because it's not technically possible. Rural users are too far away
> from the exchange for it to work. Normal ADSL requires you to be within 6km of
> the exchange. Rate-Adaptive ADSL will reach out to 10km at typically 256kbps
> down to 56kbps. And on top of that the exhanges themselves will need a high
> speed trunk back to the city.
> Perhaps they need to install fibre to the farm?


Telecom have got fibre running to a lot more rural exchanges than they
let on - there have been a lot of upgrades of this type undertaken in
the last 10 years! And there are also a lot of rural roadside cabinets
with fibre to them acting as a mini-exchange out in the wops.
>
> Just how far are rural users from the exchanges?


Not as far as Telecom would like you to think - see above.


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kriskirk@hotmail.com
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      05-04-2006
Vista wrote:
> OK, how about the electricity market, which is almost identical to Telecoms
> monopoly. The only difference is that it is owned by the goverment. Local
> government (Rates) is also a monopoly that conusmers and businesses have no
> choice on. Both of these have had huge price increases over the last few
> years which I believe are affecting people and businesses and the economy a
> lot more than telecoms monopoly is.


Maybe if businesses jumped up and down about it and analysts from NZ
and overseas said that we were much worse than other developed nations,
and that we will fall behind unless something drastic is done, then the
government would regulate. Is this the case?

Kris

 
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Jo
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      05-04-2006

"EMB" <(E-Mail Removed)> wrote in message
news:e3cdb2$vkd$(E-Mail Removed)...
> Craig Shore wrote:
>
>> Possibly because it's not technically possible. Rural users are too far
>> away
>> from the exchange for it to work. Normal ADSL requires you to be within
>> 6km of
>> the exchange. Rate-Adaptive ADSL will reach out to 10km at typically
>> 256kbps
>> down to 56kbps. And on top of that the exhanges themselves will need a
>> high
>> speed trunk back to the city. Perhaps they need to install fibre to the
>> farm?

>
> Telecom have got fibre running to a lot more rural exchanges than they let
> on - there have been a lot of upgrades of this type undertaken in the last
> 10 years! And there are also a lot of rural roadside cabinets with fibre
> to them acting as a mini-exchange out in the wops.
>>
>> Just how far are rural users from the exchanges?

>
> Not as far as Telecom would like you to think - see above.
>
>
> --
> EMB



Many rural exchanges are running at 28.8 kbps, the real problem is that the
speed is shared between 200 subscribers for example. Unfortunately for many
exchanges with more than 200 subscribers thats reality not an example. When
a large number of the exchanges were upgraded in the 1980's the speeds we
think of now as slow were top of the range back then. Millions were spent on
exchanges which were superceded years ago, internet charges were $40 per
hour, computers cost around $10 000 and cellphones came with a suitcase
battery.


Who remembers the joke about the cellphone in the thumb? Once it was slight
irony, now wtf is a more correct response.


 
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nil_einne1@email.com
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      05-04-2006
Craig Shore wrote:
> On Thu, 04 May 2006 07:20:39 GMT, MarkH <(E-Mail Removed)> wrote:
>
> >On the other hand I think that more should be done to provide rural users
> >with a better service. I know people that would pay good money just to
> >have 256k ADSL, but Telecom is not interested in providing the service.
> >This is why I have no problem with the unbundling - Telecom is NOT doing
> >the job now they deserve to have this legislation forced upon them.

>
> Possibly because it's not technically possible. Rural users are too far away
> from the exchange for it to work. Normal ADSL requires you to be within 6km of
> the exchange. Rate-Adaptive ADSL will reach out to 10km at typically 256kbps
> down to 56kbps. And on top of that the exhanges themselves will need a high
> speed trunk back to the city.
> Perhaps they need to install fibre to the farm?
>
> Just how far are rural users from the exchanges?
>
> From what the govt is saying, i'm wondering if they are going to invest
> themselves in getting high speed out to the rural areas?


One of the problems at the moment IMHO is that there is little
incentive for anyone other then Telecom to invest, especially in rural
areas. Most of the ISPs are small and are likely to remain so under the
current regime. You need a big influx of capital to even think of
investing and this would be seen as a very high risk by many investors
given that Telecom can and from past experience will just destroy you
by predatory pricing. Witness how it is about $10 cheaper for people in
TelstraClear areas. TC undercut Telecom but Telecom just moved to equal
them (but only in the areas they needed to).

Also consider how wireless networks like Woosh, WiredCountry etc are
concentrating on the urban areas. AFAIK, other then wifi and mobile
phone based networks, this is not true in most other countries. There
is simply no reason. Woosh for example has never provided anything that
interesting compared to what our wired networks are able to offer,
probably reflective of the fact it is still very difficult for wireless
to compete with wired in urban areas.

Under the new regime, ISPs will be able to get gains with much smaller
investments and the investments seem more pallatible. Once they become
larger, they will have more existing capital and will seem a much
smaller risk and so can continue to invest and expand.

Rural areas are also an important part of our economy and the farmers
in them are often big businesses with decent amounts of capital. This
suggests they are in fact attractive investments oppurtunities
especially if there is significant competition in the urban area.
Wireless providers especially may begin to see it as a good are for
them to concentrate on. Or perhaps one of the biggers ISPs which we
will hopefully get will see a golden oppurtinity for them. Maybe even
Telecom will see a good oppurtunity there for them if they are losing
out in the urban areas.

Of course, rural areas will be behind urban areas. But as other have
pointed out, this is not surprising. However, I expect rural areas will
in fact do significantly better out of this then they would have ever
done under Telecom. We are unbundling later and unfortunetaly IMHO this
means our 'digital divide' will expand rapidly for a short time which
may make some people call doom and gloov. But rural areas will start to
catch up and will probably always be better off then they were under
Telecom.

The governments help will probably be necessary in some areas but this
is not surprising. The important thing is that unlike with Probe 1
which IMHO was a bit of a waste of time and money especially since we
ended up giving most of it to Telecom and a number of the areas would
have been served a lot better under an unbundled regime anyway without
needing government investment the governments investment will hopefully
be more fruitfull. The simple fact is, despite Telecom's claims, most
people (not just Telecom's competitors) agree that we have not been
doing very well so IMHO we will definitely do better even if the
government does make a few mistakes. Let's not forget we wouldn't even
be where we are today. Does anyone think the prices, speeds and caps we
enjoy today we would have today were it not for UBS and the threat of
regulation? Does anyone really think Telecom would have rolled out
ADSL2+ at the end of this year as they claim they plant to do were it
not for the threat of regulation?

A number of people have brought up the power companies. However
although it's a mess, I've never seen any real evidence that it is
worse then it would have been had we not unbundled. Sure a lot of
mistakes were made and hopefully fewer will be made with Telecom. More
importantly, it's very difficult to compare the two. Power companies
can't really differentiate much. I remember a Dilbert comic from one of
the books were Scott discussed the possibility of power companies
showing burnt toast with competitors power and implying it was the
competitiors fault. Of couse this never happened as we would expect.
Power companies will only ever have limited ability to differentiate
even more so for the many of us who don't have gas or two power meters.
They also have a high fixed cost and using more power is not going to
make it much cheaper to generate more power. However this is not so
true with the telecommunications here and also, generally speaking.

A number of people have also commentated on whether Telecom will
continue to invest. I personally believe they wil, but this is one of
the advantages with structural seperation. The wholesale entity needs
to invest or they will die. However the good news is that when the
wholesale entity is acting independently, it becomes a very good idea
for them to invest since they don't have to worry about cannabalising
other areas.

 
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Stu Fleming
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      05-04-2006
From an investment point of view, the overseas investors have cashed
out straightaway. The share price is now low, will go lower. Then when
the dust settles and people realise there's a years grace, plus
dastardly plan for T to roll out fibre to roadside cabinets leaving them
with 100m of copper and everyone else with hundreds of metres...buy back
in, share price at $6+ end of year.

If you were a new ISP trying to get into the market, it's a risky
proposition. You'd need a fairly solid base of 3000-5000 customers at
$30/month to break even. If plans start to head to $10/month, it gets
harder. Might even end up with fewer ISPs in the medium term.
 
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kriskirk@hotmail.com
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      05-04-2006
Vista wrote:
> don't have any claim on it at a later date...unless you are a
> government....and then you can make up your own rules.


As long as they make up their own rules for the benefit of NZ, then I'm
fine with that. Like what they did with the seabed and foreshore, good
on them!

> Like they have with the electricity network, and now we are paying huge
> electricity prices


Funny, I keep getting credits on my electricity bill as dividends. I
don't recall that ever happening on my Telecom bill! How are our
electricity prices compared to the rest of the world btw?

Kris

 
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kriskirk@hotmail.com
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      05-04-2006
Stu Fleming wrote:
> From an investment point of view, the overseas investors have cashed
> out straightaway. The share price is now low, will go lower. Then when
> the dust settles and people realise there's a years grace, plus
> dastardly plan for T to roll out fibre to roadside cabinets leaving them
> with 100m of copper and everyone else with hundreds of metres...buy back
> in, share price at $6+ end of year.


Do you reckon we could make a quick buck by buying shares now and
selling in 6 months?

 
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EMB
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      05-04-2006
Stu Fleming wrote:
> Might even end up with fewer ISPs in the medium term.


Probably actually in the permanent term. Both orcon and ihug have been
assimilating smaller ISPs for quite a while, and LLU is only going to
accelerate that process.


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Stu Fleming
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      05-04-2006
http://www.velocityreviews.com/forums/(E-Mail Removed) wrote:

> Do you reckon we could make a quick buck by buying shares now and
> selling in 6 months?


I don't do financial advice, so you should consult your broker.
But yes, would be my guess.

Short oil futures might be a better bet.
(Advice I didn't take: buy gold at $250/ounce in 1998...now at $670.)
 
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Nho Whei
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      05-04-2006
Excuse the vicious snip, but there is some good reading on this here:
http://www.beehive.govt.nz/ViewDocum...cumentID=25636 , which
itself has a link on it to the full cabinet decision & minutes.


 
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