Government pressured not to unbundle

Discussion in 'NZ Computing' started by Mainlander, Nov 3, 2003.

  1. Mainlander

    Mainlander Guest

    Unbundled future bleak: BCL

    By PETER GRIFFIN telecoms writer
    State-owned transmission company Broadcast Communications has signalled
    it may have to abandon its multimillion-dollar move into the telecoms
    industry and radically restructure if the Government opens Telecom's
    copper line network to competitors.

    BCL delivered one of the gravest indictments yet of "local loop"
    unbundling in a submission to the Commerce Commission last week as
    lobbying around unbundling heated up before a final decision on whether
    it should proceed.

    BCL, which has undergone huge change as it repositions itself as a
    wholesale supplier of wireless data and telephone services in the
    regions, forecasts a grim future for itself should Communications
    Minister Paul Swain approve the commission's draft unbundling

    The company said a wide definition of the "public data network" in the
    report meant its Extend wireless network used by Telecom might also have
    to be opened to competitors, tearing apart its business model.

    "Telecom could have to sell BCL's services at a net loss. This would be a
    disincentive for Telecom to purchase further broadband wireless access
    services from BCL," its submission read.

    BCL has spent about $25 million upgrading transmission sites to enable it
    to sell wholesale services to partners such as Telecom and to internet
    providers ihug and Iconz.

    But the cost of BCL getting into the telecoms game is much higher. In
    late 2000 it paid $30.5 million to Clear Communications to end a
    restraint of trade agreement that prohibited it from becoming a telco.

    BCL's fate is closely tied to that of Telecom's through the partnership
    the two have struck in the regions and as part of the Government's Probe
    rural broadband initiative.

    BCL's managing director, Geoff Lawson, said the impact of unbundling on
    BCL would be a loss of revenue amounting to tens of millions of dollars
    over several years.

    "Unbundling as envisioned in the draft report has the potential to
    undermine [our] investment."

    The commission's network access group manager, Osmond Borthwick, said
    there was scope in the draft report to mandate unbundling across parts of
    Telecom's local access network that it may lease from others - such as
    BCL. The commission would consider opposition to this.

    A slew of submissions on the unbundling issue has the telecoms industry
    and the business world in general divided on where unbundling should

    The pro-unbundling camp is headed, not suprisingly, by TelstraClear with
    support from CallPlus and owner Malcolm Dick's Australian investment
    Swiftel, the Consumers Institute, film studio DayBreak Pacific, the North
    Shore City Council and Chime Communications, a subsidiary of Australian
    listed company iiNet, which bought ihug in September.

    Those opposing unbundling include Broadcast Communications, Telecom,
    Woosh Wireless, the Business Roundtable, Federated Farmers, Business New
    Zealand, Teamtalk, NZX, NGC and Zespri.

    Opponents of unbundling point to the hive of activity generated by
    wireless providers such as the partnerships between Woosh and Vodafone
    and BCL and Telecom.

    But the Telecommunications Users Association in its submission pointed
    out that there was as yet no successful national competitor to Telecom to
    prove competition could thrive without unbundling.


    Broadcast Communications Ltd.

    TVNZ subsidiary, but becomes separate state-owned enterprise on December

    Broadcasts TV and radio to 99.8 per cent of New Zealanders through
    network of more than 400 transmission sites.

    Owns a 28-site national broadband wireless access network, branded
    Extend, which goes live this month.

    Employs 300 people.
    Mainlander, Nov 3, 2003
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  2. Mainlander

    Warwick Guest

    I find this extraordinary.
    The state sold telecom and the utp copper infrastructure as it was
    unable to operate it successfully.

    Which begs the question, why has the State invested in another telco
    that uses competing technology?(ie wireless).

    There are well established international precedents for unbundling the
    local loops. We have an underutilised broadband adsl network that pre
    exists. A business plan that depended on unbundling not happening is
    not a particulary good one. If it goes belly up that is thier fault
    and they should be lining up to aplogize to the taxpayer.

    imho bleating about the rules and thereby preventing that
    infrastructure from being used competitively casts them in an even
    worse light.

    Warwick, Nov 3, 2003
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  3. Mainlander

    Jay Guest

    .... which is an admission that BCL cannot hack competition and have
    given up before they have even started.

    Maybe they want to be treated the same as some people on the dole ... have
    a free lunch and not have to bother doing anything.

    What BCL is not saying, of course, is how much a more open system would
    benefit NZ's economy as a whole. That would surely amount to a much
    greater sum of money than what BCL might lose. But they are totally
    blind to that side ... as one would expect.
    Jay, Nov 3, 2003
  4. More explicitly, it's an admission that Telecom's prices are jacked up so
    high that there's lots of room for them to fall to realistic levels -
    probably as much as 90% down, long term.
    Uncle StoatWarbler, Nov 3, 2003
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