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Top five telco issues that need sorting

Sarah Putt | June 28, 2013
Sarah Putt looks at the some of the hot button telco issues likely to be addressed in two upcoming government review.

Despite two major upheavals in five years — local loop unbunding and operational separation in 2007, and then Ultra Fast Broadband and structural separation in 2011 — telecommunications continues to be a topsy turvy industry in New Zealand.

The government is expected to release discussions papers on a review of regulation, and another on the future of the Telecommunications Service Obligation this month.

Here are some of the hot button telco issues that are likely to be addressed in both reviews.

Migration from copper to fibre
The government-backed Ultra Fast Broadband network is a private-public partnership scheme set up to build a national fibre access network by 2020. What is commonly known as the last mile — the connection between the telephone exchange (called a 'central office' in the fibre world) and the customer's premise. It's the most difficult, most expensive piece in the connecitivity puzzle.

At a recent fibre to the home conference in Auckland, one technology executive observed that as soon at the telco turns up at the house with a drill, the customer goes cold on the idea.

Which is why technology such as VDSL and vectoring — which promise speeds of up to 50Mbps and beyond — are so appealing. The customer isn't inconvenienced, and the telco doesn't have to spend up to a day on just one installation.

But VDSL/vectoring has two major issues — you can only get the fast speeds if your house is close to an exchange/cabinet and for those connected to a cabinet vectoring doesn't enable unbundling (that is only one telcos equipment in the cabinet and the others reselling its services).

A fibre network on the other hand can enable speeds of up to and over 100Mbps, and competition issues are put to one side — at least during the network build phase — because those building the infrastructure are prohibited from retailing the services.

InternetNZ policy consultant Reg Hammond points out in a series of blog posts, that under the current regulatory regime UFB and the existing copper network are in competition with each other. In those places where UFB is rolled out by Local Fibre Co (Whangarei, central North Island and Christchurch) the situation is clear cut. In the remaining 70 percent of UFB areas, Chorus is rolling out fibre, while at the same time operating the copper network. Does this mean Chorus is competing with itself?

Hammond says Chorus may have thought it could use the profits from the copper to pay for the fibre, but the former is regulated by the Commerce Commission. Legislation has meant that Commission is now required to review copper pricing. It is doing so based on the method of assessment outlined in legislation, and has found in favour of a sharp reduction in wholesale copper pricing. Chorus is protesting, but the retail service providers (RSP) and the user groups are urging the Commission to stand firm. The process is ongoing.


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