Cabinet access too costly, say rival telcos

Telecom rivals say access to these roadside cabinets will be hampered by the new Commerce Commission charging regime.

The Commerce Commission has opened Telecom's roadside cabinets to rival telcos but the company's competitors say the costs make it prohibitively expensive.

Pricing for cabinet access announced yesterday by the commission includes a monthly charge starting at $11.99 (excluding GST) per customer, then a share of the cost of the roadside cabinet and fibre cable connecting it to the wider network.

Telecom is part-way through a programme of installing roadside cabinets - in effect, mini telephone exchanges - aimed at cutting copper line lengths, thereby boosting broadband speeds.

Telecom's rivals said once the access and technology costs are calculated the economics of running equipment from the cabinet only stack up if telcos have a significant market share.

Vodafone's general manager corporate affairs, Tom Chignell, said given roughly 50 per cent of the around 200 people served by a roadside cabinet have broadband, a telco with 10 per cent of those customers would be paying Telecom $184 per customer.

With a 20 per cent share of the cabinet customers that figure drops to $98 per customer - still in excess of the average revenue per customer of $90, said Chignell.

These figures exclude set-up costs and the company's own network, cabinet equipment, marketing and support expenses.

"Just looking at it at first blush it just seems to us it's going to be very difficult unbundling a cabinet when the fees we are going to pay Telecom are in excess of the revenue we get from our customers," said Chignell.

Orcon chief executive Scott Bartlett said even combining the market share held by Vodafone, TelstraClear and Orcon wouldn't give the customer numbers to make it viable.

Bartlett said the only option would be to buy Telecom's wholesale service, flying in the face of the commission's mandate to promote competition.

"They could not have got this more wrong," he said.

Telecommunications Users Association chief executive Ernie Newman said opening up cabinets coming so soon after exchange unbundling had the "sad but predictable" effect of not giving new entrants enough time to build a significant and economically workable market share for the new environment.

"The unfortunate reality of it is that competition can't thrive as well out of cabinets as it can out of exchanges," said Newman.

Telecom was not commenting on the decision until it had "looked at it top to bottom", said a spokesperson. Telecom shares closed up 10c yesterday at $2.69.