Government coy on plan to boost net uptake

David Cunliffe

Communications Minister David Cunliffe will take action to accelerate uptake of broadband internet services next year, but has left room to retreat from the prospect of tougher regulation for Telecom to achieve that aim.

New Zealand's uptake of broadband, which the Government regards as a key ingredient in the country's economic development, has remained low by international standards.

Critics say that is because Telecom's near-monopoly on the phone lines used to deliver most broadband services keeps prices too high.

Yesterday, Cunliffe confirmed the Government would take action next year to address the problem.

"We don't know what yet and whether it's a little bit, or a lot, or the action is to say the market is working just fine.

"We haven't made those decisions just yet," he said at the Digital Cities and Regional Networks conference in Wellington.

However, Telecommunications Users Association chief executive Ernie Newman said the minister's words showed he understood the mood of the public and was getting ready to regulate.

"I think he's going to take action.

"The pressure mounting is just too hard for a politician not to take action," he said.

"There are too many people around the country who are seriously angry and concerned about slow broadband speeds and poor performance generally."

Cunliffe said he was reflecting on the debate about local loop unbundling and although it was too early to identify any action, "the next year is going to be important in that regard".

Local loop unbundling would force Telecom to rent its copper lines network to other companies, allowing them to supply combinations of voice, ADSL or other data services.

"The Government made a decision 18 months ago not to unbundle the local loop," Cunliffe said.

"It did so on the basis of certain expectations and we're monitoring carefully how those expectations bear fruit."

Telecom has committed to having a total of 250,000 broadband internet customers by the end of this year, with a third of those coming through competitors reselling the Telecom service.

But that target of 83,000 wholesale customers by year-end looks unlikely to be achieved, as Telecom had only 47,059 wholesale customers at the end of September.

Meanwhile, Telecom denied yesterday that it had received a bid from Optus for its persistently troublesome Australian unit AAPT.

A report in an Australian newspaper said Optus had made an opening bid of A$650 million ($693 million) in a deal that could be wrapped up by Christmas.

It was believed Telecom was looking for A$1 billion for AAPT, which it bought in three tranches between June 1999 and December the following year for a total of $2.2 billion.

Commenting on the reported Optus bid, Telecom spokesman Phil Love said there were "no proposals on the table", although the company was open to alternatives.

He would not comment on whether discussions were taking place or whether AAPT was for sale.

Telecom reported first-quarter revenue this month of A$296 million for its Australian businesses, including AAPT, down 9 per cent.

The book value for its Australian operations, which includes TCNZA, an operating entity for large corporate accounts, is $1.4 billion.

An attempt by Optus to buy AAPT in 1999 was blocked by the Australian anti-monopolies authority.

A spokeswoman for Optus said the company made "no comment on market rumour and speculation".

Shares in Telecom closed down 1c at $6.04 yesterday.

Wholesale deal

* Telecom has committed to having a total of 250,000 broadband internet customers by the end of this year.

* But the target of 83,000 wholesale customers by year-end looks unlikely to be achieved.

* It had only 47,059 wholesale customers at the end of September.