KEY POINTS:
Telecom's rivals have seen too many false dawns to greet any harbinger of genuine competition with too much enthusiasm. There was, however, no doubting their satisfaction at the Commerce Commission's suggested price for access to Telecom's local network. A monthly charge of $16.49 a customer for urban areas would certainly stimulate investment in equipment for major-centre exchanges, they said, virtually as one. Telecom's share price echoed that verdict, and the prospect of a new era of competition, dropping 11c to $4.54 after the regulator's announcement.
On several levels, the Commerce Commission's draft view is a significant step. Perhaps most fundamentally, it confirms that steady progress is being made towards an acceptable telecommunications service, especially in terms of affordable, high-speed internet access.
It is little over a year since the Government decided to terminate Telecom's monopoly over its copper wire network. To get to this point in that time is commendable. It contradicts those who predicted the process would be bogged down by the weight of Telecom resistance. The commission's final ruling is scheduled for November, and people living in urban areas could have real choice in both telephone and internet services early next year.
In many eyes, the one surprise in the commission's decision was the setting of different prices for urban and rural networks. The rural access charge, which will cover almost a third of the country, is $32.20, almost double that for urban areas. This largely rules out investment in rural districts, drawing predictable criticism from the likes of Federated Farmers. The Telecommunications Commissioner was, however, quite right to adopt a policy that acknowledged the realities of servicing these districts. Any other course would have meant delving into the murky waters of subsidisation, an area that, if it must be tackled, should be done politically.
A uniform charge would also have meant that urban access prices would have had to be higher, a situation that would have discouraged investment. Telecom's rivals were always bound to look to city exchanges first, if only because the more densely settled an area, the greater the chance to garner the biggest profit for their capital expenditure. Those living in rural districts are always likely to be disadvantaged to some degree in telecommunications, as in other aspects of infrastructure. Their best hope for closing the gap lies in a rural broadband strategy being worked on by the Ministry of Economic Development.
A survey last week by nzherald.co.nz left no doubt of the need for significant investment. Many broadband providers promise much but deliver little in line speed. This reflects the lack of investment in the network during Telecom's hegemony, a feature reinforced regularly by OECD statistics. Quite simply, a fourfold increase in traffic through Telecom's copper lines over the past two years has proved too much to handle. The opening of that network will allow providers to control their service to subscribers through the use of their own equipment.
The completion of local loop unbundling will mean not only more competitive pricing and better service in major centres. Customers will also be able to terminate their long-running relationships with Telecom. Some will not need to be asked a second time, given the alienation wrought by former chief executive Theresa Gattung. Her successor, Paul Reynolds, says he will embrace a customer-centred strategy, focused on simple, straightforward and value-for-money telecommunications. That is another step in the right direction. Let real competition begin.
