Local phone-line freedom the way to go

By RICHARD BRADDELL

WELLINGTON - A year or so ago, unbundling the local telephone network was seen by many as the heresy promoted by Clear Communications and retrograde extremists who wanted to dismantle New Zealand's light-handed regulatory structure.

But things have moved along since. Australia, the United States and now the European Union are moving in that direction, concerned that in its absence, the full benefits of the information economy may be difficult to achieve.

In essence, local loop unbundling would allow Telecom's competitors to attach equipment to the lines going into homes and businesses, without the connection first being filtered through a Telecom exchange.

A key advantage is that competing providers would no longer simply resell Telecom services at the quality it prescribes because they would bypass its exchanges and attach their own.

As a result, they would control the whole process of service design and delivery and, as far as customers would be concerned, they would give every appearance of being the network owner.

But while the argument about unbundling is usually seen in the context of enabling competing voice services, Telecom's competitors are more likely to attack the lucrative data market using DSL (digital subscriber line) technologies which stretch copper's service capacity to reasonably adequate broadband levels.

In the US, DSL is still regarded as the poor cousin to the potential of cable. Even so, Wired Magazine predicts that DSL users will total more than a million this year - up from virtually none 18 months ago.

The EU has become so concerned about its lag behind the US in e-commerce that last month it set an end-of-year target for local loop unbundling on non-discriminatory terms to incumbents' competitors.

Meanwhile, an Australian Government-commissioned national bandwidth inquiry highlighted the challenge faced by Australia in matching emerging centres of e-commerce in North America and Europe. "The one-size-fits-all approach - which made some sense in a telephony world where there was only one size - is no longer tenable in an environment of diverse and multiple communications needs," the inquiry said.

In New Zealand, a Government-commissioned report by international telecommunications con-sultants Ovum found only a neutral economic case in favour of local loop unbundling. But the report, made public last month, conceded that its terms of reference were narrowly focused.