Rivals pressure Swain on unbundling

By PETER GRIFFIN

Pressure is mounting on Communications Minister Paul Swain to reject a surprise Commerce Commission recommendation not to fully open Telecom's copper line network to competitors.

The pro-unbundling camp has sprung into action, sending Swain a slew of submissions criticising the commission's report and setting the case for unbundling Telecom's local loop.

The heaviest fire comes from TelstraClear, which is using evidence from Australian economist Professor Henry Ergas to claim that some of the commission's calculations on the pros and cons of regulation are simply wrong.

"TelstraClear considers that the net economic benefits of unbundling would have been of a magnitude to justify regulation on the commission's terms if they had been properly calculated by the commission," the company wrote.

It also argued that failing to unbundle would hurt New Zealand's chances of sealing a fair trade deal with the United States and that the commission had not backed up its claims with empirical evidence of unbundling's lack of success overseas.

The Telecommunications Users Association said parts of the weighty report were hurriedly put together to meet the December deadline, possibly leading to mistakes.

It questioned the commission's view that unbundling would discourage network investment by the likes of Telecom and Woosh Wireless.

"Surely Telecom is not such a fragile organisation that it cannot make ongoing investments in a network unless assured of an ongoing monopoly?" asked association chairman, Graeme Osborne.

The Internet Society in its submission also called for the recommendation to be overhauled.

Telecom had a few bones to pick with the details of the commission's recommendations, but overall backs the report as it stands.

"In the interests of moving on from the last five years of investigation and analysis ... Telecom accepts the commission's recommendations."

This submission period is the last chance for industry players to express their views either way on unbundling, which explains the strong criticisms.

Swain can reject or accept the commission's findings or ask it to reconsider them. He hopes to decide by May.