Telecom keeps control of premium broadband service

Telecom will keep control of its copper for the premium, fast VDSL2 service set to launch next year, offering guaranteed speeds of 25Mb/s down and 5Mb/s upstream. Photo / Thinkstock

Telecom, which will likely win a chunk of the government's $1.35 billion roll-out of high-speed internet, won't face regulatory shackles over its premium copper-based broadband service set to be unveiled next year.

The Commerce Commission today upheld an April decision that premium services offered on the regulated unbundled bitstream access (UBA) fell outside its purview. That means Telecom can set the pricing for its second-generation Very high bit-rate Digital Subscriber Line (VDSL2) services without facing the same rules governing fixed-line broadband.

"The commission is satisfied that the new service has higher specifications which differentiate the new service from the regulated service," Telecommunications Commissioner Ross Patterson said in a statement.

"There has been much debate about the willingness of consumers to pay for upgraded broadband services, and it is appropriate that the price is set by the market."

That's the second win in as many weeks since Telecom was put in the box seat to win 25 regions in the government's bid to run fibre-to-the-home by 2018.

The country's biggest phone company offered to carve out its Chorus network unit in return for relief from what it says is onerous over-regulation of copper-based services that will soon be outdated by fibre technology.

Telecom will guarantee minimum line speed for wholesale VDSL2 services will be 15 megabits per second downstream, and 5 Mbps upstream, and increase bandwidth to an average minimum throughput per connection to 96 kilobits per second from the current regulated service.

These two facets were enough to sway the regulator VDSL2 was a differentiated service, with the guarantee adding "significant" obligations to the phone company.

Telecom's so-called 'premium best efforts' service using

VDSL2 technology is expected to be rolled out in early- to mid-2011.

The company claims the new service will offer twice as fast download times, and upload times up to seven times the speed on ADSL2+ (Asymmetric Digital Subscriber Line) services.

Last week, the regulator recommended Communications Minister Steven Joyce let Telecom dictate terms for the repackaging of broadband, data and bundled services to be sold by rivals where the services faced competition or didn't attract much take-up from customers.

The shares rose 0.5 per cent to $2.22 on the NZX today and have declined 11 per cent this year.