Telecom looks overseas as big-wig days wane: report

By RICHARD BRADDELL and NZPA

Telecom knows its days as the giant of the local telco industry are numbered, says a report by an Australian telecoms analyst.

Paul Budde says that a break-up of Telecom is unavoidable.

He also believes Telecom cannot make big investments in infrastructure on both sides of the Tasman and that it is positioning itself to focus on Australia.

His main disappointment is that the Fletcher inquiry into telecommunications failed to recommend local loop unbundling, a move adopted in Europe, Australia and the United States. Unbundling effectively forces the incumbent telco to sell use of its local lines to competitors to provide services they have designed themselves.

Given that the inquiry recommended the first overarching review of the proposed regulatory environment not take place until 2006, Mr Budde says unbundling will not be addressed until then.

By that time New Zealand will have fallen behind places like Europe which are rapidly rolling out broadband services capable of supporting high-speed internet and the information economy.

Mr Budde also predicted Vodafone would be market leader in mobiles in two or three years. Vodafone yesterday claimed 60 per cent of new cellphone connections in the three months to September 30 - extending to four quarters its lead over Telecom.

"They [Vodafone] have the global strategy, they think innovation, they have the top people in mobiles ... They will always be five steps ahead of Telecom."

Mr Budde says Telecom's network needs considerable investment over the $500 million it has admitted was the cost of updating its rural network for basic internet.

"Where will they get the money from?" he asked, suggesting the company would ultimately fall under Asian control, most likely NTT DoCoMo or Singapore Telecom, if it is not broken up.

But Telecom yesterday took strong exception to Mr Budde's argument that it could not support high-speed internet, pointing out that it has been offering business and residential customers its Jetstream branded ADSL service for around 18 months.

Spokesman Glen Sowry said Australia was just out of the trial phase of ADSL whereas Telecom already has 9500 Jetstream customers.

Telstra Saturn also has around 1000 customers using its cable modem Chello broadband service.

Telecom says Jetstream is now available to half its residential customers, two-thirds of business customers and 73 per cent of corporate. It expects it to be available to 75 per cent of all customers by the end of 2002.

Mr Budde says 100,000 people would use a high-speed internet service if it cost $50 a month. Telecom charges $49 for the first 400 megabytes of data.

Users also have to pay an internet service provider and perhaps a modem rental.