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Telecom's competitors are concerned that the phone giant's fibre network plan will make their local loop investments obsolete.
Today Telecom will reveal details of a proposed $1.4 billion spend on building a "next generation" network capable of providing speeds of up to 20 megabits per second to all towns with 500 or more phone lines.
However, there is growing disquiet among its internet rivals about their investment in local loop unbundling.
Equipment in Telecom's local exchanges used to operate services over the copper phone lines which run to homes and businesses would be made obsolete if Telecom builds fibre directly to roadside cabinets, bypassing the exchange.
Orcon chief executive Scott Bartlett said any plans by Telecom to run fibre past exchanges where there was a viable business case for unbundling would halt investment by other players. "This is about the worst thing that could happen to LLU (local loop unbundling) in this country," he said.
He said it was good to see Telecom spending money on its network but any plans that see it building "over the top" of exchanges where other telcos had invested was not in the spirit of the Government's regulation.
"To be honest, it makes five years of working on LLU, specifically the last 18 months, seem pointless."
Telcos can expect to pay up to $500,000 in fixed costs to "unbundle" an exchange in addition to monthly running costs of $25,000.
Companies considering investment in unbundling need to have at least 300 customers served by an exchange to make it worthwhile.
Bartlett estimated any company seriously interested in investing in sub-loop unbundling - placing broadband equipment in Telecom's roadside cabinets - would need more than 100,000 customers.
That could only be achieved by using local loop unbundling to launch services to attract that number of customers, he said. Telecom's rivals will be looking closely at its investment plans in order to determine their own future investment.
Speaking to the Business Herald at the beginning of the month when the Commerce Commission released its final pricing for unbundling, TelstraClear's Wendy Dodd said Telecom's cabinetisation plans was an important piece of information for its business case for local loop unbundling. "If cabinetisation is extensive in an area then LLU becomes less viable and other forms of access will become more important," said Dodd.
"We want to keep offering innovative services and we'll have to keep looking at the best way doing that."
She said there was the possibility Telecom would rent access to equipment inside the street cabinets.
